Housing Hopes, or Housing Half Measures? State of the State 2025

When it comes to housing, Governor Kathy Hochul has been banging on the same drum for years: New York isn’t building enough. In public appearances and interviews, she has repeatedly emphasized that New York’s housing shortage is driving up costs and pushing people out of the state.

Her State of the State speech Tuesday continued this theme. “We need to build, and build, and build some more,” she said, to a smattering of applause from the crowd of legislators and politicos gathered for her speech in Albany.

Hochul has made strides toward this goal within New York City. Last year, she passed a legislative package designed to boost housing growth in the five boroughs and pledged $1 billion in state funds towards Mayor Eric Adams’s signature “City of Yes” zoning changes, which are projected to add around 80,000 new homes.

But building housing in the rest of the state has proved an elusive goal. Many areas, particularly in New York City’s suburbs, have sought to curb new housing for decades by passing laws and zoning codes that sharply limit what kinds of housing can be built, or even banning it entirely.

Hochul’s previous efforts to shift this status quo have largely foundered, and this year, it seems like she’s backing off. Instead, the top line of her housing agenda is providing financial assistance to first-time homebuyers and limiting the role of private equity in New York’s housing market — neither of which is likely to significantly bring down home prices or rents. She’s also proposing a ban on certain types of software that landlords use to set rents, and that the U.S. Justice Department alleges artificially inflate prices.

She’s not totally ignoring the supply shortage: Her budget proposal includes new policies to send state cash to help affordable housing developers and local governments boost their housing stock.

One such measure is the creation of a $100 million state fund to offer low-cost loans to developers who include affordable housing in new buildings. When developers repay the money, it can be used to back more housing projects. Massachusetts and Atlanta recently implemented similar funds.

“This is a type of tool that is increasingly being deployed all over the country,” said Paul Williams, director of the think tank Center for Public Enterprise. “You fund it once, and then you have a tool that supports projects in a revolving fashion.”

Hochul is also seeking to expand tax credits available to affordable housing developers, and offer state grants to towns that commit to expanding their housing stock.

But compared to her proposals in previous years, these measures appear modest.

“Ultimately, state policy to address housing affordability that doesn’t address zoning restrictions on building new homes is incomplete. So we were disappointed in that,” said Annemarie Grey, director of the pro-housing growth group Open New York.

Another provision of Hochul’s agenda would create an exemption for some new homes from the most stringent aspects of New York’s environmental review law, which is frequently used by NIMBY forces to block new housing development. But it would only apply to a subset of small apartment buildings, and would be a far more modest change than a similar reform recently enacted in New York City.

The change would be “a good first step,” said Sean Campion, a housing policy expert at the Citizens Budget Commission. “But broader exemptions are needed to speed up housing production.”

Despite the doubts from outside experts, Kathryn Garcia, Hochul’s director of operations, told New York Focus that the administration is hopeful that their grant program can spark a wave of statewide housing growth.

“Communities need infrastructure investments,” she said. “It’s very hard to build a house without a sewer.”