A shortage of inventory remains a market obstacle. One 2024 estimate from Zillow found that the U.S. has a 4.5 million unit deficit. The latest housing report from Redfin also found a recent inventory high can be attributed to many homes sitting unsold.
Though this is an issue felt on the national level, housing regulations are shaped at the local level—so how are local lawmakers reacting?
In November 2024, U.C. Berkeley’s Terner Center for Housing Innovation published a report tracking six recently implemented state-level pro-housing designation programs. These programs generally offer municipalities priority access to state grants if they can demonstrate either a certain minimum of new building permits or pass favored housing policy. Some of the programs have voluntary participation, though a couple are required.
“These are state laws or programs that encourage local governments to take action on housing supply and affordability,” said Shazia Manji, co-author of the Terner Center report. “They give localities an element of choice in what reforms to adopt. They aren’t meant to substitute for broader state housing regulations, but they are complementary tools that can help address the housing crisis.”
On January 22, the Center held a webinar, hosted by the Center’s Managing Director Ben Metcalf and featuring comments from one of the report’s authors and consulted representatives from California, Massachusetts and Utah.
The report comes with the asterisk that, because the programs are so new, the results can’t be measured yet. Instead, the report focuses on structural evaluation—how the programs differ in incentives offered, if measurements are based on building permits or policy, ultimately offering suggestions to ensure participating localities are consistently successful in achieving program goals.
The six programs examined are in Massachusetts, California, Utah, New York, Montana and New Hampshire, with most having been passed or implemented in the last couple years.
Common features and differences between pro-housing designation programs
The incentive structure is key to the programs. The report consulted (and the webinar featured as a panelist), Steve Waldrip, Utah’s senior advisor for Housing Strategy and Innovation and a former state representative who helped pass the state’s plan. On the webinar, he noted Utah’s previous housing efforts did not have the desired impact.
“Without a couple more carrots and a couple more sticks…it wasn’t having that depth of an impact. A lot of communities were simply giving it lip service, because there was no real significant incentive for them to do it and there wasn’t really an appetite to go after them either,” Waldrip said. “And we’ve seen greater compliance (since amending the incentives).”
Kristen Guichard, a planning director and zoning enforcement officer for the town of Acton, Massachusetts, said on the webinar that her town’s “primary motivation” for applying to the program was “the financial benefits.”
“Since its designation, Acton has received close to $1 million in direct housing choice grant funds to support sewer and water connections for affordable housing projects, sidewalk construction to existing affordable housing projects, (and) planning grants to establish multifamily housing districts,” said Guichard, highlighting the broad range of incentives that localities can receive and put into effect by participating.
“It has also boosted our evaluation points when applying for other grants,” she added.
The exact policies, and housing unit types, encouraged by the programs vary from state to state. The report notes that each program was (and should be) designed to address the specific housing needs of the state it is covering.
However, there were some common big-picture priorities that recurred across several (though not all) of the programs.
Policies prioritized in several of the pro-housing designation programs included: land use and zoning reform, subsidies for construction, promotion of fair housing and sustainability practices, streamlining processes and addressing development costs.
The types of housing units typically encouraged included accessory dwelling units (ADUs), multifamily complexes, senior housing, single-room occupancies and low-income housing or housing for people facing homelessness.
Within this broad spectrum, different programs addressed different priorities. For instance, only the programs in California and Massachusetts encourage localities to take action on environmental sustainability in housing. Conversely, every state program except Massachusetts’ focused on reducing development cost fees.
The two areas that all six state programs focused on were 1) making zoning and land use more conducive to new development and 2) changing zoning laws to allow for the construction of ADUs within single-family zones. Furthering support for ADUs, Massachusetts also passed in 2024 a statewide allowance for their construction in SFH zones, going into effect this February.
The focus on local effectiveness is why instead of mandating a list of policies that localities must adopt, several of the programs offer lists of suggested policies to implement and allow localities to choose from within that list.
For instance, New York’s program has a lower threshold for new building permits in upstate localities (0.33% improvement a year) than in downstate localities (1% improvement a year) because upstate New York tends to be more rural than downstate. Thus, it does not make sense to hold the two regions to the exact same standard of new construction
Program administrators consulted on the report said that continued flexibility will be key to ensure a wide impact on many localities via broad accessibility. The report also notes that four of the six programs—Massachusetts, Utah, Montana and New Hampshire—were designed and passed with input from local stakeholders, such as housing and planning practitioners, lawmakers and housing advocates.
