The federal government needs to create more transparency and accountability in the massive housing subsidies it generates every year. (Photo by Stefan Zaklin/Getty Images)

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Later this month, I’ll be heading to Washington DC to speak with congressional staff about housing. And in January, legislative sessions will be gaveled to order and many of those legislatures will be considering housing legislation, from subsidies for affordable housing to changes in policies affecting local jurisdictions. Earlier this year, I wrote an internal memo at an organization I was working with to give a sense of what I think the greatest opportunities to have a positive impact on housing policy at the federal and state level. What follows is a brief on what I think we should be talking about to policy makers in congress and in state legislatures that convene in 2026.

**Federal Level **

Because of the Tenth Amendment, almost all land use, permitting, and zoning policies that affect the production of housing happen at the state and local level. But there is massive spending on financing and funding of programs and interventions to address housing. Is that spending effective and if it isn’t, how can it be improved, reformed, or ended? And federal funds should be conditioned on performance of regulatory reform.

• Transparency – The Low Income Housing Tax Credit (LIHTC) sends $13.5 billion in tax credits to the states annually and in 2024 the Department of Housing and Urban Development was budgeted to spend over $70 billion. When it comes to LIHTC spending, we know very little about the distribution and performance of the credit. We need better data.
• Accountability – Transparency leads to accountability. How effective is tax credit financing? When compared to private sector development, how efficient is LIHTC at producing housing? Does it take longer and is it more expensive? Why? What factors are contributing to the fact that spending has tripled over the last two decades but so has cost burden among poorer households?
• Reform – How can the tax code be used to get needed help to families who need housing assistance more efficiently? Is the tax code even the right place? What kinds of cash-based programs could take existing spending, reduce it, but improve the distribution and effectiveness of subsidy programs for families struggling to make ends meet?

**State Level **

Housing policy and implementation ends up at the state and local level which is driven largely by debates over zoning and land use. Often local funding is blended together with federal funding, turning local programs into federal programs, exposing efforts to fund and build housing even more difficult. What can states do to make policies that are both necessary to increase market supply and be sufficient to spark investment in more housing?

• Preemption – Often state leaders are reluctant to take power away from local governments that are making policies that restrict development. But there is strong legal precedent for state government to intervene when local governments are making policies at the local level that have negative and statewide impacts.
• Land Use and Zoning Reform – There is wide consensus that it is just too hard to build housing in the United States. However, zoning itself – not just single-family zoning – serves to hinder production. Phasing out zoning as a tool to manage growth in favor of more general building codes that emphasize health and safety rather than use, location, or aesthetics should be prioritized.
• Local Funding – Local funding is far more flexible than federal funding and states should be careful to avoid building capital stacks with restrictive federal funds. State governments should require better and more careful use of local funds.

Nothing in this agenda is particularly radical, but taken together, if fully implemented, I’m convinced that these items could get us track as a country when it comes to housing. The challenge is that housing policy is largely a local affair, taken up by thousands of jurisdictions and municipalities. And federal funding is jammed up with ideological conflicts and sclerotic bureaucracy. States could, through preemption and wiser use of local funds begin to break up these jams.