For a break with past practices on housing affordability, it’ll be hard to beat the 21st Century ROAD to Housing Act, newly passed by Congress with overwhelming bipartisan majorities.
In a single package, the act rethinks a century-old approach to zoning that has contributed to the housing shortage; makes an offer of federal housing funds for communities actually allowing housing to be built; and strips away an outdated regulation that has put the American dream of homeownership out of reach for far too many families.
By themselves, each of those three measures qualifies as a significant achievement. Combined, they stake out a new approach to federal housing policy–one that focuses less on subsidizing housing after it has already become far too expensive and more on making housing less costly to build in the first place.
The bill now needs to become law, one way or another. For now, it’s worth recognizing the 21st Century ROAD to Housing Act for what it is: a milestone in housing legislation that could pave a path to better lives for millions of families.
It’s a big bill, comprising 56 provisions designed to tackle housing barriers from multiple angles through an “all hands on deck” approach that combines regulatory reform, incentives, flexibility, and more effective use of existing federal programs to make housing easier to build. Of those 56 provisions, three are standouts:
- the Build Now Act
- the Housing Supply Frameworks Act
- Housing Supply Expansion Act
Here’s what each of them does.
Build Now: The offer too good to refuse
The Build Now Act does something highly unusual in federal housing funding: It creates a tangible incentive for communities to build more housing. Unlike traditional federal housing grants, which are generally allocated to communities based on measures of need, the Build Now Act will reward communities that build more homes.
Build Now doesn’t tell communities how to do this by dictating a process or a set of rules. It simply offers more federal funding for more housing. It’s exactly the kind of approach that promises to deliver the kind of results the nation needs in order to address the housing shortage.
Build Now’s nuts and bolts
A budget-neutral pilot program, Build Now aims to improve the Community Development Block Grant (CDBG) program formula by rewarding high-cost jurisdictions that build more housing.
The CDBG program was designed in the 1970s to help communities beset by high rates of poverty, overcrowding, and aging housing stock. In high-cost metro areas; however, restrictions on home building aggravate those conditions, raising housing costs, pushing families into poverty and overcrowded homes, and increasing the cost of replacing older units.
Build Now’s innovation is to incentivize better policy in high-cost metro areas by giving extra CDBG funding to help those that allow substantial housing growth deal with any resulting growing pains. This money will come from reduced federal allocations to high-cost metros that continue to discourage growth through local policy, and where federal dollars would accomplish the least. Because the bonus is financed entirely by reallocating existing CDBG funds, it comes at no additional cost to taxpayers.
The Build Now Act applies only to jurisdictions with the most expensive housing, leaving the majority of the country untouched. We recently described the mechanics of the incentive here.
With federal funding on the line, local jurisdictions have a stronger incentive to reform restrictive zoning, streamline permitting, and remove other barriers to housing production. These changes will help to moderate the costs of housing across the entire region. For families on the cusp of homeownership or struggling to afford rent each month, this could mean the difference between being able to save toward a downpayment or pay for extras like kids’ after-school activities and not.
HUD now needs to translate the Build Now Act into a clear incentive program to give local governments confidence that increasing housing production will be rewarded — that is, that the federal government will meet its end of the bargain.
Housing Supply Frameworks: Dismantle and build anew
The Housing Supply Frameworks Act takes aim at fixing a problem created over a century ago: It directs HUD to update the 1920s-era federal model zoning codes that laid the foundation for the regulations blocking housing construction today. HUD is also to provide guidelines, best practices, and technical assistance to help reform state and local housing regulations: reducing parking requirements, increasing allowed building sizes, and expanding by-right permitting among other key changes.
Many state and local government officials want to allow more housing but lack the staff, technical expertise, or political roadmap to modernize decades-old zoning codes and development regulations. It doesn’t offer incentives as the Build Now Act does, but for jurisdictions that choose to use the guidance, the Housing Supply Frameworks Act will help remove these obstacles to improved housing affordability.
There’s evidence to support this approach: Places that have adopted changes such as those the Housing Supply Frameworks Act envisions have seen rents and home prices stabilize or decrease. In Austin, Texas, for example, in 2017 the city streamlined the permit approval process, allowed development of smaller homes on smaller lots, and relaxed some regulations on lower-cost homes. The result: more affordable rents and home prices since 2022.
The next step is for HUD to turn the Housing Supply Frameworks Act into practical guidance for state and local governments. Its recent report outlining best practices for home construction suggests that it’s ready to take on the challenge of providing a useful, comprehensive set of tools and guidance to communities to improve housing affordability.
It’s ‘wheels up’ on manufactured housing
The third provision, the Housing Supply Expansion Act, may be the sharpest break with stagnant housing policy. It’s designed to pave the nation’s most affordable path to homeownership by eliminating an expensive, outdated regulation on the most affordable homes by removing the HUD Code requirement that every manufactured home include a permanent steel chassis. Although the chassis requirement was originally intended to ensure that the homes can be easily transported, the vast majority of manufactured homes are never moved after their first installation.
The chassis may rarely be used, but they’re not cheap. Removing them could reduce the cost of manufactured homes by $5,000 to $10,000 per home, more than 10 percent of the purchase price for many of them.
Removing the chassis requirement will have a significant secondary benefit in that it will make two-story manufactured homes more feasible since it eliminates the need for a heavy trailer chassis between the first and second floors. Given the broad appeal of two-story homes, the impact could be substantial.
Because manufactured housing is the nation’s largest source of unsubsidized affordable homeownership, even modest reductions in cost could make ownership attainable for hundreds of thousands of additional families.
Realizing those savings will require more than changing federal law. HUD must revise manufactured housing construction standards, while states, lenders, and local governments will need to update regulations and practices based on the assumption that every manufactured home includes a permanent chassis. Coordinated action by each of these partners will be essential to ensure families see the benefits of Congress’s reforms as quickly as possible.
A powerful combination
The 21st Century ROAD to Housing Act matters. These three provisions each tackle a different barrier to housing production: aligning local incentives with housing growth, giving communities the tools they need to succeed, and removing obsolete federal regulation that hurts affordability for working families.
But there is much more to be done. Realizing the promise of the act will depend on thoughtful implementation by HUD, states, local governments, lenders, manufacturers, and other partners. And it is still far too difficult to build anything other than a single-family home in most parts of the country. All of this points Congress in the direction of the next milestone in housing reform: eliminating the next line of barriers to more affordable housing.
