After a 30-year legislative drought, Congress has passed the most significant federal housing law in decades, aiming to address the nation's housing affordability crisis. The 21st Century ROAD to Housing Act, which became law on July 11, is built upon the premise that high housing costs are a direct result of overly burdensome regulations that make building difficult.
The bipartisan bill, negotiated by Senators Tim Scott (R-SC) and Elizabeth Warren (D-MA) along with Representatives French Hill (R-AR) and Maxine Waters (D-CA), synthesizes over 60 separate pieces of legislation. A central component, the Build Now provision, links federal block-grant funding to housing construction outcomes, rewarding cities that increase their housing supply and penalizing those that do not. Additionally, a $200 million annual innovation fund is established to incentivize measurable gains in housing supply.
The legislation also seeks to streamline federal processes that can delay housing development. It includes provisions to expedite federal environmental reviews for housing projects supported by federal funding. The Department of Housing and Urban Development is directed to develop guidelines for single-stair apartment buildings up to six stories, a change advocates believe could significantly increase housing density. Furthermore, the act eliminates a 1970s-era rule that required factory-built homes to be placed on a permanent wheeled chassis, a mandate that added substantial costs and limited the viability of manufactured housing.
The passage of the ROAD Act signifies a shift in federal policy, embracing the idea that increasing housing supply is key to lowering costs. This concept, often associated with the YIMBY (Yes In My Backyard) movement, has been gaining traction, with proponents citing international and domestic examples. In Auckland, New Zealand, upzoning efforts in 2016 led to a doubling of construction and an estimated 23 percent reduction in rents. Similarly, Austin, Texas, has seen its housing stock grow by 30 percent since 2015 through a decade of reforms including legalizing apartments and reducing parking minimums, with rents falling 6 percent in a single year.
Despite the widespread support and the law's potential, experts caution that its immediate impact on rent and ownership costs may be limited. The ROAD Act authorizes no new funds and leaves zoning decisions primarily at the local level. Critics argue that determined city councils could still impede development. National homebuilding has shown little sign of significant increase, and mortgage rates remain elevated, factors that contribute to ongoing affordability challenges.
Housing advocates suggest that addressing the complex issue requires a comprehensive approach, similar to what has been successful in cities like Austin, involving density, permitting reforms, and parking and lot size regulations. While the federal government has now addressed some of these barriers, local regulations still present significant hurdles. The passage of the ROAD Act is seen as a crucial step in building a national consensus on the causes of the housing crisis and laying the groundwork for future development, even if it does not provide immediate financial relief to renters and homeowners.