America’s housing crisis has no shortage of potential solutions. From innovative construction methods to creative financing models, brilliant ideas are emerging from think tanks, startups, and local governments across the country.
But here’s the puzzle: some of these innovations spread like wildfire, while others—despite being equally promising—get stuck in development hell for decades.
Take two examples that perfectly illustrate this phenomenon.
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Tale of Two Innovations
The Stuck Solution: Modular Construction
Modular housing should be a game-changer. By building homes in factories using standardized designs, it can slash construction costs and timelines. In Sweden, modular construction accounts for the vast majority of new single-family homes. Japan and the Netherlands have embraced it too.
But in the United States? It’s barely a blip on the radar, despite decades of attempts and high-profile investments.
The Success Story: Housing Production Funds
Meanwhile, consider the Montgomery County Housing Production Fund. Launched in 2021 in Maryland, this $100 million revolving loan fund helps create mixed-income housing developments.
In just a few years, the concept has spread to Atlanta, Chattanooga, Boston, and Chicago. Each city has adapted the model to fit their local needs, but the core innovation is taking root nationwide.
So what’s the difference? Why did one solution spread rapidly while the other remains stuck?
The Fragmentation Problem
The answer lies in understanding how housing regulation works in America—and it’s messier than you might think.
Unlike most industries that are regulated primarily at the state or federal level, housing is governed locally. The United States has approximately 39,000 municipalities, most with their own zoning rules. More than 10,000 “authorities having jurisdiction” oversee building permits, each determining whether proposed buildings comply with local codes.
For modular construction, this creates a nightmare scenario. Companies often need to create custom solutions for each jurisdiction, eliminating the cost and time savings that make modular construction attractive in the first place. It’s like trying to mass-produce cars when every town requires different engines, brakes, and safety features.
Housing production funds face no such barrier. They typically work through public housing authorities that operate under similar frameworks across state lines, thanks to federal guidance and state enabling legislation. The regulatory foundation is already harmonized, making it much easier to replicate successful models.
The Missing Ingredient: Policy Entrepreneurs
But regulatory compatibility alone isn’t enough. Just because an idea can spread doesn’t mean it will.
This is where policy entrepreneurs come in—the unsung heroes of policy innovation.
Political scientist John Kingdon defines policy entrepreneurs as “advocates for proposals or for the prominence of an idea” who are “willing to invest their resources in the hope of a future return.” Think of them as the bridge between good ideas and real-world implementation.
The Center for Public Enterprise exemplifies this role perfectly. As a neutral advocate for housing production funds, they’ve worked directly with cities like Atlanta, Chattanooga, and Chicago to set up funds and provide technical assistance. They don’t profit from the idea—they’re simply committed to making it work.
Other successful policy entrepreneurs in housing include:
The Path Forward: Two Key Solutions
To unlock more housing innovations, we need a two-pronged approach:
1. Tackle Regulatory Fragmentation Head-On
We need policy entrepreneurs focused specifically on state-level reforms. States have the power to harmonize building codes or create reciprocity agreements that would allow innovative construction techniques to spread more easily.
This wouldn’t just help modular construction—it would accelerate adoption of new materials, techniques, and technologies that could make housing more affordable, sustainable, and durable.
2. Create Better Matchmaking
America’s housing markets are incredibly diverse. What works in San Francisco might not work in Cleveland. We need organizations that can take the growing wealth of housing innovations and identify which solutions would work best in specific places.
Some communities need upzoning and permit streamlining. Others need creative financing from state housing agencies. Some need regulatory constraints removed, while others need new catalysts created.
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The Bottom Line
The housing crisis won’t be solved by good ideas alone—it requires the right people and organizations to champion those ideas, navigate regulatory complexity, and adapt solutions to local contexts.
As more innovative housing solutions emerge, the communities that will benefit most are those that cultivate and support policy entrepreneurs: the advocates, bridge-builders, and implementers who can turn promising concepts into housing reality.
The question isn’t whether we have enough good ideas to solve the housing crisis. The question is whether we have enough policy entrepreneurs to make them happen.
To read more on this topic, visit We Need More Policy Entrepreneurs to Solve the Housing Crisis,
