US Housing Crisis: HI, MA, NY take Steps
On July 18, 2023, three states – New York, Hawaii, and Massachusetts – took a significant step towards tackling the ongoing housing crisis in their respective regions. It was a peculiar coincidence that all three states made announcements on the same day, emphasizing the growing urgency of the issue. In this blog article, we will delve into the unique initiatives each state is taking and discuss the greater context and potential implications for renters and prospective homeowners. While the states' efforts to incentivize housing construction are commendable, concerns remain about the rising costs of renting and buying properties.
New York's Multi-faceted Approach
New York Governor Kathy Hochul announced several measures aimed at addressing the state's severe housing shortage. One of the primary focuses was extending tax abatements for the construction of affordable housing in Brooklyn's Gowanus neighborhood, a region that has faced challenges due to expired tax breaks. Hochul also issued an executive order directing $650 million in grants to "pro-housing" communities and identifying state properties that could be repurposed for housing. While these initiatives are essential steps towards increasing housing stock, critics argue that more needs to be done to combat rising housing prices in the Greater New York City metropolitan area.
Hawaii's Emergency Proclamation
Governor Josh Green of Hawaii issued an executive order titled "Emergency Proclamation Relating to Housing," leveraging a state law to suspend several laws hindering housing development. The order aims to construct 50,000 new homes over the next three to five years for residents of all income levels. With housing prices soaring in Hawaii and many essential workers unable to afford homes, the proclamation highlights the critical need for urgent action. However, concerns are raised about the potential environmental and cultural impact of the fast-tracked construction.
Massachusetts' Tax Credit Expansion
The Massachusetts Legislature is working to significantly expand the Housing Development Incentive Program (HDIP) to boost market-rate housing in midsize and smaller cities. The proposed expansion would increase the annual cap on tax credits from $10 million to $57 million initially, and then set it at $30 million annually. HDIP has had some success in stimulating housing development in Gateway Cities, but critics argue that it falls short in addressing the demand for affordable housing. Some advocates express the need to combine multiple approaches, such as zoning changes and additional funding, to tackle the state's complex housing woes effectively.
The Context & Implications
While the initiatives taken by these states are commendable steps towards addressing the housing crisis, there are lingering concerns about their effectiveness in providing relief to renters and prospective homebuyers. Financial breaks and incentives for housing construction are essential to increase housing supply, but they might not directly tackle the core issue of skyrocketing renting and buying prices.
In New York, the expiration of tax incentives for constructing affordable housing has hindered progress, and developers are calling for new incentives to encourage more affordable housing construction. In Hawaii, the emergency proclamation allows for a streamlined construction process, but it remains to be seen how environmental and cultural concerns will be addressed. In Massachusetts, expanding the HDIP could provide more market-rate housing, but the focus on market-rate housing may not adequately address the need for affordable units.
Ultimately, the fact that three states simultaneously addressed the housing crisis on July 18, 2023, underscores the severity of the issue and the growing acknowledgment by state governments of its importance. Each state's approach to incentivize housing construction is a significant step forward, but concerns remain about the lack of focus on rising rental and buying prices. As these initiatives unfold, it is essential for state policymakers to consider a balanced approach that addresses both housing supply and affordability to ensure that all citizens have access to decent and affordable housing. As it stands now, the measures being taken will likely not make significant impact on the rising prices of housing being faced by the millions of Americans living paycheck to paycheck.
