States made big and little changes to land use laws in 2024

As households’ shelter costs continued to rise in 2024, many legislatures across the country re-examined their states’ approaches to regulating the production of new homes. Their work resulted in an array of new land use laws at the state level. Some of these states have a history of being active on land use issues, while others have historically been less active. In either scenario, implementation of the new laws may make it easier for builders to supply housing units and, in the long term, could ease pressures on home prices and rents.

State and local roles in the housing market

State laws give local governments planning and zoning authority. This power allows county and municipal officials to determine what can be built—and where—within their jurisdictions. Planning and zoning policies theoretically allow local governments to balance growth with any resulting demands on public infrastructure. The rules can also protect the public’s health and safety—for example, by requiring minimum street widths to accommodate emergency vehicles, or keeping heavy industrial activity away from residential areas.

Even in places with a more active state role in the regulatory landscape, state laws generally give localities broad discretion. Local officials ultimately develop the plans and rules that guide housing development. That means the rules of the housing game differ across municipal boundaries.

For example, cities within a single metropolitan area can take very different approaches to parking requirements. One city may require developers to provide a two-and-a-half-car garage for every new single-family home, or two spots for every apartment unit. Another may let developers decide the best mix of parking to meet their buyers’ or renters’ preferences.

Different rules result in different baseline costs to produce new housing. Some local regulations may increase the cost to build homes while not providing a public safety benefit or meeting infrastructure needs. When less new housing is built as a result, the price of all housing is more likely to go up.

Housing price growth inspires a re-evaluation of states’ role

Local housing regulations have been drawing increased attention from policymakers at every level as housing costs have climbed. Since 2000, national metrics show that home prices and rents have consistently risen at a faster rate than household incomes. Over the same period, housing production has fluctuated in response to major economic events. Residential construction plummeted to historic lows during the Great Recession of 2007–2009. Fast-forwarding to the 2020s, production may be declining again after strong growth during the COVID-19 pandemic.

Every city’s housing market is influenced by local economic conditions and demographic trends, but most growing places are experiencing some version of these national stories. Taken together, they suggest that the supply of homes has not kept pace with the demand for new housing. Home prices and rents are rising as a result.

State legislators don’t control the price of loans, lumber, labor, or land, all of which play a role in increasing home prices. Their work outlined here may, however, change the way their states’ laws influence the cost of development.

For the Federal Reserve Bank of Minneapolis, exploring regulatory reforms and other conditions that influence the price and supply of housing advances our mission to pursue an economy that works for all of us. Like the regulatory update we released in late 2023, this article focuses on new state policies or initiatives that address land use. The variety of approaches reflects the many different strategies states are testing. These strategies generally leave considerable control in local governments’ hands while requiring or incentivizing local policies that make it easier to build housing.

Not their first rodeo

Several states that passed significant laws in 2024 have been tinkering with the state-local land use dynamic for decades. For example, New Jersey, Massachusetts, and Oregon have unique state-level land use regimes that started more than five decades ago. In 2024, each state also passed or implemented laws modifying its approach. At an October 2024 event at the Minneapolis Fed, experts from each state expanded on the respective regimes.

Katherine Payne, managing director of operations and senior planner from New Jersey’s Fair Share Housing Center, explained New Jersey’s “fair share” approach. In a series of decisions going back to 1975, the state’s supreme court has ruled that localities have an obligation to enable the production of their “fair share” of the state’s housing needs.

Payne contended that this fair share approach was inconsistently implemented until the state supreme court re-invigorated enforcement in 2015. In 2024, legislators strengthened the approach further with a new law that outlines a process for the state to set each locality’s fair share obligation, for municipalities to develop their housing plans, and for disputes to be resolved in a timely way.

If a town refuses to participate in the affordable housing development process, Payne continued, developers can file a builder’s remedy lawsuit (a legal action that property developers can pursue against a municipality to change zoning on a particular site to allow for affordable development). Local government plans can also be challenged in court under certain circumstances. As a result, “there is a big incentive for municipalities to participate in this process,” Payne said. “If you accept your fair share obligation and cooperate ... you receive immunity from exclusionary zoning litigation or builder’s remedy lawsuits.”

