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Youngkin’s Housing Start

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Youngkin’s Housing Start

Virginia’s innovative governor unveils a promising, if incomplete, new plan. December 7, 2022
Economy, finance, and budgets
Politics and law

U.S. housing prices have risen 10 percent since last September and 41 percent since before the pandemic. Though prices have dipped slightly over the last three months, inflated costs remain a major problem. Policymakers around the country are trying to bring prices down, and a new proposal from Virginia governor Glenn Youngkin follows the right playbook but requires further elaboration.

America’s housing crisis is largely a supply problem. Data show that housing prices fell at an annualized rate of 1 percent in September, the third straight monthly decline. While this may seem like progress, the decline is largely driven by the Federal Reserve’s interest-rate hikes. A higher benchmark interest rate leads to higher mortgage rates, which means monthly payments—another measure of affordability—remain elevated.

To make housing more affordable, policymakers must boost supply relative to demand, while holding everything else, including interest rates, constant. The press release announcing Youngkin’s Make Virginia Home plan acknowledges the supply problem, promising to “promote increasing the supply of attainable, affordable, and accessible housing across the Commonwealth.” That’s a worthy goal; achieving it is another matter.

Research shows that the primary culprits behind high state and local housing costs are restrictive zoning and land-use regulations that artificially limit the housing supply. Youngkin’s plan is short on details, but it explicitly mentions establishing guardrails for local zoning and land-use review processes. The state would impose deadlines to stop local governments from slow-rolling approvals; such delays impose big costs on developers and make otherwise attractive projects financially infeasible.

The plan also calls to investigate comprehensive reforms of Virginia’s land-use and local zoning laws. But action, not study, is needed. Youngkin should consider allowing duplexes and triplexes by right, as in Minneapolis; making it easier to build accessory dwelling units (ADUs), as in California; and ending minimum parking requirements, as in Buffalo and other cities. Virginia could also prevent local governments from restricting housing by putting limits on local minimum-lot sizes, height restrictions, setbacks, and density requirements. Local governments often claim these regulations are justified for dubious reasons.

Make Virginia Home also hints at permitting and other regulatory reforms, such as streamlining environmental review and making it easier for developers to meet mandated wetlands and stream-mitigation requirements. Protecting the environment is important, but lawmakers are right to seek a balance between green goals and building the things people need—housing, roads, power plants—to live modern life. At the federal level, laws such as the National Environmental Policy Act make it too easy for trivial environmental concerns to derail construction projects. Virginia should give its own environmental rules a long look.

In addition to reforming, streamlining, and even eliminating some land-use regulations via state preemption, Youngkin’s plan also mentions an incentive to encourage localities to make such reforms on their own. Specifically, it calls for creating “reasonable linkages” between discretionary state funds and local government housing policies. In essence, discretionary state funding would flow to localities that liberalize land-use regulations. Local governments could still erect barriers to new housing, but they’d risk losing money.

Finally, the plan mentions building codes, an underappreciated factor behind high housing prices. Today’s codes too often focus on marginal safety improvements, showing no concern for the higher costs of compliance. Some simple reforms would help. For example, a code change to allow multistory buildings to have only a single staircase would lower construction costs, increase the variety of building designs, and facilitate more interaction among building residents, with little impact on safety.

Youngkin’s plan recognizes that local permitting rules, building codes, zoning laws, and land-use regulations are all making housing needlessly expensive—and it seeks to address them all. By trying, through the use of state funds, to motivate municipalities to enact their own reforms, it might also reduce the need for state preemption of local rules. Virginia’s governor is on the right housing track.

Photo by STEFANI REYNOLDS/AFP via Getty Images

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