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How will the 21st century road to housing act affect housing supply? Part II

Brian Potter doesn't just read the 21st Century ROAD to Housing Act; he dissects its mechanical heart to ask a brutal, necessary question: do these provisions actually build homes, or do they just shuffle paper? In this second installment, Potter strips away the legislative fanfare to reveal that while the bill is massive, its ability to expand the actual housing stock hinges on whether it fixes constraints that were actually holding builders back in the first place.

The Illusion of Movement

The piece opens with a sobering reality check on Section 201, which directs HUD to prioritize Opportunity Zones. Potter dismantles the idea that this will create new units, noting that "the likely impact of this section on housing supply is almost definitely zero." He argues that the provision merely redirects existing funds rather than increasing the total pot, a distinction that often gets lost in political spin. This is a crucial intervention for readers trying to separate signal from noise in housing policy.

How will the 21st century road to housing act affect housing supply? Part II

Similarly, when examining the Whole-Home Repairs Act, Potter reframes the conversation from "building new" to "keeping what we have." He suggests that while the program is useful for quality of life, its impact on total supply is limited. "If you want to turn dollars into housing supply, in some cases a dollar probably goes farther repairing an existing home than it does building a new home," he writes. This logic is sound, yet it highlights a tension: preventing decay is vital, but it is not a substitute for the massive volume of new construction needed to solve the shortage. Critics might argue that focusing on repairs distracts from the urgent need for new density, but Potter's cost-benefit analysis suggests that preserving the existing stock is a pragmatic, if modest, win.

The Mechanics of Funding

The analysis deepens when Potter tackles the financial plumbing of the bill, specifically the Community Investment and Prosperity Act. This section raises caps on how much banks can invest in Low Income Housing Tax Credit (LIHTC) projects. Potter's insight here is nuanced; he suggests the change is less about immediate relief and more about future-proofing. "This section is possibly a big counterfactual deal... but not one that will boost housing supply over current levels," he observes. The argument implies that the current system isn't yet hitting a hard wall, but this legislation ensures the wall doesn't appear tomorrow. It's a defensive move disguised as an offensive one.

If you want to turn dollars into housing supply, in some cases a dollar probably goes farther repairing an existing home than it does building a new home.

The commentary then shifts to the use of Community Development Block Grants (CDBG), allowing up to 20% of these funds to be used for affordable housing. Potter admits his "error bars here are quite wide" due to the complexity of local implementation. This honesty is refreshing. He acknowledges that while $3.3 billion is a large sum, the real constraint is often bureaucratic inertia, not just the availability of cash. This mirrors the historical challenges seen in Opportunity Zone designations, where the tax incentives were clear, but the actual deployment of capital into distressed areas proved far more difficult than the legislation anticipated.

Cutting Red Tape

Perhaps the most promising part of Potter's analysis focuses on environmental reviews. Section 206, the "Unlocking Housing Supply Through Streamlined and Modernized Reviews Act," offers categorical exclusions for smaller projects and infill construction. Potter identifies this as potentially the most important section in the bill. "It doesn't change the amount of funding for these projects, but it could make some of that funding stretch slightly farther if folks don't need to take the time and effort to do an environmental review," he writes. The argument here is that time is money, and in construction, delays are the enemy of supply.

He draws a parallel to transportation projects, noting that similar delegations of authority have sped up reviews by 15-30%. However, he tempers this optimism by noting that the speedup only works if the local jurisdiction actually has the capability to perform the reviews. This is a critical caveat often missed in high-level policy summaries. A streamlined process is useless if the local agency lacks the staff to run it.

The Limits of Incentives

The piece concludes with a skeptical look at the bill's incentive structures, particularly the Innovation Fund and grants for pre-approved "pattern books." Potter questions whether a $10 million grant is enough to sway a local jurisdiction to overhaul its zoning codes. "I would be surprised if this is enough to make most jurisdictions make major changes to their housing or zoning regulations — the amount at stake is probably just too small," he argues. This is a strong counterpoint to the assumption that federal money can easily buy local policy changes.

