Shapiro unveils $1 billion plan to ‘go big’ in housing and zoning reform

With housing affordability at the forefront nationwide, Democratic Pennsylvania Governor Josh Shapiro proposed a $1 billion program to build more housing across the state.

Shapiro’s Critical Infrastructure Fund – nestled within his broader $53.26 billion budget recommendation – would support housing and infrastructure projects and finance them with capital raised through new bonds.

“Instead of tinkering with this, let’s go big and make a real impact,” Shapiro told lawmakers Tuesday in his annual State-of-the-State address. “We need hundreds of thousands of new homes.”

In an hour-and-a-half speech unveiling his 2026 state budget plan, Shapiro outlined a sweeping state strategy for zoning reforms and land-based housing development. Measures would allow for additional housing units, promote transit-oriented development and streamline mixed-use development on main streets and commercial corridors, paving the way for adding tens of thousands of new homes in Pennsylvania’s cities and towns.

Shapiro’s push for zoning reform reflects a pattern of solutions being pursued by governors and lawmakers from various political parties as they face the collapse of access to affordable housing for more and more Americans. Texas, Florida, Colorado, Washington and California have passed zoning reforms that disenfranchise local governments, often with bipartisan support.

However, Republican lawmakers in Pennsylvania signaled after Shapiro’s speech that they will scale back his proposed budget because of its size.

“The affordability crisis is real and people are struggling,” House Republican Whip Tim O’Neal said in a statement. “This proposal from Governor Shapiro is irresponsible and will contribute to rising costs across the state.”

I miss the housing boom

Pennsylvania is having its own housing crisis, a situation common across the United States. In his speech, Shapiro noted that more than half of the state’s housing stock is more than 50 years old.

“If we don’t act now, we will be short 185,000 homes by 2035,” he said.

Unlike the Sun Belt states, Pennsylvania – and other Rust Belt states – missed the wave of new housing construction in the pre- and post-pandemic era. Home prices in the state skyrocketed as even modest demand collided with a long-standing, structural shortage of housing, especially entry-level and mid-price homes. Pew Charitable Trusts Analysis last March.

The report notes:

“From 2017 to 2023, local governments issued building permits for only enough units to increase the state’s housing stock by 3.4% – well lower than the United States as a whole, which saw a 7.5% increase over that seven-year period. Meanwhile, the number of households in Pennsylvania has increased by 5.1%, which is higher than the increase in housing stock. Fewer permits issued mean fewer homes built – a key reason rents have risen dramatically in Pennsylvania.”

The authors of the Pew analysis recommended that the state follow the path of zoning reform pursued by other states, including allowing missing median housing in single-family zones, lowering parking minimums and allowing accessory housing.

Cities have taken steps themselves

Pittsburgh passed zoning reform about five years ago to address its own escalating housing crisis. The city created neighborhood-based, inclusive zoning districts that required larger new developments to reserve a share of units that were affordable in hot-market areas.

The Builders Association of Metropolitan Pittsburgh sued the city over the new rules, but neighborhood groups mobilized to support the city. A federal judge dismissed the case last year, ruling that the association filed the lawsuit prematurely.

The builders have not yet been able to demonstrate any damage because the local law is so new.

In 2025, the Pittsburgh City Council introduced the Housing Needs Assessment Bill, which would legalize ADUs citywide, eliminate parking minimums, and create a voluntary affordable housing incentive program tied to affordability or replacement fees. The regulation is still pending.

Philadelphia, across the eastern state, has made modest strides in affordability.

The City Council created a mixed-income neighborhood overlay, which requires residential projects with 10 or more units to set aside 20 percent as income-restricted housing. Developers can receive additional height and lower parking requirements in return.

In addition, the citywide Mixed Income Housing Bonus gives developers additional density, floor space or height if they include or pay for affordable housing instead.

Zoning code reform across the state

Shapiro said there is no catalog of the various rules and laws in 2,560 municipalities.

“We need to create one so we can help local governments understand what works best to build more affordable housing,” he said. “That also means working with local communities to modernize the council’s planning code so that building can happen where it makes sense – and to reduce red tape where it doesn’t need to.”

Politics will determine whether Governor Shapiro succeeds in cutting red tape, as has happened in other states. The Republicans have a small lead in the Senate, while the Democrats have had a one-seat majority in the House of Representatives since 2022. The divided legislature has slowed policymaking, especially in housing.

Shapiro tried last year to revive a program to repair homes so residents could stay in them. The Whole Homes Repair program began in 2022 as a one-time initiative funded with federal dollars under the American Rescue Plan. For the third year in a row, he was unable to get state appropriations through the Legislature.

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