The Governors Wading Deeper Into the Housing Crisis

A national housing crunch is spurring governors around the country to venture into debates that typically consume local officials: regulating where new housing can go and figuring out how to entice developers to build more of it.

The state executives are looking at a range of strategies, from borrowing billions of dollars for the construction of new homes, to tax credits, to overhauling restrictions on what types of housing can be built in different areas. Housing advocates and builders say the attention from state leaders is long overdue and, in certain states, critics are questioning whether the plans go far enough.

“People do want to live here. That’s a good thing. But the cost of housing is also out of control because we simply don’t have enough of it,” Massachusetts Gov. Maura Healey said in her inaugural address. “If we want Massachusetts to be a home for all, we need to build more places to live, and we need to make sure those homes are within reach.”

“High housing costs are unacceptable for our people, our businesses, and our state’s future. To fix that, we need to think big,” she added.

Healey’s proposals included items such as creating a cabinet-level official concerned with housing, identifying state-owned land that could be converted to rental units and making it easier for developers to build near transit stops.

Other governors are pushing for different approaches. 

For example, Gov. Jay Inslee of Washington wants voters to approve a $4 billion bond that would pay for new affordable housing and help new home buyers with down payments. Ohio Gov. Mike DeWine said he would pursue tax credits for affordable housing and single family homes. New Mexico Gov. Michelle Lujan Grisham wants to set up a program to encourage landlords to accept housing vouchers from low-income residents.

In Oregon, Gov. Tina Kotek, elected in November, made housing her first priority after taking office, declaring a state of emergency on homelessness, calling for the state to produce more housing units every year and asking the legislature for $130 million to address immediate needs. 

And Georgia Gov. Brian Kemp, a Republican, said he wants to find a way to work with localities to encourage the construction of “workforce housing” for the many new manufacturing plants coming to the state.

Perhaps the boldest proposal comes from Gov. Kathy Hochul, who announced a plan to build 800,000 new units in the next decade. Hochul’s “Housing Compact” focuses on increasing housing stock across the state through a variety of strategies, including rezoning initiatives and establishing a $250 million infrastructure fund.

Her plan calls on downstate municipalities–including New York City–to increase housing by 3% per three-year period. In upstate New York, cities and towns will increase housing stock by 1% per three-year cycle. Under the proposal, affordable housing projects hold more weight than market-value ones.

It would be up to municipalities to decide how to best meet those goals, whether by converting old office spaces and strip malls to new housing or by incentivizing multi-family developments. Hochul’s proposals would also allow some projects to skip environmental reviews in order to speed up construction.

If those local governments don’t comply, developers could short circuit the normal zoning process to build affordable housing. Local governments would only be able to stop the projects if they showed there was “a valid health or safety reason for denying the application,” according to Hochul’s plan.

That process is similar to a California law that has allowed builders to move forward with housing developments in places like Santa Monica and Redondo Beach that had previously been forbidden.

Meanwhile, Colorado Gov. Jared Polis has not offered specifics, but urged lawmakers to consider approaches such as zoning reform, expedited regulatory approval of new developments and promotion of factory-built homes. He warned that a failure to act would mean that Colorado would end up like California, with traffic-choked highways, power outages and average home prices of more than a million dollars.

“Let me be clear: Housing policy is climate policy. Housing policy is economic policy. Housing policy is transportation policy. Housing policy is water policy. Housing policy is public health and equity policy,” Polis said. “It impacts every part of our lives.”

A National Crisis

The calls to action come amid a national housing shortage that has driven up prices for renters and homeowners and left many people without dependable housing options. 

The National Association of Home Builders estimates that the country is 1.5 million housing units short of what is needed to alleviate the supply problems. Other estimates are even higher.

The imbalance between market supply and consumer demand has grown since the Great Recession wreaked havoc on the housing market. The slow production of single-family homes, particularly smaller “starter” homes, is a major factor fueling higher prices.

The disruptions caused by the pandemic made housing even more expensive in many places, as people sought more comfortable homes, the prices of labor and construction materials such as lumber increased and, more recently, rising interest rates made taking out mortgages more costly. 

Karl Eckhart, the vice president of intergovernmental affairs for the National Association of Home Builders, said the industry has been calling on elected officials to address the housing shortage for a decade, but it’s only recently state leaders have taken up the cause.

“Elected officials waited too long, but they’ve waited long enough that they consider it to be a problem,” he said. “I hope their solutions will actually help build more homes, because that’s the only way to get out of this.”

Thirty-six governors also started new terms this year, which gives them the political capital to take on local governments and obstinate residents. Those groups have often blocked new developments or saddled homebuilders with high costs of installing new infrastructure and complying with increasingly stringent building codes, Eckhart said.

