Laying Foundations: Momentum Continues for Housing Supply Reforms in 2024

Last year, we reported on the accelerating pace of state-level housing supply reform, with major victories in four states and laws being enacted across the country. This year, state legislatures kept up the pace, with 263 individual bills under consideration that would contribute to easing the regulatory burdens on homebuilding, touching on areas from accessory dwelling unit (ADU) permitting to building code reforms. With most state legislatures having adjourned for the year, we can take stock of this year’s successes and failures:

• In the first six months of 2024, states enacted 50 housing supply bills, compared with 30 enacted during the same months in 2023.
• In the past 12 months, 65 housing supply bills have been enacted in 20 states (see figure 1).
• Several states that had previously enacted major housing supply bills (such as California, Florida, and Rhode Island) continued to advance legislation building on or refining their previous reforms.
• Colorado and Arizona were the year’s comeback stories, enacting major housing packages after very public failures last year.
• Two more high-cost states, Hawaii and Maryland, made strong opening bids in the zoning reform game.
• The year’s new trend is building code reforms. Five states took steps toward allowing “single-stair” multifamily building designs up to six stories.
• Legislators in Vermont and Kentucky moved in the opposite direction, reversing housing supply reforms. Another counterproductive tactic cropped up in 10 states, where legislators introduced bills to prohibit institutional investors from buying single-family homes. However, none of those bills has passed.

Housing Is on the Agenda 

This year, the divisions between cheaper and more expensive regions of the country were apparent in state legislatures. In many states, housing supply is firmly on the policy agenda: governors highlight it, legislators debate it, advocacy groups promote it, and journalists report on it. Such states often have legislative committees with “housing” in the name. This is no guarantee of success. In New York, a vigorous public debate has yielded a firm “no” so far. But in New York and in some 20 other states (highlighted in figure 2), the debate will continue. By our judgment, housing supply is on the agenda in most of the East Coast, West Coast, and Mountain West states.

In some states, a single leader defines housing supply’s place in the legislative debate. For example, in Rhode Island, land use lawyer and House Speaker Joe Shekarchi (D-Warwick) introduces an annual flotilla of relatively modest bills, most of which are enacted. His continued success points to the ongoing relevance of high housing costs in the Ocean State. 

In California, the epicenter of the American housing supply crisis, housing supply is not only on the agenda—it is a top-tier issue. In late 2023, the Golden State enacted more than a dozen housing supply bills, primarily making reforms to the permitting process but also refining ADU law and making the state’s required local planning process more stringent. Dozens more housing supply bills have been introduced in 2024 and remain under consideration as of this writing.

From the Blue Ridge Mountains to the Front Range, housing costs are lower, local regulation is less burdensome, and housing supply is largely a niche issue in state legislatures. When ambitious housing supply bills are introduced, such as Kentucky’s HB 102, they usually expire in committee. Occasionally, a narrower bill will be enacted as part of the push and pull among housing industry stakeholders. Iowa’s HF 2388, which preempts restrictions against lower-cost exterior materials, is a good example, as is North Carolina’s H.488 (2023), which shifted triplexes and fourplexes to the single-family building code.

The largest two Sun Belt states—Texas and Florida—are exceptions to the pattern. Florida Governor Ron DeSantis signed the Live Local Act into law last year, and a “cleanup” bill tweaked those reforms this year. With its nonmarket affordability mandates, the Live Local Act was not the kind of bill an observer of national ideological trends would expect to pass a Republican-dominated legislature. Texas’s legislature did not meet this year, but its cities picked up a vigorous debate that began in the 2023 legislative session.

As housing supply debates spread, we are interested to see whether the YIMBY (yes in my backyard) versus NIMBY (not in my backyard) terms of debate familiar in coastal states take hold in the Midwest and the South or whether housing supply is framed differently in those regions.

Colorado Comeback 

In 2023, Colorado disappointed advocates when suburban Democrats joined with Republicans to vote down Governor Jared Polis’s housing package. Polis vowed to try again, and this year most of his proposals passed into law. 

