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The big, neglected problem that should be Biden’s top priority

It’s time to take on the NIMBYs.

Row of multifamily houses under construction
Housing under construction in Atlanta, Georgia, on November 13, 2022.
Bloomberg via Getty Images
Rachel M. Cohen is a senior reporter for Vox covering social policy. She focuses on housing, schools, homelessness, child care, and abortion rights, and has been reporting on these issues for more than a decade.

For decades, the US has built fewer homes than it needs — a trend that has led to soaring rent and home prices, hurt economic growth, and hampered attempts to address the climate crisis.

Just how much more housing the US should have is debatable. But the estimates are unanimous that the country needs a lot more — 1.5 million units, or 3.8 million, or even 5.5 million — to ensure affordable housing for everyone. Low-income housing advocates estimate that America has a shortage of 7 million affordable rental units for those living in poverty; another group found nearly 11 million households spend more than 50 percent of their income on rent.

Last May, the White House announced the Housing Supply Action Plan, a grab bag of ideas that the Biden administration called “the most comprehensive all of government effort to close the housing supply shortfall in history.”

But 10 months later, there has been minimal progress, and higher interest rates have led to an overall slowdown in construction. The federal government did pass significant new investments in climate and infrastructure but largely failed to authorize new spending to expand the supply of housing.

There was real home-building progress in 2022 — more multifamily projects were started than in any year since 1986 — and the Biden administration argues its economic stimulus policies helped fueled some of that demand.

Yet most of those projects had been in the works for a long time. And although the Biden administration has invested more time and resources into the housing supply issue than its two most recent predecessors, it’s hard to claim the issue has stayed at the top of the president’s agenda. Biden has not pushed hard for expanding housing supply as a legislative priority and has not spent much time talking about building more homes. The housing crisis was barely mentioned in his recent State of the Union address.

“Both to the credit and detriment of this administration, they just have a lot of priorities,” said Ben Metcalf of the Terner Center for Housing Innovation at UC Berkeley, who is a former Obama administration HUD official.

Developers say they’ve been begging the Biden administration to take more steps to reduce the cost of construction. Advocates for looser zoning rules say there is more the White House could do to clearly communicate what’s driving the crisis.

In the weeks leading up to the omnibus spending bill that Congress passed in late December, the Biden administration made clear its top legislative priorities were new money for Ukraine, Covid-19, and disaster relief. Biden officials defend their broad approach and say housing supply remains a focus that will be reflected in their soon-to-be-released budget proposal. But given how often officials cite resource constraints as a limiting factor, their ever-widening agenda creates obvious challenges.

Many pressing issues don’t receive much attention from the president. But among policy analysts, there’s a growing consensus that America’s housing shortage is the primary issue exacerbating many of the other big problems the country faces — from the climate crisis and homelessness to economic inequality and chronic illness. Unlike many other policy crises, too, housing is one that’s not yet totally polarized yet along partisan lines. The White House has gestured to agreeing with this analysis, but at least so far, it hasn’t met the crisis with proportionate urgency.

The feds’ tools against NIMBYism, briefly explained

Housing prices keep rising primarily because there’s not enough housing to go around. A top culprit for this scarcity is local zoning laws that bar new construction and empower homeowners who gain financially from restricting housing supply to decide whether or not to make room for more neighbors.

It’s illegal to build apartments on more than 70 percent of residential land in virtually every major US city. Other regulatory barriers, like minimum parking requirements, minimum lot sizes, and height limits, also make it harder to fit more people onto the available land. The popular shorthand for these restrictions is NIMBYism — short for “not in my backyard.”

Experts praised the Biden administration for elevating zoning issues in its plan released last May because many people don’t grasp, or don’t believe, that these policies and the fundamental imbalance between housing supply and demand fuel the affordability crisis.

“Getting the president to talk about housing and keeping up a consistent drum beat about supply and these land use barriers is among the most important things the White House could be doing,” said Andy Winkler, the housing director at the Bipartisan Policy Center.

The Biden administration’s plan proposes deploying new financing tools to build and preserve housing, to improve existing federal financing models, and to offer incentives for communities to reduce their housing development barriers.

In October, the White House announced progress on executing its plan, and it has taken some steps — like finalizing a rule to make it easier to build mixed-income projects, and extending several tax credit deadlines so that projects delayed by the pandemic could continue.

These changes are welcome, but in practical terms, they’re modest. Without an increase in federal funding, the administration’s impact on total housing supply will be limited.

