- America’s housing shortage is primarily the result of decades of restrictive land-use policies that have limited new construction, creating the scarcity that has allowed institutional investors to thrive
- The 21st Century ROAD to Housing Act takes meaningful steps toward improving housing affordability by reducing barriers to development and encouraging greater housing supply, despite some imperfect federal interventions
- North Carolina should continue pursuing state and local reforms that reduce unnecessary housing regulations and expand supply, regardless of federal action
America’s housing shortage did not develop overnight, and it will not be solved with a single piece of legislation. Decades of restrictive zoning, burdensome permitting requirements, environmental review delays, parking mandates, minimum lot sizes, and other local regulations have made it increasingly difficult to build enough homes to keep pace with demand. The result has been higher prices, fewer options for families, and declining affordability across much of the country.
North Carolina has experienced this challenge firsthand. It is one of the fastest-growing states in the country, and families and businesses continue moving here for economic opportunity and a relatively lower cost of living. Unfortunately, this population growth has placed additional pressure on the state’s housing supply.
Between 2020 and 2024, North Carolina added approximately 365,000 housing units, one of the largest increases in the nation. Nevertheless, recent analysis conducted for the NC Chamber found that the state could need hundreds of thousands more housing units in the coming years to maintain affordability. Meanwhile, according to the National Low Income Housing Coalition, hundreds of thousands of low-income renters in North Carolina face severe housing cost burdens because available affordable units have not kept pace with demand.
Housing markets function best when supply can respond to demand. Unfortunately, that has not been the case. In many communities, local governments have made it extraordinarily difficult to build new homes, thanks to exclusionary zoning ordinances, lengthy approval processes, excessive permitting requirements, and other restrictions. These policies artificially limit supply, reduce competition, and drive up prices.
In recent years, institutional investors have expanded their presence in the housing market, purchasing large numbers of single-family homes. They have been able to benefit from a market that was already constrained by years of underbuilding and restrictive regulations. When governments prevent housing supply from keeping up with demand, scarcity creates opportunities for investors, developers, and existing homeowners who already own property.
On June 29, Congress sent President Donald Trump one of the most significant federal housing reform efforts in decades: the bipartisan 21st Century ROAD to Housing Act. The legislation expands and modernizes the Low-Income Housing Tax Credit to encourage additional private investment in housing construction, streamlines environmental review and permitting requirements for certain federally assisted housing projects, promotes the conversion of underutilized commercial buildings into residential units, improves financing options for manufactured housing, and encourages the redevelopment of vacant and blighted properties.
The act also increases transparency surrounding institutional ownership of single-family homes by strengthening reporting requirements and improving the collection of data on large-scale investors. The goal is not to prohibit companies from purchasing homes, but to provide policymakers and the public with a clearer understanding of how institutional investment is affecting local housing markets. Supporters argue that better data can help identify where large investors may be contributing to affordability challenges without imposing broad restrictions that could discourage legitimate private investment.
Not every provision in the act, however, aligns with free-market principles. Even though many of the underlying problems in the housing market originated from government intervention, the bill expands federal housing tax credits and federally assisted housing programs. Subsidies can distort investment decisions, shift costs onto taxpayers, and encourage developers to pursue projects based on federal incentives rather than consumer demand. Federally assisted housing projects can also face extensive regulations that increase costs and slow construction like private housing developments.
These concerns are especially important because housing markets are local. A federal program designed in Washington may not always reflect the needs of communities in North Carolina’s mountains, coast, and rapidly growing metropolitan areas. Local governments should have flexibility to determine what works best for their residents rather than relying solely on federal solutions.
That said, unlike many other housing proposals that focus primarily on increasing government assistance, the ROAD to Housing Act also emphasizes making the market more open to expanding supply. Supporting manufactured housing, encouraging commercial-to-residential conversions, improving financing tools, and reducing unnecessary regulatory barriers should all help create conditions in which the private sector can build more homes.
Federal legislation cannot override every local zoning ordinance, nor should it. Land-use decisions are primarily a state and local responsibility. What Congress can do is remove federal barriers, modernize outdated programs, and encourage reforms that make it easier to build. The ROAD to Housing Act takes meaningful steps in those directions.
North Carolina policymakers should continue pursuing the same principle at the state and local levels, with bills such as Senate Bill 445. Reforming outdated zoning laws, reducing unnecessary permitting delays, allowing greater housing density where appropriate, and encouraging innovation in construction would do more for affordability than simply increasing subsidies.
Markets work best when governments allow competition, innovation, and new supply to meet demand. For too long, housing has been seen as an exception, but that’s because of local governments restricting the market from working. The ROAD to Housing Act is not a perfect piece of legislation, but its emphasis on making it easier to expand supply rather than merely subsidizing demand should help restore a housing market in which more Americans can afford to buy a home.
