The United States grapples with a complex hierarchy of government that many argue is overly convoluted. While Washington, D.C. benefits from a streamlined city and federal government, residents of many states face a labyrinth of local, county, and state governments, as well as various political entities that complicate decision-making.
This fragmentation of authority has proven disastrous for America’s housing market. When new apartment buildings are constructed, they bring significant advantages: new residents gain homes, the broader metropolitan region experiences reduced rents, and there is long-term economic growth driven by the clustering of industries. However, local neighborhoods often bear the brunt of increased traffic and noise, leading to a backlash against new housing developments.
In most cases, the advantages of new housing developments far outweigh the local costs. Yet, decisions about these projects are frequently made at the very level where those bearing the costs—often vocal residents—hold disproportionate influence. For instance, in cities with “aldermanic privilege,” city council members wield effective veto power over housing projects in their districts. Their constituents tend to prioritize immediate nuisances like traffic congestion and parking shortages over the long-term economic benefits of housing growth, leading to a chokehold on development. New York Mayor Eric Adams has introduced measures for the upcoming city ballot aimed at diminishing this privilege, but the city council’s pushback has been fierce.
Interestingly, some of the most progressive housing policy advancements have emerged at the state level rather than the local level. States often have more to gain from housing growth than individual municipalities, prompting them to override local zoning laws to facilitate increased construction.
For example, Tina Kotek, the current governor of Oregon and former speaker of the Oregon House, championed a 2019 measure mandating that large cities permit at least two housing units on all land parcels, effectively phasing out single-family-only zoning. Meanwhile, California state Senator Scott Wiener has also made strides with similar legislation, such as the recently passed SB79, which allows for six-story apartment buildings near transit hubs. Other states like Massachusetts, Washington, Florida, Texas, and Montana have followed suit, enacting various laws to tackle housing shortages.
However, it is important to acknowledge that many of these state interventions are relatively modest, and more ambitious efforts often struggle to gain traction. In New York, Governor Kathy Hochul’s 2023 proposal to aggressively increase zoning for the construction of 800,000 new homes was ultimately abandoned due to fierce opposition from suburban constituents, particularly in swing districts.
Similarly, in Arizona, Governor Katie Hobbs vetoed a less ambitious housing bill, citing “unintended consequences.” While state-level politics typically lean more pro-housing than local levels, they can still be resistant to change.
This raises the question of whether the federal government could play a role in addressing the housing crisis. Historically, the federal government has preempted local land-use regulations, as seen with the Natural Gas Act of 1938, which prevents states and localities from imposing certain regulations on interstate gas pipeline construction. Additionally, the Federal Communications Commission has effectively preempted local zoning for cell tower construction.
Nevertheless, outright federal preemption is often viewed as unlikely in the context of housing policy. More feasible proposals include grants to localities for adopting beneficial policies or increasing staffing at the Department of Housing and Urban Development to assist states in implementing effective measures. The Federation of American Scientists recently called for proposals that could enhance housing supply, but none have emerged that effectively address the scale of the crisis.
One promising initiative is the bipartisan ROAD to Housing Act, spearheaded by Senators Tim Scott (R-SC) and Elizabeth Warren (D-MA), which passed their committee unanimously in July. The act includes provisions to eliminate cumbersome regulatory requirements that have hampered housing production.
Though my initial impression of the bill was skeptical—viewing it as a collection of modest measures—the unanimous Senate support suggests it may not be as innocuous as it seems. Transformative changes to zoning and local regulations typically provoke significant opposition, yet this bill has garnered broad backing.
The Economic Innovation Group (EIG) posits that I may be underestimating the potential of the ROAD to Housing Act. While they don’t claim it to be groundbreaking legislation, they believe it lays the groundwork for a federal approach that could significantly impact housing availability.
EIG researchers highlight two key aspects of the bill: first, it encourages the federal government to create model zoning codes that permit denser construction by eliminating mandatory parking requirements and reducing minimum lot sizes. Second, it establishes an Innovation Fund, distributing around $200 million annually to municipalities that increase their housing supply through meaningful reforms.
On the surface, these provisions may appear insufficient, but EIG argues they represent a bolder vision for housing policy. They advocate for the establishment of “Right-to-Build Zones,” akin to the special economic zones in China that facilitated rapid growth by allowing specific areas to operate under less restrictive regulations.
Under the proposed model, municipalities could adopt these less restrictive zoning codes in designated neighborhoods, receiving financial incentives for each new home constructed. This innovative approach could help navigate the complexities of American governance while allowing local governments to limit reforms to specific areas, thereby minimizing opposition from residents resistant to change.
The ROAD to Housing Act includes many foundational elements of this approach, but there is still work to be done to ensure financial incentives are directly tied to the adoption of model zoning codes. Linking incentives to specific zoning reforms would encourage cities to implement more substantial regulatory changes rather than making only minor adjustments.
While it remains uncertain how closely the final Senate package will align with the vision of specialized housing zones, the mere possibility is encouraging. Perhaps a seemingly innocuous bill will turn out to be a catalyst for meaningful change in America’s housing landscape.