Part of the challenge is that building new housing is an area where local governments hold immense power, and cities fiercely defend their right to dictate what kind of housing should exist. Land use policy has also historically been a state responsibility. As a result, federal lawmakers generally opt for strategies that encourage localities to make change, rather than strip money from those that don’t.

In his first year in office, Biden proposed a grant program to reward communities that loosened their zoning rules. That idea became the $1.75 billion Unlocking Possibilities program, which was included in the House’s Build Back Better bill but cut from the Senate’s version.

In 2022, the Biden administration tried again, proposing a new $10 billion grant program to reward states and localities that remove barriers to housing development. The omnibus spending package Congress passed in December did include its first competitive grant program aimed at zoning reform, dubbed a “YIMBY” grant — an acronym that stands for “yes in my backyard.” But it was for just $85 million, less than 1 percent of what Biden asked for.

“It’s not a meaningful amount of money; it’s a symbolic amount,” said Eric Kober, a senior fellow at the right-leaning Manhattan Institute, of the new grant program. Kober is skeptical that the federal government can successfully nudge cities and states to take action on zoning. “Local governments often don’t understand the effects of their own land-use policies, and those that do can feign compliance while quietly undermining housing construction,” he wrote last year in a critical assessment of Biden’s housing plan.

The concern is warranted. One aspect of Biden’s plan that received early attention is a proposal to use both federal housing and transportation dollars to incentivize zoning reforms. In theory that’s a great idea: investments in new public transit are less useful if few people can actually live nearby the subsidized trains and subways.

But when the Transportation Department announced recipients of $2.2 billion in new competitive grants in August, few, if any of the 166 projects were from applicants that embraced zoning reforms. Some went to notorious NIMBY cities, like San Francisco. The White House claims two recipients — in Colorado and Minnesota — were chosen in part due to their adoption of land use policies to promote housing density.

“That doesn’t strike me as a systematic approach to encouraging future reform,” said Emily Hamilton, the director of the Urbanity Project at the Mercatus Center. “There certainly doesn’t seem to be any accountability that these zoning reforms are actually going to build more housing.”

The Transportation Department declined to comment on these criticisms but pointed to its rating rubric, which ranks applicants higher if they “coordinate and integrate land use, affordable housing, and transportation planning.” A spokesperson said they also recently announced that transit-oriented development projects are now eligible to receive better financing, that they have received “dozens” of inquiries so far, and they expect several projects will benefit from that this year.

Another Biden initiative was to allow states to use federal pandemic funds to address the housing shortage. A few, like Illinois, seized this opportunity. Allison Clements, of the Illinois Housing Council, said her state committed more than $339 million in American Rescue Plan funds to create affordable housing and fight homelessness.

But most states had no interest in leveraging the funds for housing production, and at the local level there’s often rarely the capacity to manage those kinds of projects, even if there was interest. So while it was a welcome idea, in practical terms it couldn’t support much new housing overall.

I asked HUD if, beyond the new $85 million YIMBY grant, it was looking to incorporate zoning into any of its other large grants. For example, while HUD cannot condition funding on zoning reforms without congressional approval, it does ask all recipients of its $3 billion Community Development Block Grant program to submit plans identifying barriers to housing development. HUD could specifically mention zoning here.

A HUD official said they don’t have plans to do that, but believe that combined with Affirmatively Furthering Fair Housing work, “many communities will come to the conclusion that addressing zoning and land use reform, if it is exclusionary, is part of that.”

To move the needle, Hamilton of the Mercatus Center thinks Congress needs to create a new grant program that specifically awards jurisdictions based on housing market outcomes — like how much housing is actually built and how much it costs. A more heavy-handed federal approach, however, could fuel local backlash and potentially polarize the housing supply issues.

“It’s definitely a risk,” Hamilton said when asked about the idea’s political viability. “It would not be good for housing policy to become a left or right-coded issue.” But she emphasized there has been conservative interest in deregulating zoning before.

The federal government is not treating housing construction as urgent

To make a dent on housing supply, the Biden administration will need to invest more political capital in pushing for funding and continue to prioritize barriers to both subsidized and market-rate housing.

While Biden’s team can tout high rates of multifamily housing construction in 2022, completions have lagged, and analysts are bracing for a construction slowdown now from higher interest rates. Single-family home starts declined in 2022 for the first time for this reason, and the home-builder industry predicts both single-family and multifamily construction will decline this year.

