Mercatus Center Study Documents Progress on Housing Reform

A new Mercatus Center study documents encouraging progress on housing reform so far this year. The scope and pace of reform is greater than last year, which was covered in Mercatus’s previous survey (which I discussed here). Here is a summary by authors Eli Kahn and Salim Furth:

Last year, we reported on the accelerating pace of state-level housing supply reform, with major victories in four states and laws being enacted across the country. This year, state legislatures kept up the pace, with 263 individual bills under consideration that would contribute to easing the regulatory burdens on homebuilding, touching on areas from accessory dwelling unit (ADU) permitting to building code reforms. With most state legislatures having adjourned for the year, we can take stock of this year’s successes and failures:

• In the first six months of 2024, states enacted 50 housing supply bills, compared with 30 enacted during the same months in 2023.

• In the past 12 months, 65 housing supply bills have been enacted in 20 states (see figure 1).

• Several states that had previously enacted major housing supply bills (such as California, Florida, and Rhode Island) continued to advance legislation building on or refining their previous reforms.

• Colorado and Arizona were the year’s comeback stories, enacting major housing packages after very public failures last year.

• Two more high-cost states, Hawaii and Maryland, made strong opening bids in the zoning reform game.

• The year’s new trend is building code reforms. Five states took steps toward allowing “single-stair” multifamily building designs up to six stories.

• Legislators in Vermont and Kentucky moved in the opposite direction, reversing housing supply reforms. Another counterproductive tactic cropped up in 10 states, where legislators introduced bills to prohibit institutional investors from buying single-family homes. However, none of those bills has passed.

With the exception of the last item on their list, this is all good news. And it is particularly notable that two big states—Arizona and Colorado—enacted major reforms this year, after failing last year. But, as the authors recognize, much work remains to be done. Exclusionary zoning still severely increases housing, blocks millions from “moving to opportunity,” reduces economic growth, and restricts property rights.

Still, this is a sign that the cross-ideological “YIMBY” movement continues to make progress in many places. At the same time, it is also important to remember that “NIMBY” opposition to housing deregulation also cuts across ideological lines, and studies of public opinion on the subject arrive at mixed results depending on framing and question wording. Survey data indicates that many harmful “populist” supply restrictions also enjoy considerable public support. The restrictions on corporate investment in housing described in the Mercatus study may be an example of that. They attract support from both many left-wingers, and some on the populist right, such as GOP VP candidate J.D. Vance.

Elsewhere, I have argued that most exclusionary zoning is unconstitutional because it violates the Takings Clause of the First Amendment (see also shorter nonacademic version published in the Atlantic), and that the YIMBY movement should combine litigation and political action. Past successful social movements show that the two approaches together can accomplish more than either alone. The optimal mix of strategies may vary from state to state.

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