While national media has focused on the first weeks of the federal administration in Washington, far less attention has been given to the hundreds of state and local legislatures that have just kicked off their new sessions. It’s common for these legislative bodies to begin with the issues that resonated most with voters in the recent election—and housing is high on that list.
Across the country, state legislatures and local councils have introduced hundreds of bills addressing housing. States like Washington and Colorado have been particularly active, with new housing-related proposals emerging almost daily. In a bid to claim they have found "the solution” to the intractable housing affordability crisis, lawmakers have floated a wide range of policy approaches. Some of these proposals may indeed help, while others—though well intended—could set efforts to create more housing opportunities back for decades.
These policies generally fall into two categories: pro-housing approaches that make building housing easier, and regulatory approaches that restrict rental housing operations and add costs, reflected in higher rents. A prevalent trend is the knee-jerk regulatory response that seeks to further restrict the parameters in which housing providers operate. While this approach may look good on paper, economic research and data tell us that it often fails to address the underlying market problem. In fact, the additional regulations only add cost to both the construction and ongoing operation of housing, thereby making affordable options even less available for renters.
Rent Regulations
Despite decades of research demonstrating that rent control and similar policies reduce rental supply and worsen affordability, lawmakers continue to introduce them. Evidence shows that areas with rent control often experience reduced investment, diminished housing quality, and limited opportunities for new development that can affect communities for decades.
Limiting the Use of Rental Pricing Software
In an era when real-time rental data is crucial for matching renters with available homes, some legislators are proposing restrictions on pricing software. Technology can play a key role in helping providers and renters monitor dynamic rental markets and adjust rates accordingly. Laws that stifle this innovation risk making it even harder for renters to access limited housing options.
Reducing Barriers to Housing Construction
Some states and localities are taking a deregulatory approach—removing zoning requirements and streamlining permitting processes to open up land for apartment development. In places as diverse as Minneapolis, Minnesota and Florida, such efforts have already produced tangible benefits for renters. For example, Minneapolis’ removal of single-family zoning and other improvements in its permitting process and general development conditions resulted in an average rent increase of 1% from 2017 to 2022 (compared to 14% in Minnesota overall). Nearby St. Paul, which adopted a strict rent control policy instead of focusing on improving development conditions, saw a 48% decline in multifamily building permits issued in 2022, while Minneapolis saw a 16% increase that same year.
Enhancing Financial Incentives for Building
Many jurisdictions have long offered financial incentives to spur multifamily housing construction. However, in today’s high-interest and rising-cost environment, older programs may no longer be sufficient. Legislators could update and strengthen tax abatements, local tax incentives and grant programs to jump-start housing development.
While the push to address the housing crisis is fueled by well-intentioned legislative action, research tells us that a heavy-handed regulatory approach will likely drive up costs, hamper new development, and restrict housing supply even further. The housing policy choices that states and localities make this year will impact their constituents for years to come. Lawmakers and voters should not be fooled into thinking that more restrictive approaches will help current renters and also give careful consideration to their own children, grandchildren, and other renters of the future who could end up living in a “housing hell” with far fewer affordable housing options at lower quality resulting in less desirable communities for all.
