Thousands of homes on $1 land: The new housing crisis solution sweeping the country

Building homes on government-owned land isn’t new. State and local governments often lease or sell land to builders, including affordable housing developers, particularly in areas with high demand for homes.

And out West, the federal government is the major landowner. The feds own about half of the land in 13 Western states. Many of these states, from Nevada to Utah, are experiencing severe housing affordability crises.

In a rare overlap of goals between the two campaigns, Harris and Trump have both proposed building housing on federal land.

“It speaks to the underlying agreement over there being a housing supply issue,” Matthew Murphy, executive director of NYU’s Furman Center, told Business Insider. “And then the following logical question being, what can the government do about it? What are the ways it can intervene?”

Low-hanging fruit in the nation’s hottest housing markets

The Lincoln Institute of Land Policy’s Center for Geospatial Solutions found in a new study that there are about 276,000 acres of underused government-owned land in urban, transit-accessible areas that could be used to build 1.9 million additional homes.

The vast majority of buildable public land in dense, urban areas is owned by city and county governments. While the federal government doesn’t have much prime, vacant land in cities to devote to housing, it has a role to play in providing financial and regulatory support to incentivize state and local governments to make their land available, McCarthy said.

The report found that Massachusetts and Florida have the most buildable square acreage of any state in the country.

“What surprised us the most is that actually that land is in some of the hottest housing markets in the country,” McCarthy said.

Local governments tend to be cautious in selling, leasing, or otherwise repurposing the land they own, in part because of anti-development pushback from local communities. But in some states, city, county, and state governments regularly team up with developers to build housing.

In one case, San Mateo County, just south of San Francisco, leased a parcel of land in Half Moon Bay to an affordable housing developer, MidPen Housing, for $1 a year for 99 years. MidPen used it to build 160 units of new affordable senior housing, now known as Half Moon Village.

Because the area has extremely high land values and demand for housing, the fact that the county government owns the land made the project financially feasible. Privately owned land in the city would likely be too expensive for affordable housing to pencil out. And because the county owns the land it has some control over what’s on it. In this case, that means ensuring the housing remains affordable.

“It’s effectively a land donation, which helps make the project more feasible, allows us to move more quickly, build the housing more quickly,” said Abby Goldware Potluri, a senior vice president and co-head of housing development at MidPen.

‘Freedom cities’ versus affordable housing near transit

Trump and Harris couldn’t be farther apart on most issues, including the bulk of their housing agendas.

Harris wants to funnel a lot more federal money into subsidizing first-time homebuyers and affordable home construction, while Trump wants to lower interest rates, which presidents don’t historically have control over, and protect restrictive zoning.

While Harris has put forth a plan to construct 3 million additional homes by slashing red tape, Trump has said he’ll deport millions of immigrants to free up housing.

Last year, Trump floated a proposal to build 10 so-called “freedom cities” on federal land in the style of a futuristic Saudi desert city-building project with plentiful single-family housing. Economists and housing experts — and even some conservatives — have generally dismissed the plan as unworkable or undesirable for political, economic, and environmental reasons.

Some Republican lawmakers agree that more federal land should be used for homes. Republican Sen. Mike Lee of Utah has introduced a bill to allow state and local governments to buy land from the federal Bureau of Land Management to use for new housing.

Housing experts generally advocate for denser housing construction, particularly in areas near mass transit. When it comes to federal land, this would mean repurposing property in transit-rich urban areas that happens to be owned by the feds. Think new apartments above post offices, homes where parking lots used to be, and new condos in former federal office buildings.

In that vein, the Biden-Harris administration has pushed to free up government-owned property for housing. The current administration has urged state and local governments and other entities — including healthcare institutions and faith-based organizations — to look into whether they could also become landlords. As part of that effort, the US Postal Service is supposed to “pilot the repurposing of certain surplus properties for housing.”

“Depending on which side of the aisle you’re on, the nature of the housing you’re going to build is going to be quite different,” George McCarthy, who heads the Lincoln Institute, told Business Insider. “But finding the land is, of course, issue number one.”

Trump has attacked Democrats for pushing for more affordable, multi-family housing. He’s framed the Republican Party as protectors of single-family zoning.

Democrats’ plan also addresses challenges governments face when trying to sell or transform underused old buildings or unique structures. It’s sitting on nearly 8,000 unused properties, according to congressional lawmakers. The General Services Administration — the federal government’s landlord — has listed for sale many buildings it no longer uses nationwide, from a courthouse in Fort Lauderdale to a historic school building in downtown DC.

Buyers are hard to find. Sometimes, the costs of repairing the property, particularly those protected by historic preservation laws, are too high. In other cases, it’s more expensive for the government to move workers out of a building and prep it for sale than to keep operating a half-empty property. But with the right government incentives, developers could turn property that sucks value out of a community into a boon for residents.

Boosting housing in a swing state

One state with lots of immediate potential also happens to be a key swing state with a particularly severe housing shortage. Nevada is a national outlier when it comes to its government-owned land: more than 80% of the state’s land is owned and controlled by the federal government.

The Biden administration has proposed selling hundreds of acres of land in Nevada controlled by the Bureau of Land Management to local governments to build thousands of new homes. In one proposal, it wants to sell 20 acres of BLM land just outside Las Vegas — priced at $100 an acre — to the county government to use for about 150 units of housing for those who make up to 80% of the area median income.

“Building towards affordable housing on these lands could have a transformative impact, especially because land costs are a major barrier,” Maurice Page, executive director of the nonpartisan Nevada Housing Coalition, told Business Insider.

But repurposing federal land for new residential communities in Nevada would likely mean more sprawl, which comes with both environmental and economic concerns. The farther people live from their workplaces and other amenities, the more they need to drive, which is expensive and polluting. When building new housing means sprawl, developers have to factor in infrastructure and other costs — and that could start to look more like Trump’s desert cities than a climate-friendly urbanist vision.

“If we build housing, we have to make sure that it can be affordable with the right transportation and other infrastructure pieces being aligned with it, so education, law enforcement, hospitals,” Page said.