The housing market is strained. Could repurposing federal land be the answer?

Want more housing market stories from Lance Lambert’s ResiClub in your inbox? Subscribe to the ResiClub newsletter. There is a growing push in both the Democratic Party, including from Kamala Harris, and the Republican Party, including from Donald Trump, to repurpose some federally owned land—which accounts for 28% of the nation’s total land—for new housing development. The idea is that selling off some of this land could spur more home construction and help reduce the nation’s “housing shortage.“ To better understand how much federal land is owned and where it’s located, ResiClub analyzed the most recent federal land data from the Congressional Research Service. Repurposing federal land isn’t unheard of: From 1990 to 2018, the total amount of federal land decreased by 5%. That said, while there are more than 615 million acres of federal land in the U.S., only a small percentage would be suited for housing development. More than a third (36%) of all federal land is in rural Alaska—areas with very little housing demand, infrastructure, and local services. Most federal land covers swaths of deserts, mountains, and remote wilderness. And the markets with the largest estimated housing shortages—metros like New York City and San Francisco—do not have much undeveloped federal land to spare. “There probably aren’t that many [federal] land parcels that are simultaneously not that valuable to the federal government and very valuable for housing,” Daryl Fairweather, chief economist at Redfin, tells ResiClub. Click here for an interactive of the chart below “The [federal] land that would really make a difference is very limited,” Fairweather says. “That doesn’t mean that it shouldn’t be done—if you build 50 units on top of a post office, that’s 50 more housing units than we had before—but it’s not a comprehensive solution.” Some federally owned land outside of Las Vegas may be promising for new development considering the vast majority of the state’s territory (80%) is federal land. But even then, builders would be betting on future demand in those newly developed regions. Moreover, these areas would also need infrastructure, including transportation, jobs, and sewer systems. “I think there are better ways to build housing than to reallocate federal land in the exurbs of Las Vegas versus doing infill housing in the center of Las Vegas and the urban cores,” Fairweather says. “It’s better because you don’t have to build new roads or new schools and it’s where people actually work—there’s already demand for it there.”  Easing local zoning restrictions, argues Fairweather, would do more to bring about new housing than selling off federal land. “These [zoning] issues are in every single city that has high earners and a strong economy,” Fairweather says. “It’s kind of the curse of having a strong economy—if you don’t build housing to keep up with the growing economy, then affordability gets out of control.” The Big Picture: Repurposing federal land for housing development might provide some marginal supply relief. However, given that most federal land is not currently suitable for development and that federal land within high-demand markets is very limited, this policy alone wouldn’t move the needle much.