North Carolina House Democrats revive state housing reform

North Carolina House Democrats will take another shot at sweeping housing reform. Several cycles of defeat on similar legislation loom in their rearview mirror.

Undaunted by a string of previously unsuccessful efforts and banking on a redoubled surge of political will to address housing affordability, lawmakers introduced House Bill 1056, titled “Relieving Housing Bottlenecks,” on Monday.

The measure anchors a broader Democratic-backed cost-of-living package. It would ban corporations from owning large portfolios of single-family homes, eliminate minimum parking requirements for new developments and allow residential construction in all commercially-zoned areas.

“For too many North Carolinians, the basic necessities have become too hard to afford,” Rep. Vernetta Alston, one of the bill sponsors, said in a press conference.

Tar Heel State lawmakers have tried for years to pass state-level legislation. The measures pre-empt local zoning authority to address a housing affordability crisis. Last year’s bid yielded only a minor change, one that prevents cities from setting building codes more stringent than state minimums.

Still, North Carolina has seen little traction in efforts for major housing legislation. Neighboring Virginia passed reforms this year. Those included a “yes in God’s backyard” bill. It allows faith-based organizations to build affordable housing “by right” on properties they own.

North Carolina’s housing reform measure faces long odds in a Republican-controlled General Assembly. Leaders referred it to the House Appropriations Committee. That group has shown no intention of taking it up. The measure lists 29 Democratic sponsors and no Republican co-sponsors.

Lawmakers could split out different parts, as they did last year, and potentially reach a goal or two.

Affordability crisis

In recent years, North Carolina has attracted a blue-chip array of business relocations. The state also wins on population growth, but both trends carry a cost.

Demand outstripped housing supply during and after the COVID-19 pandemic. The bill states that median home prices have risen by more than 50% statewide since 2015. More than one in three renter households is considered cost-burdened, paying over 30% of their income on housing.

Rent prices rose significantly but then flattened and trended downward amid the apartment construction boom in Charlotte and Raleigh. CoStar analyst Chuck McShane wrote that 2026 year-over-year asking rents in Charlotte fell at their steepest pace in more than a decade in the first quarter.

Home prices also rose significantly. Although they have eased, homes remain largely unaffordable for first-time buyers.

Corporate ownership cap

The legislation takes an aggressive approach. It borrows from proposed federal ideas, including a cap on single-family rentals by corporations.

The bill’s boldest provision bars corporations, investment trusts or other entities from owning more than 25 single-family homes. The cap applies to rentals, speculation or other non-owner-occupancy uses.

Officials would aggregate holdings of affiliated entities. Violations count as unfair or deceptive trade practices. Courts could order divestiture and $10,000 civil penalties per home.

Exemptions cover nonprofits, community land trusts, builders selling to owner-occupants and lenders on foreclosed homes. Lenders could not hold those for rental or speculation beyond 24 months.

Democrats filed a milder 2023 bill capping urban-county ownership at 100 homes. It died in committee.

Zoning and parking reforms

With the legislation, local governments must permit residential development by right in all commercially zoned areas. Densities match the jurisdiction’s least restrictive residential zone. Industrial zones stay excluded.

It bans minimum parking requirements on new development. Experts say the change cuts costs and frees land for housing. Both take effect July 1, 2027.

New programs

The bill creates a Municipal Housing Approval Acceleration Program the North Carolina Housing Finance Agency would administer. Under the program, local governments would be reimbursed up to 125% of costs to speed residential permitting.

A Workforce Housing Preconstruction Revolving Loan Program offers up to $1 million loans. Developers target housing for 60% to 120% of area median income. Eighty percent of loans go to Tier 1 and Tier 2 counties with economic distress.

Funding outlook

The bill appropriates $120 million from the General Fund. It shifts $40 million from the Economic Development Project Reserve. Funds support the programs in fiscal 2026-2027.

Possible path to success

Republicans have so far shown little appetite for sweeping state intervention in local land-use decisions. But with housing costs emerging as a top election-year concern for voters in both parties, even GOP leaders may find it harder to ignore pieces of the Democrats’ plan that promise quicker permitting, more construction and modest relief for middle-income households.