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Readers of this newsletter know that I focus repeatedly on the reality that states, counties, and cities are the vanguard of problem solving for the foreseeable future. The federal government is mired in a level of partisan combat that has precedents in U.S. history but takes on new meaning in a world where Daniel Patrick Moynihan’s pithy maxim — “Everyone is entitled to his own opinion, but not his own facts” — no longer holds.

To start off the year we argued that the right question on housing isn’t “what should we do?” but rather “which housing crisis are we solving?” In that piece we identified seven intersecting housing challenges — from zoning reform to construction methods to maintenance and operations— and cautioned against over-indexing on any single one.

The housing crisis has reached global proportions. Despite significant variation in economic growth, regulatory environments, and level of state intervention, home prices and rents have risen substantially across most OECD countries over the past decade. Figure 1, below, shows that almost all OECD countries have home prices above 2015 levels, with some — such as the United States — up nearly 80% in only a decade. The increase in housing costs is having significant political reverberations. In the US, for example, affordability is the top issue concerning voters as the country enters the 2026 midterms.

As the new year unfolds, there are few issues attracting as much attention at the city, county and state level as housing. Housing policy is having one of those rare moments: a consensus across communities large and small, markets hot and cold, Democratic and Republican administrations alike, that the housing challenge must be solved and must be solved from the ground up given the unreliable and inconsistent actions of the federal government.

I started the New Year last week by attending a multi-day Symposium on Institutional Innovation in Cities at the Bloomberg Center on Cities at Harvard University. The gathering was curated by the remarkable people who power the Harvard Center (notably Jorrit de Jong, Mark Moore, Stacy Richardson, Quinton Mayne and Kimberly Leary) as well as two of the brilliant founders of The Institutional Architecture Lab (Sir Geoff Mulgan and Juha Leppänen).

In July 2018, Jeremy Nowak and I launched a Metro Finance Lab at Drexel University. The Lab had the active support and encouragement of John Fry, then President of Drexel and a good friend of both of ours. Earlier that year, Jeremy and I had co-authored The New Localism: How Cities Can Thrive in the Age of Populism, which contended that cities and metropolitan areas had emerged as the vanguard of problem solving in the United States for one overarching reason: they were not just governments but networks of institutions and leaders that cut across sectors as well as jurisdictional and disciplinary lines.

Across the United States, local governments are facing regional-scale crises with municipal-sized tools. Housing, homelessness, infrastructure, and climate challenges have all outgrown the fiscal and institutional reach of any single city. Federal dollars that once underwrote public works and affordable housing have thinned out, while expectations for local governments have only expanded. The result is a generational shift toward what we call the New Localism: a world in which cities and metropolitan regions must design, finance, and deliver their own solutions.

In our earlier work, Organizing for Impact: Lessons from Atlanta’s Housing Strike Force, we argued that success depends as much on how cities organize as on what they choose to do. Atlanta’s experience showed that systems change requires new institutions (a public asset corporation to build mixed income housing on public land) and new capital (raised via municipal bonds, public asset disposition and the aggregation of private/philanthropic resources). But as the scale of our challenges continues to grow, that same logic must now extend beyond the boundaries of individual cities.

If it was not already certain, we now know; housing affordability is the top issue driving the electorate. Derek Thompson described last week’s election results as a referendum on the “affordability theory of everything”. Zohran Mamdani comfortably won the mayoralty of the most significant city in the world on the back of an affordability-focused campaign.

Mamdani campaigned on an affirmative message of hope and possibility, motivating a broad swath of voters to believe again in the nation’s largest city.  In the process, he made the problem of housing affordability a central issue, but in some ways dangled contradictory solutions. On the one hand, Mamdani insisted on rent freezes for stabilized apartments, satiating the left-leaning wing of the Democratic party. On the other, he emphasized the need to build more units, pledging to build 200,000 affordable homes with government support and also flirting with the Abundance coalition by embracing the importance of supply and offering fast-tracked planning review.

Yesterday, the Hampton Roads Alliance held a remarkable forum in Virginia Beach. The jam-packed gathering, aptly entitled “It’s Go Time,” was a vehicle for launching the Hampton Roads Playbook (Home – Hampton Roads Playbook). The Playbook, over a year-and-a-half in the making, boldly realigns the region’s economic development strategy with a national economy that is simultaneously remilitarizing, reshoring, and re-energizing, catalyzed by an accelerated deployment of next generation technologies. With new, objective evidence showing the region’s outsized and distinctive advantages, the Playbook puts forward 8 actionable projects and initiatives that exhibit the region’s determination to lead rather than merely participate in this transformation.

America’s housing crisis has reached a tipping point. As the country climbed out of the pandemic, the cost to rent or own a house reached record levels across the country and spread far beyond the coasts. Most Americans – regardless of geography, party affiliation, or whether they rent or own – feel that housing is too expensive. Calls for reform to increase housing affordability have reached a fever pitch and addressing the crisis is increasingly the top issue for elected leaders (mayors, governors, members of Congress) across party lines.

The country has seen moments like this before. But they happen once-in-a-generation. The last time that the housing shortage was so widespread and so deeply felt was after WWII, leading to marquee federal legislation that set the foundation for American life as we know it today. The country again finds itself in a historic moment to make big changes to address the nation’s housing shortage and affordability.