That doesn’t mean localities have lost all their flexibility to chart their futures, Payne noted. When it comes time to design a housing plan, “towns have a lot of discretion in how they meet their numbers,” she said. “It’s really math, and figuring out how to balance providing a mix of housing types that make sense for your community.”

Massachusetts took a similar tack starting in 1969. For more than 50 years, under its “40B” laws, the state has set a threshold for the affordable housing supply in 351 cities and towns. If the affordable housing stock is below that threshold, developers have access to an expedited planning process. Denied projects get access to a special avenue for appeals that places the burden of proof for a denial on cities instead of developers.

Jeff Levine, a professor at the Massachusetts Institute of Technology and a former planning director in Massachusetts and Maine, noted that in 2023 Massachusetts also required cities to allow more housing density near transit hubs. Other states in New England have been pursuing similar changes, he said, highlighting recent laws passed in Maine and Vermont.

State lawmakers on the opposite end of the country also launched a new approach to land use regulation more than 50 years ago. Since 1973, local governments in Oregon have created plans to address 19 state land use planning goals, said Mary Kyle McCurdy, an attorney affiliated with 1000 Friends of Oregon. Housing is one of those 19 goals.

Like Payne from New Jersey, McCurdy argued that Oregon has only lately begun to fully implement its long-standing commitment to enabling housing production. Recent policy changes require cities to accommodate a wide mix of housing types, and to be “clear and objective” in how they assess proposed buildings.

“Cities can’t say that a building needs to be ‘consistent with the character of the neighborhood,’” McCurdy said. “That’s not clear and objective.”

She explained that cities had two choices for implementing the state’s new requirements. They could adopt their own ordinances that would reflect the need to accommodate new housing types, or they could follow a model zoning ordinance the state created. Every city in the state chose the first option, McCurdy said, and the state provided resources to support them in pursuing it.

All three speakers noted the importance of these kinds of resources. Even the simple existence of a state requirement can make local officials’ jobs easier, said Levine. “In some communities, the staff or political leaders are happy to get a push to do the right thing,” or build more housing, he said. Without a state mandate, “it’s very hard to push on things that may seem injurious to even a few residents.”

A “state backstop has been extremely helpful to those localities and planners that want to do the right thing,” McCurdy said. “We’ve found in recent years that technical assistance and data provision from the state, in addition to infrastructure funding, model ordinances, that sort of thing, have been very helpful.”

That kind of support and coordination with local governments is critical for success, noted Payne. Smaller cities or towns with limited planning capacity may need access to technical assistance or consultants even when they want to allow more housing “but don’t really know how.”

Land use policy on a spectrum

The fourth speaker at the event, Jenny Schuetz, an economist who was then a senior fellow at the Brookings Institution, agreed that states should be sensitive to the amount of work new requirements create. Schuetz, who now serves as vice president of infrastructure and housing at Arnold Ventures, has worked with states around the nation to help them better understand the key ingredients for policies that can support a more abundant housing supply.

There’s a spectrum of intensity for new rules, she said. Requiring high-density residential zoning near transit provides flexibility to local governments, Schuetz continued, because it’s a broad target and there are several ways to do it. But the open-ended nature of such a reform also requires cities to devote staff time or hire consultants to actually design their implementation strategy. Other changes are quick and easy by comparison. To get rid of off-street parking requirements, Schuetz said, “all you have to do is delete some text from your zoning.”

This wasn’t the only trade-off she and the other speakers discussed. Schuetz noted, “You can spend a lot of time and resources chasing after” places that don’t want to build housing. Another way to think about it, she said, is that “it’s less important that the most expensive and most resistant places be building some low-income housing, and more important that as many places as possible are building a reasonable amount of housing, a diversity of housing types, and that the overall supply of housing is enough that rents and prices become more affordable.”

