Housing crisis forces bipartisan action

Population-dense blue states and fast-growing rural red states alike are scrambling to find solutions to the national housing crisis.

They’re grappling with an affordable housing shortage, acute homelessness and, in some places, a swelling population that outstrips supply. The collective problem grew over decades and was exacerbated by COVID.

In response, state legislative leaders said in a series of interviews that housing is among their top priorities for 2023.

“It’s all-hands-on-deck,” said New Mexico’s incoming House Speaker Javier Martinez (D).

Montana Senate President Jason Ellsworth (R) called affordable housing “a significant issue, and I think people need to be cognizant that we will be dealing with it” this session.

Housing investment needs to be “front and center because we certainly are struggling with affordable housing needs in our state,” Minnesota House Majority Leader Jamie Long (D) said.

The national picture is daunting. More than 580,000 people experienced homelessness on a single night in January 2022, and that’s likely an undercount. There’s a shortage of 6.8 million housing units for extremely low-income families.

Historic increases in rent prices and spiking home values have further compounded the underlying crisis. More recently, interest rates have been climbing which makes borrowing to purchase a house more expensive.

As state legislatures convene, lawmakers are considering a range of options to build more low-income units and ease the affordable housing gap. The proposals include more funding, tax incentives, new requirements for multifamily housing, and changes to home building regulations.

In Montana, Ellsworth said he wants to “rollback some of the red tape” to encourage more home construction in his fast-growing state.

“We can have a real impact with state law, just making sure that we’re not putting any barriers there to affordable housing,” Ellsworth said.

State lawmakers in both Democratic- and Republican-controlled states are also eyeing incentives to get more housing stock built.

Montana House Speaker Matt Regier (R) floated the idea of grants to spur new development while Washington State Senate Majority Leader Andy Billig (D) touted tax credits to encourage affordable and multifamily housing.

“You’ll see more targeted incentives like that to try to get, particularly, the development that we think is most responsible, which is infill development,” Billig said.

But Billig emphasized that the biggest impact will come from continuing to replenish the state’s Housing Trust Fund.

Last year, New Mexico’s Housing Trust Fund got a new, dedicated source of revenue when Gov. Michelle Lujan Grisham (D) signed legislation committing 2.5% of the state’s annual severance tax bond capacity for affordable housing. The state has estimated that it needs 32,000 more affordable rental units.

Martinez, the incoming New Mexico speaker, said low-income housing could get another jolt of funding this year thanks to a robust state surplus. But he noted that the housing crunch extends up the income ladder.

“We also need to target middle-class folks who, right now with higher interest rates, might be unable to afford a mortgage,” Martinez said.

Another problem Martinez cited is local zoning that prohibits multifamily housing in some areas.

Local zoning is also a topic of debate in Washington State, where state Reps. Jessica Bateman (D) and Andrew Barkis (R) pre-filed bipartisan legislation to allow fourplexes statewide and six-unit dwellings within a half-mile of a major transit stop.

But even as states scale up their response to the housing crisis, there are fresh hurdles: higher costs due to inflation, permitting backlogs and construction workforce shortages.

Last year, Rhode Island lawmakers committed a record $250 million to address the state’s affordable housing crisis and made it easier to permit low-income housing projects.

Senate Majority Leader Ryan Pearson (D) said the next step is to make sure the housing gets built.

“Now they need to go deliver, and if something’s getting in their way then they need to come to us and let us know,” Pearson said.

A similar shift is happening in Colorado, where lawmakers have also invested significant sums of money in housing in recent years.

“The focus this year is going to be around policy changes, and how the state and regions and cities all … collectively work together to address the housing crisis that we’re seeing,” Senate President Stephen Fenberg (D) said.

Fenberg said there is also interest in giving seniors and people on fixed incomes property tax relief.

Utah House Speaker Brad Wilson (R) also highlighted tax policy.

“We have a number of policy initiatives related to housing affordability, and you will also see a number of tax cut options,” Wilson said.

Besides contributing to homelessness, the nation’s lack of housing is exacerbating workforce shortages — something all states face. South Dakota Senate President Pro Tempore Lee Schoenbeck (R) said that developing workforce housing is among his top priorities for 2023.

“Communities need a labor force, and the No. 1 impediment to attracting labor is available housing,” Schoenbeck said.

A $200 million workforce housing program is currently on hold after getting ensnared in a dispute between legislative leaders and Gov. Kristi Noem (R). But Schoenbeck expressed confidence that planned changes to the law in 2023 will satisfy the governor’s concerns.

“We’re gonna put a bow on that … right at the beginning of the session,” Schoenbeck said.

Several governors are also pitching ideas on how to address the housing crisis.

New York Gov. Kathy Hochul (D) recently announced a plan to build 800,000 housing units over the next decade. Washington Gov. Jay Inslee (D) proposed a voter referendum to approve a $4 billion bond measure to build 26,700 affordable housing units over the next eight years.

Hawaii estimates it will need 50,000 additional housing units in the years ahead. To meet that need, newly elected Gov. Josh Green (D) is developing a plan that could involve taxing investment properties and cracking down on vacation rentals.