Increasing overall housing supply
- Reducing pressure at all price points: Local governments generally have a range of legislative, regulatory, and operational levers to create the conditions for increasing overall housing supply in their communities. A substantial increase in the total supply of housing, regardless of price point, reduces the rate at which housing prices rise and increases affordable housing supply. Without the ability to build denser housing, any local strategy to create new affordable homes will be limited in its effectiveness.
- Passing supply-friendly rules and regulations: Many local rules and regulations can be reformed to facilitate increases in the net total of available homes. Such changes, which have demonstrated effectiveness both in strong and soft markets, include eliminating or reducing the use of single-family zoning (where the only legally permitted structures on plots of land are single family homes), upzoning (permitting denser housing), adapting building codes to enable more efficient construction, and encouraging mixed-use developments. Many of these changes are legislative, requiring passage by a local council.
- Taking a supply-focused approach to land use: Similar to zoning reform, local governments can further increase housing supply by writing new rules on land use requirements. This can include lifting restrictions on accessible dwelling units, reducing parking requirements, reducing minimum lot sizes, and more. Some communities may also facilitate the construction of more affordable housing through the establishment of community land trusts, strategic leveraging of land banks, or enabling housing construction on public land.
- Incentivizing development: In addition to zoning and land use, jurisdictions can provide financial incentives for significant increases in available housing units. Such approaches may include tax abatements, tax exemptions, and appraisal gap financing (covering the difference between the appraised and market value). These incentives can be applied both to new construction and significant rehabilitation of dilapidated units.
- Streamlining permitting processes: A relatively low-cost component of a broader housing supply strategy can include updating processes for construction permits, environmental reviews, and waiving related fees. Such changes are mostly operational, and can facilitate more rapid housing development and, in turn, a more favorable building environment.
What evidence supports this strategy?
While multiple rigorous analyses demonstrate that strategies to increase overall housing supply can be effective, further research is needed to confirm effects across locations and market types.
- A 2021 quasi-experimental study found that higher-density zoning was associated with increased housing supply and development density.
A 2018 empirical review and theoretical analysis found that increases in overall housing supply moderate price increases, thus making more housing affordable to low- and moderate-income residents. However, further research is needed to confirm effects across markets and conditions.
A 2014 literature review found that restrictive land use policies can raise house prices and reduce new construction.
How does increased housing supply impact economic mobility?
- Increasing access to quality housing: Many housing development strategies focus on increasing the number of available high-quality units. Research shows that increased access to high-quality housing can improve health, education, and lifetime earnings.
- Reducing rent in low-income communities: Research shows that new market-rate housing can decrease nearby rents by 5-7 percent, thus increasing affordability. Significant evidence demonstrates that high housing costs, especially for low-income individuals, limits the ability to save for other costs, reducing access to key upward mobility levers such as education and health care.
Best practices in implementation
- Use overall supply as a lever for affordability: Shifting a market towards more affordable housing requires more housing supply overall. Incorporate both direct efforts to facilitate more affordable housing, like land banks and housing construction on public land, and a comprehensive suite of supply-side reforms that will allow for density (i..e. upzoning) and more rapid development (like expedited permitting).
- Solicit public input: At the beginning of any process seeking to increase overall housing supply, launch a robust public engagement effort targeting two separate audiences: community members and developers. For residents, hosting public forums, conducting focus groups, and administering surveys to pinpoint community concerns can build trust and buy-in. These sessions should begin far in advance of any zoning or legislative changes, and include a wide range of materials to help residents understand how their neighborhoods might change, including extensive use of visuals and 3D models. For developers, direct engagement through interviews and roundtables may help identify which types of interventions will most meaningfully change the status quo.
- Conduct neighborhood-level analysis: Invest in staff and software capacity to analyze market conditions at a hyperlocal level. Analyses should be shared extensively with community residents and generally done in tandem with resident engagement, which can yield significant qualitative and quantitative data to enrich findings. A rigorous neighborhood analysis can help a jurisdiction identify priority areas for interventions and tailor specific programs and policy levers to maximize impact on a block-by-block level.
- Identify operational constraints: Reforms intended to increase the total quantity of housing in a community can begin with simple assessments of government operations. For instance, permitting may include burdensome paperwork, duplicative applications, or slow processing periods, creating significant costs and disincentives for developers to invest in building new housing. Conducting a formal evaluation and including all relevant agencies can facilitate a smoother, quicker process for builders.
- Make a multi-pronged case for reform: Especially for changes that include legislation, frame increasing housing supply as a multidimensional issue with a range of benefits. This can include achieving goals in areas beyond housing affordability, such as racial equity, desegregation, regional economic development, and climate change.
Community-owned or public entities that acquire troubled properties and transform them into community assets
Land development approach merging distinct uses (commercial, residential, leisure) for greater density and diversity in a given geographical area
Local regulatory action shaping development, design, and built environment of communities and municipalities