Surveyed administrators said this was an essential step to create “buy-in” and “political will” for local governments’ adoption of the programs. Waldrip added on the webinar that pro-housing designation programs mean local governments “are forced to really confront the NIMBYism that drives a lot of local policymaking,” which can and has resulted in backlash.
However, the report also notes that there can be too many cooks in the kitchen:
“Too much flexibility may dilute the adoption of policies shown in the literature to have the most significant impact on production and affordability, leading to pro-housing designation programs with limited impact. Additionally, upfront negotiation with stakeholders, while valuable for increasing buy-in, may lead to the development of weaker programs that are more politically palatable to a broader set of constituents.”
For instance, the report noted that the limited scope of the Montana program (applying to only 10 of 129 localities) was the result of “political compromise made to
ensure the bill had the support needed to make it through the legislature.”
While Massachusetts and New York’s programs measure based on building permits issued, California, Montana, New Hampshire and Utah measure based on policy or resolutions implemented by the localities. Philosophically, this difference was described by panelists on the webinar as the difference between rewarding pre-existing “good behavior” or changed behavior.
The choice of measurement comes with practical pros and cons, listed in the report. While tracking building permits issued during recent years is a more direct and trackable measure of new housing construction, it is also a “backwards looking” metric, i.e., it rewards something that has already happened and which might not have even been the result of current lawmakers (i.e., a high number of building permits can also come from a new business opening, or from decisions by lawmakers no longer in office). Conversely, grading by policy rewards the actions of current lawmakers more directly, but it is also harder to track the concrete results of those policy changes on local housing construction.
Striking a balance between this, said Chris Kluchman (director of the Livable Communities Division for the Massachusetts government) on the webinar, is why the Massachusetts program offers funding based on either high permit issuances or lower permit increases coupled with adoption of best practices.
“How do we not reward communities that are kind of doing nothing but they’re getting development?” she said, describing one of the questions that the program planners asked. Another concern that led to the Massachusetts model was “recognizing that there are some markets that may not support market rate development of housing. There’s just not demand.”
Due to the comparative ease of linking permit issuances to results, the report suggests that states should “leverage building permit data” to track the effect that pro-housing programs are having on new construction (including which types of units are being built, and how this responds to the localities’ needs) and affordability in the participating localities. The report argues that states should take an active role in monitoring progress and make “robust evaluation(s).”
In turn, the states should be ready to adjust the programs (e.g., changing incentives) if the desired results are not being met or if any external factors (such as newly passed statewide housing laws) change the local housing sector—as well as offer tools and assistance to localities if they struggle to meet goals due to limited capacity or tools.
John Bauters, a city council member in Emeryville, California, noted that his town traditionally struggled to meet its ambitious goals before the Prohousing Designation Program.
“As a really small urban community, the money that’s available from the state and HCD for projects is extremely competitive in California. And the scoring for those projects often comes down to just a couple points as to who is a recipient and who may not be. And in our case, despite our urban location, our small boundaries put us just outside of a distance set in many of the grant programs for proximity to transit,” he explained, adding that the Prohousing Designation Program “opened up” Emeryville to compete for other grants.
Asked by Metcalf why they would encourage other cities or states to participate in pro-housing designation programs, Guichard cited the additional grants that have come to Acton—though Bauters said “the jury is still out” on the effectiveness of the California program. Kluchman said the opt-in and reward-based structure encourages the amplification of and communication between local governments, while Waldrip argued that “narrow tailored rewards” are key.
“This is one tool in the toolbox. Part of the challenge, I think, is cities don’t build houses,” he explained, so it is important to reward “people who are actually impacting the landscape.”
Waldrip brought the conversation back to “common-sense solutions” to housing problems, saying that outside (or along with) the pro-housing designation conversations, that he hopes to see more of a dialogue with the Trump administration around housing polices, including workforce housing and the use of federal properties—something Trump previously promised he would leverage to alleviate the housing shortage.
“We have national parks out here where people who work at the national park have to drive two hours because they can’t live anywhere near there,” he said. “We have forest service employees who have to live an hour away, because they can’t afford to live in those places.”
For the full report, click here. For the webinar, click here.