Some of the biggest pieces of the administration’s plan are bills that Congress failed to pass last year, but that the Biden administration also failed to really lobby for. Those bills would have subsidized the preservation and repair of existing affordable homes, and offered more money for low-income rental construction.

The housing shortage has animated conservative think tanks, as well as some Republicans in Congress, like Indiana Sen. Todd Young. Winkler said he and his colleagues are encouraging the administration to work more proactively with Republicans this year. “They haven’t really yet engaged in those bipartisan conversations,” he said. In October, the Bipartisan Policy Center outlined a series of housing bills it believes could unite both parties.

“This plan is a departure from the Build Back Better Act — which recognized the severity of the nation’s housing affordability crisis but did not embrace a politically feasible, bipartisan agenda to address it,” Winkler’s team wrote.

One recurring critique was that the Biden administration has not been as aggressive in working to help the private sector build more homes.

For example, housing industry groups have been lobbying HUD to raise its large loan limits, which developers say could help them bring about anywhere from 10,000 to 100,000 new additional homes annually and does not require congressional approval. The federal housing agency sets limits to mitigate lending risk, but with rising interest rates, builders are finding it harder to make financing deals possible under the status quo.

“There’s been a bias at HUD toward working with the nonprofit community, and we’ve been trying to get them to be more open to working with private sector partners,” said Bill Killmer, a lobbyist with the Mortgage Bankers Association. A HUD spokesperson said they’re reviewing their loan limits.

Builders have also been pressing the Biden administration to ease up on certain tariffs to reduce the cost of home construction. Last April, more than 10,000 members of the National Association of Home Builders urged the administration to suspend taxes on Canadian softwood lumber. But the trade dispute continues, and the US actually increased tariffs on Canadian timber companies in January. Lumber cost has come down recently, but builders say that’s just because construction is down.

“The Biden administration has done nothing to make lumber cheaper, and in fact, you could argue they are making it more expensive, due to overzealous environmental regulation that’s made it impossible in some cases to harvest in our own national forests,” said Jerry Howard, CEO of the National Association of Home Builders. Howard credited Biden’s team for reducing the cost of manufacturing chips but lamented that “the administration is focusing all of its efforts on very low-income housing.”

Kober, of the Manhattan Institute, argued Biden has embraced protectionist trade policies to help his reelection chances, even if it raises the price of housing construction and feeds into inflation. He criticized the Buy America rules included in recent federal legislation, arguing they will make building housing more expensive.

Buy America rules do not apply to market-rate housing or housing built with the low-income housing tax credit, but affordable housing advocates have expressed concern with how these new rules could impact existing subsidized programs.

A White House spokesperson defended the rules, saying “using American-made materials will help make supply chains more resilient and can reduce costly delays that slow down projects.”

Advocates remain cautiously hopeful about the potential for increased production of manufactured housing, which are homes largely assembled in factories. These houses are far less expensive to produce at scale than conventional “site-built” housing, and included in the federal omnibus bill was a new $225 million grant program for this sector.

But current federal policies discourage lenders from offering accessible financing terms to buyers of manufactured homes, and advocates like Jim Gray, a fellow at the Lincoln Institute for Land Policy, have been urging Fannie Mae and Freddie Mac to offer less expensive products.

“It has been an uphill battle,” Gray admitted. The Biden housing supply plan talked about promoting manufactured housing, and HUD has been focused on research in the area and working to improve relevant loans, but progress has been slow so far.

Yet there’s also been no real push to treat factory-made housing as an urgent federal investment priority like leaders have, say, electric cars or solar energy.

“The federal government could be saying, ‘Hey, we have an investor role to play in building American factories for entry-level housing,’ but instead they talk mostly about the annual HUD festival [on innovative housing models] they host,” said Metcalf. “That’s cool, but that’s not the focus we’ve brought to bear for other industries.”

Tackling the housing supply crisis will require big, industrial-level creativity on a scale comparable to what the administration brought to legislation like the Inflation Reduction Act and the Infrastructure Investment and Jobs Act. So far, on housing, that’s been missing. Winkler says he thinks the Biden administration has made “a good-faith effort to do what they can administratively, but without the substantial resources they had wanted to get in the reconciliation plan, their hands are somewhat tied.”

Many of the provisions of the administration’s plan “align with our own priorities,” he said, but “on the whole, that cannot in and of itself be transformational.”

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