A National Housing Policy Simulator: A Plan for Modeling Policy Changes to Spur New Housing Supply
By several measures, the United States faces the greatest shortage of housing since World War II. Increasingly stringent local regulatory barriers are often to blame, but we have little way of knowing what specific policies are constraining new housing supply in any given community. Is it overly onerous height limits? Outsized permitting fees? Uncertain approvals? Furthermore, for the federal government to spur local governments to encourage new housing development—e.g., by tying federal transit dollars to local pro-housing actions—it ideally needs to first understand the potential for new housing supply in those communities. In addition, because of the multi-year lag between enacting policies and seeing housing built as a consequence of those changes, modeling which policies will move the dial on production—and by how much—increases the likelihood that policy change will have the intended result. The good news is that the tools, data, and proof of concept all exist today; what is needed now is for the federal government to build, or fund the creation of, a National Housing Policy Simulator. Done right, such a tool would allow users to toggle policy and economic inputs to compare the relative impact of new policies and guide the next generation of land use reform.
Simulators, such as the one built by UC Berkeley’s Terner Center & Labs for the City of Los Angeles, demonstrate the value of connecting zoning data with economic feasibility pro formas for modeling supply impacts. However, successful, validated simulators have been rare and limited to a handful of geographies. With recent efforts to digitize land use data, increased real-time datasets on rents, home prices, financing, and construction costs, combined with remarkable advances in computing power, the federal government could accelerate a scaling of this modeling, bringing forward national adoption within two years.
While this proposal might be seen to compete for federal funding with other housing subsidies, the idea of a national simulator is complementary: first, because it allows for a cost-effective targeting of existing federal pro-housing efforts, and second, because it spotlights low-cost zoning and land use reforms that can result in new unsubsidized housing.
To make this happen, Congress should
- Appropriate $10 million to the Department of Housing and Urban Development’s (HUD) Office of Policy Development & Research (PD&R) to build, or fund the creation of, a National Housing Policy Simulator and commission related research.
- Appropriate $500,000 to HUD’s Office of Community Planning & Development (CPD) to update its existing data collection tools and provide technical assistance.
Once funded, HUD should
- Build and/or contract with one or more academic/research organizations to scale the necessary mapping and economic modeling tools and acquire necessary financial datasets (e.g., county assessor data, home price information, construction cost estimates, vacancy rates, census data, capitalization rates, and costs of financing) (via PD&R).
- Amend its Consolidated Annual Performance and Evaluation Report, which is required of all jurisdictions that receive federal housing block grant funding, to report annually on land use and zoning changes in order to complete to build out and ensure the ongoing maintenance of the existing National Zoning Atlas or a similar federally maintained resource (via CPD).
Once built, Congress should
- Direct all federal agencies to look for opportunities to integrate this modeling data and tool into federal pro-housing policies and program development as well as to enable its use by local governments, researchers, advocates, and policymakers.
- Prioritize and commit to funding ongoing reporting and research opportunities.
A National Housing Policy Simulator can unlock an entirely new field of research and drive the next generation of policy innovation. Equally importantly, it will allow a deeper understanding of the policy incentives, levers, regulatory policies, and financial programs that can precisely target incentives and penalties to stimulate housing supply, while also empowering local actors—such as civic leaders, elected officials, and local planners—to effectuate local policy changes that make meaningful improvements to housing supply.
This idea of merit originated from our Housing Ideas Challenge, in partnership with Learning Collider, National Zoning Atlas, and Cornell’s Legal Constructs Lab. Find additional ideas to address the housing shortage here.
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