California is increasingly focused on promoting infill development to meet greenhouse gas targets and satisfy consumer demand for walkability and short commutes. Gov. Newsom’s budget adds to that focus with a $500 million deposit into a competitively awarded grant program for infill infrastructure.

Shock. Depression. Relief. Those were just some of the reactions as the year’s most controversial state housing bill met its sudden demise. But very few people—supporters, opponents, and even the author himself—can claim to have seen this coming.

In the rugged hills to the east of the Napa Valley, chainsaws and bulldozers converted a steep hillside of scrubby oak woodland and rockpiles into another vineyard. “That was an incredible rock-hopping wonderland, with frothing, amazing, waterfalling cascades every time it rained—I mean, it should have been a park,” said nearby resident Kellie Anderson of what is now a plot of grapevines at Bremer Family Winery, in the small community of Deer Park.

Over the past decade, housing costs in the United States have risen faster than incomes. While housing affordability has long been a problem for low-income families, middle-income families are increasingly facing affordability challenges, especially in urban areas with strong labor markets. How do current housing policies help – or harm – the well-being of middle-class families?...