Opportunities and Challenges for Building Homes on Federal Lands
Federal lands for development have gained traction in the mainstream media since President Trump first announced his interest in opening federally held land for housing on the campaign trail. His administration has followed through on this interest — most recently, with the creation of the Joint Task Force to Use Federal Lands for Affordable Housing between the Department of Housing and Urban Development and Department of the Interior.
NAHB CEO Jim Tobin recently spoke to The New York Times (NYT)* on this topic to highlight why this discussion is important and what it could mean for housing affordability.
“Any land that we can make available would help in [the fastest-growing] markets in particular, and then you have the ability to continue to push the suburbs out,” Tobin told NYT.
In addition to fast-growing markets such as Las Vegas and Phoenix, areas such as California — where the federal government owns about half the land in the state — can also benefit from having more available land to develop.
“Land is hard to find,” Dan Dunmoyer, president and CEO of the California Building Industry Association, told NYT. “If there is land that’s adjacent to urban cores that’s available, that would be of interest to us.”
Here’s what this opportunity means, the challenges it may present and why it matters.
What are Federal Lands?
The U.S. government owns and manages around 640 million acres of land — 28% of the total land area of the United States — with the vast majority concentrated in the Western states. Nevada, for example, is 80% federally owned land. More than half of the land in Utah, Idaho and Oregon is federally owned as well.
This land is held by various federal agencies, including the Bureau of Land Management (BLM), U.S. Forest Service and the National Park Service. The land owned and managed by the BLM has emerged as a top contender for housing and development as it is does not comprise national park or forest land, nor Native American reservation land, but rather, is primarily vast, undeveloped tracts located near or adjacent to high-growth cities.
Opportunities to Use Federal Land for Development
Nevada provides one example of utilizing this land for affordable housing purposes. The state passed the Southern Nevada Public Land Management Act (SNPLMA) in 1998, which allows the BLM to sell federal land around Las Vegas and has facilitated the reservation of approximately 562.5 acres of federal land for affordable housing purposes in the Las Vegas Valley.
The Public Land for Public Good program previously instituted in Arlington, Va., also sought to leverage publicly owned land for affordable housing and other community needs. Although it was discontinued in 2015, the program was able to save development costs by providing land to affordable-housing developers through discounted land leases and other unique financing structures. Arlington Mill Residences — a 122-unit affordable housing development — is one example of the projects completed through this program.
Challenges to Using Federal Land for Development
Despite solid examples of how this land could be used effectively, this avenue is not without its own challenges.
Although Congress currently has mechanisms in place to sell or transfer land, it is often faced with lengthy environmental reviews and legal challenges. The Federal Land Policy and Management Act (FLPMA) of 1976 authorizes the BLM to sell federal land, but most remains held for conservation purposes.
Public infrastructure and water for growth in fast-growing Western states will also be an issue, as the Colorado River Basin remains far below capacity.
Summit County, Colo., for example, sought a 45-acre parcel of U.S. Forest Service land — designated through the Lake Hill Administrative Site Affordable Housing Act, signed by President Obama in 2014 — for workforce housing. The county purchased the property, located immediately northeast of Frisco, in 2016.
As of February 2024, the county has paused the project’s rezoning application while working to secure water and sanitary commitments. Despite being identified as a critical housing need a decade ago, the project has yet to break ground because of 10 years of administrative hurdles and delays.
Why This Matters
Although utilizing federal lands is not a silver bullet to solving the housing affordability crisis, it should be an option, especially for federal land located near or in existing cities.
The lack of developable lots is a key component of the housing crisis. National values for lots reached a new high in 2023, according to NAHB’s analysis of the Census Bureau’s Survey of Construction (SOC) data, with a median lot value of $58,000 for single-family detached for-sale homes started that year.
According to the January NAHB/Wells Fargo Housing Market Index (HMI) survey, builders identified the cost and availability of developed lots as one of the top five industry challenges that will continue to be an issue in 2025, with concerns rising among respondents from 63% in 2024 to 65% in 2025. Without additional land to develop or reduced restrictions on the development of existing lots, this issue will persist.
If even a fraction of the BLM land is made available for housing development, it could have huge results. The American Enterprise Institute estimates that by unlocking 850 square miles (0.3% of total BLM land) of BLM land could lead to the production of 3 million new homes over the coming decades.
Key considerations include ensuring that that land is developed to prioritize affordable housing and streamlining the development process. Cities and developers can benefit for working together as public infrastructure will also be a challenge.
If done so properly, federal lands provide an opportunity to bolster housing supply and affordability, offering a pathway to alleviate the growing pressures faced by communities primarily in the western United States.
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