For the first time in memory, Democrats are running a national campaign with a focus on building more housing.
Vice President Kamala Harris led off the debate with the subject. Barack Obama invoked zoning regulations in his convention speech. Sen. Tina Smith of Minnesota and Rep. Alexandria Ocasio-Cortez of New York have proposed a mammoth federal investment in social housing.
“It’s a pretty rapid change in the politics around housing,” Sen. Brian Schatz of Hawaii, one of the party’s most vocal YIMBYs, told me last week about seeing housing’s star turn at the Democratic National Convention. “It’s no longer a controversial proposition anywhere in the country to say that we need more housing, it’s urgent, and the government should stop making it so damn hard to build.”
Headlines about the Harris plan have been dominated by the vice president’s pledge to issue a $25,000 credit to first-time homebuyers, but the more significant number is 3 million. That’s how many additional new homes she wants built in her first term if elected. That would add 750,000 new homes a year to the country’s current baseline of about 1.3 million units, an increase of more than 50 percent.
How’s that going to happen? Tax incentives for builders, perhaps an expansion of the low-income housing tax credit, but mostly, a $40 billion fund that would “empower local governments to fund local solutions to build housing [and] support innovative methods of construction financing.”
It’s not clear exactly what an innovation fund entails. Maybe the closest antecedent is a new, $85 million HUD program called “Pathways to Removing Obstacles to Housing,” or PRO Housing, which this summer issued 17 grants of a few million dollars each. The projects that got money include buying land for affordable housing in Rhode Island, retooling a digital application process in New York City, and hiring staff to fast-track affordable housing proposals in Denver.
It was a super competitive process, with $13 in requests for every $1 in award. Which raises the question: What can an annual outlay of $100 million (the PRO budget for next year) do to solve a problem as big as a deficit of 3 million homes? “State and local governments look at each other all the time, so those little examples can bear a lot of fruit,” said Chris Herbert, director of the Joint Center for Housing Studies at Harvard and a fan of the program. “There’s not a lot of money out there, but these grants can become an example for other places.”
Note what those two programs share: A focus on more housing, period, even if it’s not necessarily restricted to low-income Americans. That’s a subtle, crucial shift in federal priorities that reflects the growing sense that Washington must intervene to create more housing at all price points, not just for the poorest households with the most urgent housing needs.
A more robust precedent for Harris is the American Rescue Plan Act, or ARPA, the 2021 COVID relief bill that included $350 billion for state and local governments. The nation’s largest cities have spent more than $4 billion in ARPA funds on housing, according to researchers at the Urban Institute, mostly on affordable housing and services for the homeless. One takeaway? Cities need flexible federal support. Uncertainty, complicated paperwork, strict rules, and long waits are common features of existing HUD programs.
A bigger program is the one put forth by Smith and AOC in the Homes Act, which calls for $30 billion a year to create a public developer within the Department of Housing and Urban Development, one capable of building and financing affordable housing nationwide. Citing Vienna’s famed social housing as a model, the legislators believe the program could create or maintain 1.3 million affordable homes. That’s an order of magnitude more housing than is built or preserved every year through the slow, inefficient low-income housing tax credit, or LIHTC, the nation’s largest affordable-housing creation program.
The infamous conditions of Cabrini Green in Chicago and other midcentury projects made the idea of government-built housing unpopular for years, but it has come back into fashion with better understanding about the failures of those projects and the increasingly dire conditions for low-income renters. Several U.S. jurisdictions are now trying their hand at public development, notably Montgomery County in the suburbs of Washington, D.C.
The idea got a boost last week from the Center for American Progress, the liberal think tank, which argued for a $150 billion investment in “new social housing,” including $50 billion in grants and low-cost financing to build affordable rental housing, $50 billion for maintenance of existing public housing, $25 billion for the vouchers that help poor families access market-rate apartments, and $25 billion to build new public housing.
Together these policies signify a sea change from housing initiatives under Clinton or Bush, or during the foreclosure crisis, said Ben Metcalf, the managing director at the Terner Center for Housing Innovation at the University of California, Berkeley. “What’s new is the idea that the federal government needs to be motivated around the issue of housing supply writ large. There have been other White House–led efforts, but you have to go back to LBJ to find this high-level focus on getting more homes built,” he said.
Some critics say Washington should be more aggressive, because grant programs like ARPA or PRO Housing will only go to jurisdictions that want housing in the first place. Economist Ed Glaeser argued in the New York Times this month that a “forceful solution” is needed, using a model akin to the one that forces states to maintain a drinking age of 21 years old by making federal transportation funding contingent on construction. Build up, or pay up.
It might be an effective gesture on its own. Recently, Spencer Cox, the YIMBY Republican governor of Utah, cited the Times in an argument for faster zoning reform to allow more housing in his state. “The federal government is going to start forcing more on us,” he said, “and I can’t think of anything worse than that. So this is our chance to do it our way.”
Schatz, one of the authors of the PRO Housing program, warns that attempting such an approach risks turning the housing shortage into a bipartisan issue. “I want to continue at our current pace, which is urgent but not hair-on-fire,” he said.
Some evidence suggests that real housing reform moves in silence, like garden gnomes. States have made good recent progress on regulatory reforms including abolishing parking minimums, lot-size requirements, and apartment bans, and drawing too much attention to those bills risks mobilizing homeowner opposition. Compare Oregon’s understated successes with New York’s very noisy failures, where Gov. Kathy Hochul backed down from a plan to permit apartments in the New York City suburbs.
Whether by choice or not, most federal action on the housing supply under Joe Biden has consisted of action within the executive branch and its federal agencies. “Build Back Better had a very significant chunk on housing, low-income housing tax credit expansion, and [rental assistance] vouchers, and that all got cut out,” said Herbert. “They gave a lot of attention to the question: What can we do to address housing when Congress has already decided what to spend?”
As an example, he cited the administration’s focus on streamlining the production and financing of manufactured homes (known to regular people as trailers). As recently as the 1990s, the U.S. sold more than 350,000 manufactured homes every year; the current figure is about one-third of that. Restoring those levels would go a long way toward the vice president’s goal of 750,000 extra units a year. The Biden administration has also helped direct existing agency funding toward housing, made it easier to buy properties with accessory dwelling units, and improved federal financing for multifamily buildings.
“I’m not super convinced it’s doing a whole lot, but it’s symbolically important,” said Berkeley’s Metcalf. “There is this awareness that there is very good stuff happening at the local and state level, and no one wants to break that by shooting this into a MAGA vortex. Everyone’s dancing around that, which keeps big stuff on the table.”
But, he added, if Harris wants to meet her housing production goals, she will need to learn from her home state, where a suite of zoning reform measures has not unleashed housing abundance. Metcalf: “In a world where costs are high and revenues are what they are, you still need to motivate people to want to build.” That could mean defense-budget-style investment in new construction technology, a huge new subsidy program in the vein of the HOMES Act, or a dedicated federal bill in the style of the 1968 Housing and Urban Development Act.
OK, but how about something that could actually happen in a divided Congress? Metcalf likes the idea, endorsed by Biden, Harris, and several members of the Republican caucus, to build more housing on federal land. It sounds like a Bundy Family project, but in fact the feds are sitting on prime underused land in many cities, including office buildings, post offices, and Amtrak property. The problem, as with many such projects, is getting its owners to give it up.