But public attitudes are changing because housing shortages have become widespread and are so entwined with economic development, he added. “Politically, it's a good play,” Eckhart said. “Financially, I think cities and states have to realize that they cannot use housing as a piggy bank, they’ve got to use housing as a place for people to live.”

Peggy Bailey, the vice president for housing and income security at the Center on Budget and Policy Priorities, a left-leaning think tank, also credited the Biden administration for highlighting the housing crisis and helping states and localities address it with pandemic relief money from the federal government. 

Robust efforts by all levels of government during the early days of the Covid-19 pandemic also showed the public and policymakers that government intervention could keep people from losing their homes, Bailey said. 

Unfortunately, she said, the housing relief funds dried up and a national eviction moratorium ended. Efforts to make long-term changes at the federal level languished in Congress, leaving states to contend with the ongoing crisis.

Bailey said she is excited about state-level proposals to create or expand rental assistance programs, which can help cash-strapped families keep their homes when rent increases faster than their pay does. 

“Most people have a place that they want to live in. They're just using a huge amount of their income to afford that place,” she explained. “If those people have rental assistance, it could take some pressure off of the demand for [new] units.”

Another promising area Bailey highlighted was subsidies for building affordable housing. Those projects often require complex financing packages, and the extra levels of coordination and review add to the project’s cost.

Bailey also backed zoning changes that “break through some of the discriminatory practices that can take place at the local level that prevent multifamily buildings or rental housing in general, from being in certain neighborhoods.”

Housing Advocates Raise Other Priorities 

Despite the attention from top state officials, housing advocates in several states worry that the plans touted by governors would not address the crisis soon enough.

Housing Justice For All, a coalition of more than 80 organizations representing tenants and homeless people in New York, says the state isn’t doing enough to protect tenants while new developments are underway. 

“Hochul’s housing plan uses a garden hose to solve a five-alarm fire,” said Cea Weaver, a campaign coordinator for Housing Justice for All, in an emailed statement. “Her worn playbook has failed time and again to produce the kind of housing that we need and it does nothing to mitigate the pain that New Yorkers are facing now.”

The advocacy group instead wants to pass legislation to ensure tenants aren’t evicted without a good reason, establish a statewide housing voucher program, and give tenants the first opportunity to purchase their building should it go up for sale. 

Policymakers should also consider changes to improve tenant rights and affordable housing, said Samuel Stein, a senior policy analyst for the Community Service Society in New York. 

Just decreasing regulations as Hochul proposed would not do enough, Stein said.

“If we believe housing is a human right, we need not just more housing as such, but rights to housing–rights to remain in housing once you have it, tools to afford the housing, and more,” Stein said.

In Connecticut, Gov. Ned Lamont called housing the “the biggest slam to our affordability and economic growth.” He added that subsidies alone aren’t the answer, and towns and cities have to decide where to allow more housing to be built. 

Sean Ghio, the policy director for the Partnership for Strong Communities, said zoning and rental assistance would likely be top priorities for housing advocates in this year’s legislative session. 

Like many parts of New England, Connecticut hasn’t seen much new residential construction in the last few decades. That is in part because the state essentially allows localities to say they don’t want any new construction in their communities, especially in areas where residents are concerned about maintaining the “character” of their towns, Ghio said.

Local restrictions on multifamily housing have also made Connecticut one of the most racially segregated states in the country. 

Instead, the state should help spur the construction of more housing in the transit hubs near New York City, Ghio argued. “We know that's where more people want to live,” he said. “We know that improves job access.”

A measure to loosen local zoning restrictions for transit-oriented development, however, failed to get out of a legislative committee last year. 

Meanwhile, Connecticut’s rental assistance program hasn’t been adjusted to meet the strains of inflation, and therefore isn’t serving as many residents as it could, Ghio said. 

“We need more dollars in that program,” he said.

In Massachusetts, advocates are looking at new ways to convert underused properties to housing, said Eric Shupin, the policy director for the Citizens’ Housing and Planning Association. That could mean transforming government property or repurposing office and retail space that’s in less demand following the pandemic, he said. 

The group is also pushing a housing bond bill in the legislature that would be the largest in the state’s history, Shupin said. The state passes a housing bond bill every five years, and 2018’s is currently the biggest at $1.8 billion. 

The housing bond bill authorizes all of the affordable housing finance programs that build and preserve affordable housing in Massachusetts, Shupin explained. That can include public housing as well as projects by nonprofit and for-profit developers. 

“That’s going to set the tone for the next five years of what we’re able to build and preserve in terms of affordable housing for our lowest-income households,” Shupin said.

Rent control is another hot-button topic that Shupin said he expects to come up at the state level this year. 

Last year, Boston Mayor Michelle Wu formed a 23-person team tasked with creating a rent stabilization plan to present to the state legislature in 2023. During her campaign for governor, Healey supported efforts to allow municipalities to enact those kinds of policies.