How the federal government can encourage innovative housing policies that improve supply and affordability

On September 12, 2023, Brookings Metro Senior Fellow Jenny Schuetz testified before the U.S. Senate Committee on Banking, Housing, and Urban Affairs’ Subcommittee on Housing, Transportation, and Community Development, for a hearing on housing supply and innovation.

Schuetz opened her testimony by exploring long-term trends in housing supply and affordability, both on a national and regional scale. The main takeaway from these trends is that the nation has an alarming shortage of housing—a gap of approximately 3.8 million homes, as the years after the Great Recession saw home-building failing to keep pace with population growth.

This shortage has hurt housing affordability, both in large, high-opportunity cities such as New York and Boston, as well as in previously affordable places such as Nashville, Tenn. and Salt Lake City, which saw their populations increase due to the prevalence of remote work during the COVID-19 pandemic. “Between 2020 and 2023, nominal housing prices increased by 37.5% and rents in professionally managed buildings increased by nearly 24%,” Schuetz testified.

To alleviate this crisis, local and regional governments have been experimenting with innovative, pro-housing policies to boost supply and improve affordability. These include revising local zoning laws to permit higher-density housing; reducing minimum lot sizes; increasing building height limits; and reducing off-street parking requirements. And, as Schuetz testified, there are significant ways that the federal government can encourage such policies. To that end, Schuetz recommended:

• The Department of Housing and Urban Development (HUD) could organize convenings among between state and local policymakers and other stakeholders to share their experiences on pro-housing policies and identify knowledge gaps important for policy design and implementation.
• HUD and other federal agencies should publish guidelines for local and state policymakers on how to design pro-housing policies. This would be especially helpful for smaller communities with limited staff capacity.
• Congress, HUD, the Department of Transportation, and other federal agencies should create financial incentives for local and state governments to integrate investments in housing, land use, transportation, and other infrastructure.

To read Schuetz’s full testimony, click here. To watch the testimony video, click here.