Incentivizing Housing Production

For decades, the United States has produced housing at a rate inadequate to account for growth in population and the nation’s wealth. This underproduction is national and has reduced housing affordability in communities nationwide. Recent projections estimate that the U.S. is short millions of units, and certain states, like California, have a particularly significant gap between the number of units needed and those being produced. Numerous factors contribute to this shortfall in housing production, including high construction costs household income inequality, and limited availability of construction materials.

Local land use regulations, such as zoning policy, also play an important role. These regulations shape the scale and location of new housing development and can influence development costs. In the context of metropolitan jurisdictional fragmentation, some municipalities leverage local zoning to limit new housing construction and prevent lower-income families from moving in. Such limitations can prevent equitable access to opportunities like well-funded public services and employment for people of color and households in poverty.

Also Read: Affordable Housing & Gentrification