This September, a California bill that would deregulate housing and loosen zoning restrictions near transit hubs passed in the legislature and now awaits Governor Newsom’s signature. Texas went even further, passing a bill that deregulates the construction of multi-family housing not just in transport hubs but also in areas previously not zoned for any form of housing. This distinction makes it likely that states like Texas will remain more affordable than coastal states, since even though the housing shortage is currently less severe in states like Texas, they are taking more decisive action. Likewise, last December, New York City passed a comprehensive zoning reform package that deregulates the creation of various forms of housing.
These housing policy reforms in 3 out of the nation’s 4 most populous states signal a shifting trend as the skyrocketing costs of housing push states and localities to attempt to expand their housing supply. Additionally, the largely bipartisan nature of housing reform is notable in an era of increasing polarization.
Much has been said about the role of investment firms like Blackstone and BlackRock purchasing housing as investments, as a greater portion of homes are now being bought by institutional investors rather than individuals and families. However, those firms still need to rent out their units on the market in order to turn a profit, so they are doing little to shrink the housing supply. The lack of sufficient construction is a much larger contributing factor to insufficient housing supply. For example, in 2024, 1.63 million new housing units were created in the United States. Compared to the over 1.7 million units built 70 years earlier in 1954, when the population was less than half of what it is today, the decline becomes very evident.
To illustrate how zoning restrictions and other regulations have decreased the pace of construction, we can look to the island of Maui in Hawaii. 18 months after devastating wildfires burned down over 2,000 homes in 2023, just 6 had been rebuilt due to byzantine regulatory and permitting processes. Fortunately, after fierce public backlash, the pace of reconstruction has picked up in recent months. This example demonstrates just how absurd the zoning restrictions have gotten in parts of the country, and shows why the reforms implemented by California, Texas, and New York are necessary.
These reforms are likely to disproportionately benefit new grads, who, compared to older residents, are far more likely to live in multi-family housing structures such as apartments or townhouses. These are the types of housing that are the most restricted by zoning policies, and which are now being deregulated. So, younger citizens have much to gain from pro-growth housing policies.
Recent Cornell grads are especially likely to congregate in expensive cities, with the university’s Student Outcomes Survey showing that in 2024, more than half of the employed graduates ended up in New York, with an additional 15% heading to the expensive coastal states of California and Massachusetts. In certain majors, this trend is even more stark, with over 70% of students from the Dyson School heading to New York for employment.
In cities like New York, where median rents currently exceed $3,600, a higher proportion of a new graduate’s income is likely to be spent on housing. So, reforms that can expand the supply of housing, and in time help curb the astronomical costs of housing, will disproportionately benefit young graduates from Cornell. In an environment of endless bad news for new grads, from the threat to jobs posed by AI to a worsening labor market, bipartisan housing reform is a rare area of relief.