Polis’s centerpiece is HB24-1313, which sets zoning targets for major municipalities. Those cities must change their zoning to accommodate a “housing opportunity goal” that scales with the amount of buildable land near transit. The 2024 version allows cities more flexibility in how to accomplish the goals than the 2023 version did. More concerning for advocates, the main fiscal stick—cities that don’t comply would have lost highway funding—was removed. Despite the changes, the bill may be the most significant “transit-oriented development” statute of the YIMBY era.

The Centennial State enacted several other bills:

• HB24-1304 eliminates mandatory parking minimums for multifamily and mixed-use buildings near transit in metropolitan planning organization (MPO) areas. Localities can require parking if they issue a finding of need in some cases, a concession compared with last year’s bill. 
• HB24-1152 requires cities with populations of 1,000 or more in MPO areas to administratively permit one ADU per lot in all single-family residential zones. 
• HB24-1007 preempts limits on unrelated adults sharing a house. 
• HB24-1107 discourages lawsuits against city decisions to allow housing and allows development to continue while a lawsuit is pending.

Colorado’s success came despite Republican opposition, bucking the trend we hypothesized last year that “minority opposition dissipat[es] majority appetite for reform.”

Phoenix from the Ashes 

Along with Colorado and New York, Arizona was a major 2023 disappointment to housing supply advocates. This year, Arizona’s housing supply package was second only to Colorado’s. (Of New York, the less said the better.)

• HB 2297 requires cities with populations over 150,000 to permit multifamily residential development on land amounting to 10 percent of existing commercial, industrial, or mixed-use buildings. 
• HB 2721 requires municipalities with populations over 75,000 to permit houses with up to four dwelling units within one mile of the city’s central business district, without regulating them more strictly than single-family homes, requiring owner occupancy, or requiring more than one parking space per unit. 
• HB 2720 requires municipalities with populations of 75,000 or more to allow two ADUs on all single-family lots.

ADU bills have steadily improved, closing common loopholes by preempting local parking requirements and owner-occupancy restrictions. HB 2720 exemplified this trend, prohibiting cities from imposing eight restrictions that tend to prevent ADU construction.

Not everything passed was enacted, however. Governor Katie Hobbs vetoed HB 2570, which would have capped minimum lot sizes and dimensional restrictions in municipalities with populations of 70,000 or more. In contrast to Colorado, Arizona shows the possibilities and limits of a bottom-up, bipartisan approach without gubernatorial leadership.

Housing Hawaii

Hawaii—home to the most expensive housing in the country—debated a score of bills. Two were enacted:

• SB 3202 requires counties to adopt ADU ordinances allowing for either the construction of at least two ADUs per lot or enough ADUs to house one-half of the county’s share of projected five-year population growth. The bill also preempts county prohibition of separate sales of ADUs from their main unit, and it requires Honolulu County to rezone to accommodate its entire share of projected growth. 

• HB 2090 broadly permits residential construction in commercial districts, although it allows counties to reserve first floors for commercial use. It also requires counties to write permissive adaptive reuse ordinances.

Maryland Mentioned

Maryland’s Wes Moore was one of several governors who put housing supply reform near the center of their legislative agendas. However, the initial draft of his “Moore Housing” package undermined its own effectiveness by requiring a large percentage of units to be deed-restricted affordable. Urbanist advocates argued decisively that the high affordability requirements undermined the bill’s intent. Over the course of the markup, however, HB 538 was geographically narrowed and economically broadened. The reduction in affordability requirements was not a poison pill for Democratic legislators, who voted for it near-unanimously.

As enacted, HB 538 has several provisions:

• It requires localities to allow manufactured and modular homes in single-family zones.

• It offers significant density bonuses for multifamily housing in commercial and mixed-use zones near transit, provided that 15 or 20 percent of the units are deed-restricted affordable at 60 percent of the area median income.

• It allows housing construction or density bonuses on land owned by nonprofits, including churches, and certain state-owned campuses, provided that 25 percent of the units are deed-restricted affordable at 60 percent of the area median income.

Single-Stair Levels Up

Last year, we remarked on the failure of “everything bagel” housing omnibus bills, which attract the maximum number of opponents. This year, no state has seriously attempted a similar effort (bills to that effect have been introduced in Massachusetts and New Jersey, but they do not have the imprimatur of the state’s executive or legislative leadership, and similar bills in Kentucky and Nebraska died a lonely death). The theory that such bills act as beachheads for later reform was bolstered by this year’s successes in Colorado and Arizona.

