States can Improve Housing Through Purposeful Policies

Four ways statewide housing policies may improve well-being.

According to Brookings, local governments have traditionally exerted the most direct control over land use and housing production, yet political and fiscal incentives align to pressure local officials into restricting new development, especially of moderately priced homes. However, state governments are increasingly feeling the pinch of poorly functioning housing markets in several ways. Inadequate supply, especially in near job centers and transportation infrastructure, makes it harder for companies to recruit and retain workers. Most new housing is developed on the urban fringe in car-dependent locations, leading to higher traffic volumes and more greenhouse gas emissions.

Exclusionary zoning by affluent, high-opportunity communities restricts economic mobility and exacerbates racial and economic segregation. In short, the economic, social, and environmental costs of poorly functioning housing markets spillover beyond local boundaries to affect entire regions and states. State-level action has the potential to improve these outcomes.

In a new study, by Jenny Schuetz, she examine what state governments can—and should—do to encourage healthy housing markets. I identify four broad goals to guide statewide housing policies, discussed in more detail below. To illustrate the range of existing state policy approaches, I examine the types of policies uses by five contrasting states: California, Massachusetts, Oregon, Utah, and Virginia. To achieve any particular goal, states can use a variety of different policy tools, giving them flexibility to design an approach that fits their economic needs, institutional capacity, and political circumstances.

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