Like the other speakers, Schuetz noted that land use reforms at every level need to be iterative to be effective. California, Florida, and Washington offer further examples from three different corners of the country. More than 30 housing bills became law in California in 2024. Those bills came after state legislators worked on land use regulation year after year. Florida and Washington significantly changed the ways they approach land use regulation in 2023. Both already passed new laws in 2024 to further tweak their approaches.

Other states are entering the land use arena

The states represented at our event weren’t the only ones to revise their housing regulation roles. At least five other states adopted or passed a number of bills in 2024 that have the potential to significantly change the processes or rules that govern some local housing markets.

Maryland, for example, had a busy 2024 legislative session for housing. Legislators passed a bill making it easier to build multifamily housing in more places if some affordable units are included. The state’s approach focuses on government-owned land and transit hot spots. The same law will limit localities’ ability to restrict manufactured or modular housing projects. Maryland will also require larger cities to report statistics about their development applications. Such data would make it easier to assess the impact of regulatory barriers on the state’s housing supply.

Three Colorado bills signed into law in 2024 will make it easier to build higher-density housing. Under one of these new laws, 31 municipalities will now be required to zone for high-density residential development near transit stops. The local governments will receive incentives for doing so. The other two density-related laws make it easier to build accessory dwelling units (ADUs)—that is, small, stand-alone housing units located on the same lots as single-family homes—and set new rules for local governments’ ability to require a certain number of parking spots for some types of new development.

A fourth new law in Colorado makes it more expensive for citizens to challenge a local government’s land use decision. Currently, people can file lawsuits against land use decisions they don’t like. Under the new law, people can still file lawsuits, but if they lose, they’ll be required to reimburse the local government for their legal fees. Developers will also be allowed to proceed with the disputed projects as the judicial process moves forward.

Meanwhile, four bills in Arizona address specific pieces of the housing market. Cities with more than 75,000 people must adopt permissive requirements for ADUs and multiplexes. Arizona’s legislators also cleared regulatory hurdles for some office-to-residential conversion projects and clarified the rules for localities as they consider developers’ requests to build.

Rhode Island’s governor signed a suite of housing-related bills that will make it easier to build ADUs and site manufactured homes. They also clarify and simplify key parts of the planning and permitting process for housing projects.

Utah’s new laws clarify many rules related to local planning processes. They create optional new zoning districts that localities can implement, and also create a statewide building code for modular housing. One new law allows people who challenge municipal zoning decisions with the state’s property rights ombudsperson to seek attorneys’ fees and civil damages related to their case. In other words, municipalities may face additional financial risks if they deny development projects without a solid argument for doing so.

Other states took smaller regulatory steps in 2024.

• Hawaii focused on ADUs and the conversion of commercial properties into residential buildings.
• In Iowa, local governments can no longer prohibit the use of any particular exterior materials for residential construction, as long as the materials are allowed in the state’s building code.
• New Hampshire addressed costly parking requirements, driveway- and sprinkler-related regulations, and the process for changing local zoning rules.
• In Vermont, a new law clears some of the regulatory barriers to housing in urban areas while adding new regulatory requirements in some of the state’s more rural areas.

Assessing impact of new laws will take time

As housing prices continue to rise around the nation, states are leaning into their role as “laboratories of democracy.” To extend that metaphor, some of the land use experiments will occur in laboratories that have been operating for more than half a century. Others will occur in laboratories that are being built from the ground up.

Either way, new reforms can take a long time to show results, Jenny Schuetz said: “There’s a big victory party when a state passes legislation. But it turns out that getting local housing markets to respond to these policy changes is not an overnight thing.”

When possible, the Minneapolis Fed may work with data to understand the impacts of some of these approaches. Analyzing states’ work to adjust their laws in support of more housing production will help us understand the potential stakes of regulatory reform for the households that are struggling with their rent or mortgage payments, and for our region’s overall economy.