Home prices in the Western United States have consistently outpaced the prices in the rest of the country, as businesses and households have moved to this fast-growing region. Cities and counties have not been able to develop housing to meet the needs of current and new households.
This report examines the impact of this shift in population in terms of the local debates regarding housing policy, homelessness, and landlord-tenant law. Using the six most populous states in the Western United States, our team has explored new political initiatives at the state and local levels to help understand how future policy will affect the housing market.
The tragedy of the increasingly harsh regulatory climate for developing housing in the Western U.S. is that the region otherwise has a good quality of life and many of our most innovative companies.
Unless these regulatory barriers are reduced, it’s likely that population growth will shift to other regions, notably the Southern United States, which has other advantages in terms of physical climate and business climate. Already, California is experiencing a high level of outmigration to neighboring states and, for the first time in the state’s history, California is growing at a slower pace than the nation as a whole. While this exodus is bringing economic growth to neighboring states, the new population is also bringing its support for more aggressive housing regulations.
- Gerard C.S. Mildner, PhD
Director, Portland State University Center for Real Estate
The United States has a long history with housing regulations at all levels of government. Many of these laws sought to regulate the supply of housing, how much rent can be increased from year to year, and the circumstances by which a landlord can evict a tenant
Fair Rent Committees established in cities throughout the United States in response to World War I.
The Emergency Price Control Act gave inflation control to the Federal Government to help manage production during World War II.
Many federal rent control laws were phased out after World War II, with only New York adopting its own legislation.
New York City Mayor John Lindsey enacts rent stabilization ordinances to deal with increasing prices and lack of vacancies.
The Economic Stability Act, passed by President Richard Nixon, included inflation control and rent stabilization during the Vietnam conflict.
New York's Emergency Tenant Protection Act placed all units under rent stabilization and capped the amount rents could increase from year to year. This became the basis for many landlord-tenant policies to come.
Cities in California passed local landlord-tenant policies, many of which capped rent increases and outlawed month to month leases. However, many of these laws had loopholes that were exploited.
Colorado enacted a statewide ban on rent controls. This ban was challenged in 2019, but ultimately failed.
New York's Omnibus Housing Act brought all landlord-tenant laws under state administration.
New York allowed deregulation of vacant units with monthly rents over $2000. Now most units are considered deregulated.
California's Costa-Hawkins Rental Housing Act limited municipal ordinances affecting rental properties and gave that power to the state.
The California legislature proposes nearly 200 new bills to address the current housing crisis. The Tenant Protection Act caps rent increases to 5% from year to year, plus inflation.
Oregon passes Senate Bill 608, which limits the circumstances by which a renter can be evicted, as well as puts limits on rent increases.
The Nevada legislature proposes Senate Bill 256 to limit evictions. Senate Bill 151 would ultimately pass with some elements of SB 256 included.
The Covid-19 pandemic closes many businesses and eviction moratoriums are enacted in several states.
A great deal of the push for this legislation comes from a desire to help those struggling with homelessness or hypermobility. Many families fall into one or more categories of homelessness or hypermobility as defined by the U.S. Department of Housing and Urban Development (HUD).
To stem the rise of homelessness, several states have passed regulations that directly address the circumstances surrounding evictions. For example, the Nevada legislature proposed Senate Bill 256 in 2019. The bill ultimately died in committee, but a companion bill, Senate Bill 151 did pass. SB 151 included the following provisions:
While states push for more legislation to reduce eviction and aid renters, policy alone does not solve the pressing issue of reduced housing supply. Without an adequate supply of housing, urban areas will continue to grapple with high housing costs, evictions, and homelessness.
Cities with the highest production rates tend to have lower overall median home prices. Markets like Charlotte, Atlanta, Dallas, Las Vegas, and Phoenix, where demand is also strong, have all produced roughly half of their total housing stock in the last 18 years, and between 10%-20% of total stock within the last 8 years.
Housing policies have been a central focus of many local, state, and even federal regulations to address issues of access and affordability.
These policies are many and wide in range; everything from tax policies to zoning laws create long-term, ripple effects in the housing market. Supply constraints can be seen using permitting data. Notably, metropolitan areas in California with stronger regulations are less likely to grant building permits.
Figures 2.2-2.5 highlight the breakdown between single-family and multi-family units produced in Los Angeles, Sacramento, San Diego and San Francisco. The ratio between the housing unit types are often a result of various local policies and zoning regulations.
Because of the persistent issues with the supply and demand for housing, it has become increasingly incumbent on local governments to use smart growth policies, be it infrastructure improvements or tax breaks for building, to stimulate development where it is needed.
Many housing organizations, lobbying groups and activists, particularly in California, have formed robust coalitions to better leverage influence on public policy.
These broad and diverse coalitions use their influence to advocate for housing affordability and to combat the displacement crisis that is disproportionately impacting working class communities of color. Some coalitions have grown to over 60 organizations and mobilized 1,000 grassroots leaders from across the state.
By forming coalitions, specifically with those also concerned with affordable housing, individual organizations can increase their influence and leverage on housing issues, and also find meaningful, and potentially bipartisan solutions to the growing calls for tougher housing legislation.