Recently Cato’s Project on Poverty and Inequality in California issued its final report. Among our conclusions, exclusionary zoning and other anti‐​housing regulations have driven up the cost of housing in the Golden State, making it difficult for low‐​income Californians to afford and contributing to the state’s growing homeless crisis.

The crisis is particularly acute in California, but hardly unique. Rents are skyrocketing across the country. Nationally, the median rent increased by 16.4 percent so far this year, roughly five times faster than over the same period 2017–19. There are, of course, many reasons for this, some pandemic related, but one of the biggest factors is a failure to build enough housing to keep up with demand. Estimates suggest that, nationwide, the U.S. is more than 5 million units short of what we would need to meet population growth and replace aging or damaged units. And, as in California, among the factors blocking construction is a range of local regulations that limit, often deliberately, the construction of affordable and/​or multifamily housing in many neighborhoods. Studies have shown that such restrictive policies contribute to racial segregation, drive up the cost of housing by as much as 50 percent in some communities, and cost the United States 36 percent of aggregate economic growth from 1964 to 2009.

Until now, the reflexive answer to rising rents has been to increase subsidies. The Build Back Better framework, for example, is reported to include $150 billion for housing, including $25 billion in rental assistance and $10 billion for down payment assistance. But such subsidies merely increase demand for housing without doing anything to increase supply. Given the existing mismatch between supply and demand, this will simply drive rents higher, requiring still more subsidies in a vicious never‐​ending cycle.

On the supply side, the bill devotes $65 billion to public housing. Yet its attempt to incentivize reform of housing regulation with grants for localities that move in the right direction is a much smaller line item on the bill.

Fortunately, however, a bipartisan group of senators has proposed a better approach. Sens. Todd Young (R‑IN), Rafael Warnock (D‑GA) and Brian Schatz (D‑HI) introduced SB 1614, the Yes, In My Back Yard (YIMBY) Act which would require communities that receive funds through the Community Development Block Grant to report to the Department of Housing and Urban Development on actions that they are taking to reduce exclusionary zoning and other barriers to housing.

Among the areas that communities would have to address is a veritable wish list of pro‐​housing reforms, including:

  • (A) Enacting high‐​density single‐​family and multifamily zoning.
  • (B) Expanding by‐​right multifamily zoned areas.
  • (C) Allowing duplexes, triplexes, or fourplexes in areas zoned primarily for single‐​family residential homes.
  • (D) Allowing manufactured homes in areas zoned primarily for single‐​family residential homes.
  • (E) Allowing multifamily development in retail, office, and light manufacturing zones.
  • (F) Allowing single‐​room occupancy development wherever multifamily housing is allowed.
  • (G) Reducing minimum lot size.
  • (H) Reducing the number of buildings protected by historic preservation.
  • (I) Increasing the allowable floor area ratio in multifamily housing areas.
  • (J) Creating transit‐​oriented development zones.
  • (K) Streamlining or shortening permitting processes and timelines, including through one‐​stop and parallel‐​process permitting.
  • (L) Eliminating or reducing off‐​street parking requirements.
  • (M) Reducing impact and utility investment fees.
  • (N) Allowing prefabricated construction.
  • (O) Reducing or eliminating minimum unit square footage requirements.
  • (P) Allowing the conversion of office units to apartments.
  • (Q) Allowing the subdivision of single‐​family homes into duplexes.
  • (R) Allowing accessory dwelling units, including detached accessory dwelling units, on all lots with single‐​family homes.
  • (S) Legalizing short‐​term home rentals.
  • (T) Legalizing home‐​based businesses.

Many of these were among our recommendations for reform in California. Many others are important reforms as well. Most of these reforms would increase the production of market‐​rate housing, which in turn limits the rate of rent increases, and the same restrictions that limit market‐​rate housing apply to public housing, making government spending less cost‐​effective.

Of course, the legislation would be more powerful if it actually tied receipt of the funds to making reforms in those area. But forcing communities to face up to the ways that their policies have blocked affordable housing is a first step in the right direction. Equally important, the willingness of legislators from both parties to stand up to powerful local interests, signals that the politics of housing may be changing. That should embolden local officials to do their part.