Earlier this year governors from around the country and both parties gathered to share ideas on how we’re solving the most pressing challenges. At the top of the list was housing affordability.
All across the country — from big and mid-size cities to small rural towns — Americans are struggling with an unaffordable housing market. With low housing supply, the highest interest rates in 20 years, zoning restrictions and other contributing factors, we risk a generation of Americans missing the chance to build long-term economic stability and civic roots through homeownership.
But as governors from the opposite ends of the political spectrum, we are seeing a growing bipartisan focus and innovations from states across the country. That is reason for optimism.
At a recent conference, governors from states as diverse as Montana, Hawaii, New Jersey, North Dakota and Maryland shared ideas on what they’re trying and what is working.
The ideas included cutting permitting times for builders, legalizing “granny flats," allowing apartments in commercial districts, decreasing parking restrictions for urban living and reducing minimum lot sizes for starter homes. The through line of all the ideas is that we need more housing supply of all sizes and types.
In Oregon, we allowed duplexes to be built in areas zoned for single-family housing and up to four homes on almost any residential lot in cities of a certain size. Since these reforms were enacted, an additional 5,000 affordable homes were developed as compared to the previous three years — a number that continues to grow each year. If the increase in federal housing credit allocations were approved, an additional 26,400 affordable homes could be financed throughout Oregon.
In Utah, by some measures the fastest-growing state in the nation, we increased the Utah Low-income Housing Tax Credit from $1 million to $10 million annually and are leveraging state funding to prompt cities to reform their zoning requirements to allow more moderate-income housing and generate more housing near public transit. We also created a $300 million revolving loan fund to provide inexpensive financing to builders to produce homes that are affordable for the average working Utahn.
We’re seeing the impact already, with 1,500 new affordable housing units being built in nine different communities throughout the state. That number is expected to increase by 600 to 700 each year for the next ten years.
Now, what can the federal government do to help? As in most policy areas the federal government should defer to states and localities to continue to be laboratories of innovation and play a supporting role when helpful.
In that spirit, we would like to see an increase in the federal Low-Income Housing Tax Credit, which has long been the country’s largest source of affordable housing financing, subsidizing nearly 4 million affordable homes since it was created in 1986. The impact of this tax credit has not kept pace with the growing need for affordable housing as the median price of a home has doubled in the last 20 years.
With overwhelming bipartisan support, the House of Representatives passed legislation earlier this year, the Tax Relief for American Families and Workers Act, that would temporarily expand the program and unlock investment in more housing. We both support the bill and encourage the Senate to pass it.
Both our states are working on additional reforms and new funding mechanisms to advance our affordable housing goals, including “Utah First Homes” to create 35,000 new starter homes by 2028 and a nearly $400 million housing package in Oregon with development interventions to spur more housing production. We’re also closely following the innovations in other states and will happily steal their good ideas that work.
We both recognize the “not in my backyard” attitude is a real thing. There will always be some who don’t want to see more housing in their neighborhoods, particularly smaller starter homes, but when framed as a question of whether their kids will be able to afford a home, most people recognize the value of more housing supply. We all want our kids to have the American dream, and having grandkids nearby can be a powerful incentive!
We’re thrilled to see New Mexico Gov. Michelle Lujan Grisham, new chair of the Western Governors Association, tackle housing as her signature chair’s initiative over the coming year. Governors want to learn from each other across party lines. And housing is no different than any other economic good that follows the law of supply and demand—the key to decreasing cost is increasing supply. We’re committed to that principle and hope our federal partners will support us.
Tina Kotek (D) is the governor of Oregon. Spencer Cox (R) is the governor of Utah.
