by James A. Bacon
Broadly speaking, there are two types of strategies for making housing more affordable: demand-side strategies and supply-side strategies.
The demand-side approach makes it easier for people to buy houses — lower down-payments, interest-rate subsidies, outright grants. Such tactics might help the lucky individual households that qualify, but only by allowing Homeowner A to outbid Homeowner B, effectively displacing Homeowner B. There’s no net gain in the housing stock, thus no net gain for the population as a whole.
Supply-side strategies address the root cause of unaffordability: regulations that drive up the cost of construction and restrict the number of new lots. In a market economy, building more housing doesn’t benefit just those moving into the newly constructed dwelling units, it benefits all potential homeowners by altering the supply-demand calculus that determines housing prices.
Typically, Democrats go for demand-side solutions, aiming to boost the buying power of lower-income households. It hasn’t worked out very well. One would think that Republicans would have leaped into the breach with supply-side solutions, but they haven’t been very imaginative in crafting new legislation.
But there’s hope in the 2025 General Assembly session. State Senator Schuyler VanValkenburg, D-Henrico, is introducing a set of supply-side bills that could do more to move the needle on housing than anything else I’ve seen in Virginia.
I’m hoping that, as a Democrat, VanValkenburg won’t trigger the knee-jerk temptation among his party peers to shoot down supply-side remedies. And I’m hoping that that there is enough muscle memory among Republicans of Reagan-style, deregulatory, supply-side policies that they will embrace the proposals of a Democrat.
VanValkenburg lays out his ideas in an op-ed piece in the Richmond Times-Dispatch. Two are excellent. One is marginal but could be improved with amendments. And one makes an issue of something that may or may not be a problem. Agree or disagree with him, Vanvalkenburg is bringing fresh thinking to a shopworn discussion that has taken us nowhere.
Free up commercial zones for residential. In SB839, VanValkenburg proposes creating by-right development of multifamily housing in areas zoned for commercial development. The original purpose of zoning was to protect neighborhoods of single-family houses from commercial and industrial development by segregating the one from the other. Politically, it is imperative to preserve the protections for traditional neighborhoods. But land zoned commercial doesn’t need protection from residential uses. VanValkenburg’s proposal would make large tracts of land zoned for commercial uses available for walkable, mixed-use redevelopment — creating the kinds of neighborhoods that many people actually prefer to live in. In the Richmond area, for example, look at Scotts Addition where a former light-industrial district is booming with offices, apartment buildings and restaurants.
This reform is a no-brainer. It would stimulate mixed-use residential redevelopment, boost the supply of housing units, and close the gap between supply and demand.
Plat reform. This bill would cut the red tape for plat approvals. Too often, VanValkenburg argues, greenfield development gets bogged down in “time-consuming bureaucratic processes that delay (often by years) the start of a project.” The delays make projects more expensive and slow the entry of new housing units into the real estate market. Conceptually, this, too, is a no-brainer, although the devil may be in the details.
Housing targets for localities. I’m ambivalent about a third proposal, but perhaps it can be tweaked. VanValkenburg notes correctly that “intransigence” at the local government level represents a major barrier to increasing the housing supply. He would require localities to show an average of 1.5% increase in their housing stock every year for five years. Localities would be given complete control over how they achieve this growth, and they wouldn’t be punished for falling short as long as they make a good-faith effort.
The problem is that there is little demand for increased housing stock in many Virginia localities, especially rural counties with stagnant or shrinking populations. An exception must be carved out for them, or this is a non-starter. As for growing jurisdictions, I share VanValkenburg’s prognosis of the problem — zoning restrictions and NIMBYism are huge obstacles. I’m just not sure that arbitrary mandates are the best solution. I’d like to see more discussion of this proposal.
Banning out-of-state corporations. A fourth bill would ban out-of-state corporations from buying up housing stock and, going a step further, require them to unwind their Virginia housing portfolios. This proposal drifts into command-economy territory. Color me skeptical.
First problem: I’m not sure that corporate ownership of single-family housing is a problem. I have heard a lot of loose claims about companies snatching up houses and increasing rents, but I haven’t seen any Virginia-specific data. Only if data exists to prove that corporate ownership magnifies the affordability crisis does it make sense to begin debating what to do about it.
Second problem: Why discriminate against “out-of-state” corporations? Is that even constitutional? And what’s to stop out-of-state entities from setting up Virginia corporate entities to hold the exact same properties? Wouldn’t this bill just encumber the housing market with more red tape and legal costs?
In sum, Virginia has a real housing affordability problem, and it’s getting worse. Goosing demand won’t make a dent in the housing shortage, it’ll just drive prices higher. Virginia needs to find ways to stimulate more housing construction. VanValkenburg is getting the conversation started on how to do that.
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