A Framework for Evaluating State Housing Policy Reforms

• In Event: New Tools for Understanding the Effects of State Housing Reforms

Abstract

Since the 1920s, local governments have held primary responsibility for regulating housing development through tools such as zoning laws. However, the growing political salience of housing affordability and limited supply over the past decade has led state governments to push back against local authority. Since 2018, more than 20 states have adopted some form of policy designed to encourage housing production, often through direct preemption of local laws. These laws are aimed at legalizing more diverse structure types (e.g., accessory dwelling units and duplexes) throughout residential areas, making the development process shorter and more transparent, and relaxing strict dimensional requirements, such as large lot sizes or offstreet parking requirements. 

State and local policymakers urgently need to know how well these policy changes are achieving their underlying goals. Have they resulted in higher quantities of new construction, especially in targeted locations and structure types? Have development timelines been shortened, yielding cost savings for new homes? Are there spillover impacts on the rents and prices of existing homes, or other changes in key housing market outcomes, such as vacancy rates? Elected officials who spent their political capital adopting new policies—or fighting against them—face the potential for backlash (reward) if policies don’t deliver tangible benefits by the next election. 

To date, few state policy changes have been evaluated using rigorous research design. High-quality evaluation of both direct outcomes and spillover impacts face serious methodological challenges. There is no centralized inventory of relevant policies (either baseline or changes over time). Many of the legislative changes have been complicated, with multiple components that require careful analysis. By definition, legislative changes are endogenous to political will; states that successfully adopt new policies at a particular point in time may be more “friendly” to housing in unobservable ways. Some states adopted laws with lengthy periods of implementation and uncertain enforcement mechanisms. New policies can interact with existing policies and market conditions in ways that complicate isolating the impact of the new law. And there are critical gaps in publicly available data on outcomes, including accurate, timely counts of newly built homes

Author

• Jenny Schuetz, Arnold Ventures
  Presenting Author