Similarly, regarding the RESIDE Act for converting vacant buildings, Potter points out a fatal flaw in the eligibility criteria: the buildings must be abandoned or unsafe. "The typical conversion targets are things like low-occupancy office buildings that are still in use and safe to occupy," he notes, meaning the law misses the very buildings that could be converted most easily. This highlights a recurring theme in Potter's work: the gap between legislative intent and on-the-ground reality. Even the well-intentioned RESIDE Act is blunted by rigid definitions that exclude the most viable candidates.

I would be surprised if this is enough to make most jurisdictions make major changes to their housing or zoning regulations — the amount at stake is probably just too small.

Bottom Line

Potter's strongest contribution is his refusal to accept legislative volume as a proxy for housing production; he forces the reader to distinguish between moving money and moving dirt. The argument's greatest vulnerability is its reliance on the assumption that local jurisdictions will not find ways to circumvent these new flexibilities, but his skepticism serves as a necessary brake on the usual policy optimism. Readers should watch for the actual appropriation of the Innovation Fund and the first wave of streamlined environmental reviews, as those will be the true stress tests for this legislation.

Deep Dives

Explore these related deep dives:

  • The Housing Boom and Bust Amazon · Better World Books by Thomas Sowell

  • South Dakota v. Dole

    This 1987 Supreme Court case established the constitutional precedent allowing Congress to use federal funding as leverage to compel state compliance with federal policy, which is the legal mechanism the 21st Century ROAD to Housing Act relies upon to influence state-level zoning and land-use decisions.

  • Pennsylvania Housing Finance Agency

    The article cites this state-level entity as the model for the Whole-Home Repairs Act, and its Wikipedia entry details the specific mechanics of how state governments have historically funded home preservation to prevent stock attrition.

  • Opportunity zone

    While the article dismisses the new housing provision in these zones as having zero supply impact, the Wikipedia article explains the original 2017 tax incentive structure that created these zones, clarifying why the author believes the new grant weighting is merely a reallocation of existing funds rather than a supply driver.

Sources

How will the 21st century road to housing act affect housing supply? Part II

This is the second installment of my look under the hood of the recently passed 21st Century ROAD to Housing Act, looking at what each provision actually does and trying to suss out its actual impact on housing supply. You can read my previous essay on Title I of the Act here. This time I’ll look at Title II, “Building More in America,” and Title III, “Manufactured Housing For America,” which have 13 and 4 individual provisions respectively. Some of the most consequential chunks of this legislation are in these two titles.

The sections in this title mirror the act overall: only a small number of these changes are likely to be of major consequence, and how much they increase housing stock will depend a lot on whether the constraints they modify were actually binding, which is often hard to tell.

Title II — Building More In America.

This is the largest title in the act, with 13 sections, each one of which targets housing production or preservation in some way. We’ll look at each section one by one.

Section 201 — Increasing Housing in Opportunity Zones. This section allows HUD to give additional weight when awarding housing grants to projects that will be built in Opportunity Zones: areas that are economically distressed and that have tax incentives available for investing in them.

The likely impact of this section on housing supply is almost definitely zero. It just shifts which housing projects HUD decides to allocate money to. It doesn’t increase the size of the pot of money, or the number of projects that can be funded.

Section 202 — Whole-Home Repairs Act. This section establishes a HUD pilot program for providing grants to homeowners and landlords for home repairs. This is potentially a useful program — some people get funds to make housing repairs that maybe otherwise wouldn’t be able to afford them — modeled on earlier, state-level programs like Pennsylvania’s. But it seems more about increasing housing quality than housing stock: improving energy efficiency, weatherization, safety, general habitability, etc.

That said, there might be a “it’s easier to keep an existing customer than finding a new customer” logic to this. If you want to turn dollars into housing supply, in some cases a dollar probably goes farther repairing an existing home than it does building a new home. Typically homes fall out of the housing stock at a ...