The rapid success of “single-stair” building code reforms this year illustrated the promise of going small. Single-stair reforms involve changing state or local building codes (not zoning) to allow residential structures up to six stories to be built with a single-egress staircase. In most of the United States, current codes require a second staircase for fire egress if the building exceeds three stories. Single-stair building designs propose to replace the second staircase, which is an expensive use of space, with other fire safety measures. Single-stair designs are the dominant form of construction worldwide, but have been legal domestically only in New York City, Seattle, and recently Honolulu. 

Single-stair reform is the memetic “one weird trick” that could unlock significant housing supply by allowing for a wide variety of new design styles and taller buildings on small urban parcels. Despite—or because of—its wonky obscurity, single-stair reform was this year’s most successful pro-housing reform. As of July 2023, only Washington and Oregon had enacted legislation to begin the process of implementing single-stair reforms. Since then, bills directing state building safety authorities to consider, implement, or allow single-stair reforms have passed in California, Connecticut, Minnesota, Tennessee, and Virginia. A similar Pennsylvania bill is still under consideration. The only state where single-stair reform failed this year was New York.

By contrast, so-called yes in God’s backyard (YIGBY) bills generated a similar buzz among advocates but yielded few legislative changes. Part of the premise of YIGBY is that it could expand the YIMBY coalition to include religious congregations and legislators motivated to support them. So far, the only YIGBY effort that seems to have been important for coalition-building was in Maryland, where it was part of the “Moore Housing” effort. Next year, with Virginia’s advocates likely to take another pass at a YIGBY bill, will be a critical test of this policy.

One Step Back 

The broad success of pro-housing reforms was not universal. In some cases, other priorities prevailed. Vermont Democrats overrode Governor Phil Scott’s veto to pass S.687. Although the bill may ease constraints on homebuilding in village cores, it unambiguously tightens them elsewhere in the interest of forest conservation. Another new law, S.213, requires one-to-one replacement of wetlands and tightens restrictions on building in flood zones. Although some provisions of the complex S.687 will benefit housing supply, the two bills in combination make this year a step backward for Vermont after last year’s major liberalization. 

Flipping the parties, Kentucky Republicans overrode Governor Andy Beshear to reverse a local upzoning in Louisville. The argument for local control was evidently unpersuasive. 

While these laws exposed partisan fault lines, other counterproductive policy proposals spanned the political spectrum. Politicians from both major parties have floated bills to prohibit or discourage institutional investors from buying single-family homes. Prospective buyers are understandably frustrated by competition with large companies. But anti-investor policies are also anti-renter and, in any case, fail to address the underlying lack of available homes.

So far, no anti-investor bill has passed a state legislature. But new research suggests that voters are more sympathetic to price controls and investor bans than to effective pro-housing policies. We likely have not heard the last of this policy proposal. 

A Maturing Movement

If YIMBY advocates expected exponential growth in pro-housing legislation year over year, they will be disappointed by this legislative session. Nevertheless, at a time when high housing costs are a bigger part of national debates than ever in living memory, state legislatures considered hundreds of bills that target the source of the problem and passed dozens (see table 1). There was considerable overlap between those states that passed bills last year and those that passed bills this year: more and more state legislatures are accepting housing affordability as part of their remit, usually with good outcomes.

About the Authors 

Eli Kahn is a research assistant at the Mercatus Center’s Urbanity project, supporting the center’s scholarship in housing supply. He holds a master’s degree in public policy from the University of California, Berkeley, where he studied housing, transportation, and environmental policy. 

Salim Furth is a senior research fellow and director of the Urbanity project at the Mercatus Center at George Mason University. His research focuses on housing production and land use regulation. He has published in scholarly journals and testified before several state legislatures as well as the US Senate and House of Representatives. Furth earned his PhD in economics from the University of Rochester.

Citations and endnotes are not included in the web version of this product. For complete citations and endnotes, please refer to the downloadable PDF at the top of the webpage.