For decades now, progress in solving New York’s housing crisis has stagnated amid the contest between two dominant visions: one that would have the city build up and up and up as if it were Hong Kong, and another that would privilege intimate scale — in some parts of the city meaning the charming traditions of European urbanism and in other parts, farther from the center, meaning the traditions of Levittown. Binary solutions nearly always present a trap. But last month the city took a historic step toward breaking out of it. After 175 community board meetings and two public hearings, each of which unfolded over nearly 15 hours, the City Council passed the most extensive set of zoning changes in more than 60 years.

The Zoning Resolution of 1961 radically altered the contours of the city in a way that was described in one academic analysis as reflecting “a disdain for the existing built form.” Famously labyrinthine, the codes, in the simplest understanding, prioritized high-rise office buildings over housing as the city’s population went into decline. The new rules — packaged as City of Yes for Housing Opportunity — roll back arcane restrictions that have long stifled housing supply in an era of staggering demand, and they have come about largely under the radar of New Yorkers, a vast majority of whom do not immerse themselves in the wonkier corners of planning and policy.

City of Yes does not — and isn’t intended to — resolutely end the city’s housing emergencies, which policymakers have estimated would require 500,000 additional units of housing. But it represents a vital new approach, one that shifts the focus away from the current paradigm, where the answer seems to consistently and tenaciously lie in building glass towers in high-density neighborhoods in Manhattan, northern Brooklyn or the waterfront in Queens and making some percentage of them “affordable,” a term subject to multiple interpretations. Again and again, this model tends to invite fierce community opposition — as it has with proposed projects across from the Brooklyn Botanic Garden and in Gowanus — that plays out over years and mountains of litigation.

The guiding principle behind City of Yes is to distribute the responsibility of creating housing more evenly, essentially extending it to every neighborhood in the city. Say you are a homeowner with an underused backyard. Under certain conditions, you can now build or repurpose a structure of up to 800 square feet to rent out long term (Airbnb use is not approved) or generously hand over to your aging parents. The crux of the plan, though, is an emphasis on modest structures of five or six stories rather than 30.

This is meant to address what urban planners characterize as “the missing middle,” the void of a certain housing style that cities across the country are now trying to fill. Zoning changes do not mandate where and how much housing ought to be built; they open up (or foreclose) possibility. In this case, they unlock a catalog of opportunities to facilitate development; converting office buildings to apartment buildings around the city, long suggested as a way to create housing, now has a much easier path.

According to the calculations of the city’s planning department, City of Yes will create more homes accessible to those at lower income levels over the next 15 years than all of the city’s other inclusionary housing programs since they first came into being in the mid-1980s. The plan further incentivizes development of all types of housing by relaxing — and in some places eliminating — the expensive requirement that a certain number of parking spaces be allotted for new apartment complexes. It is a requirement that urban planners and ordinary car antagonists have complained about for decades.

In all, City of Yes is expected to produce 80,000 new units of housing, which might seem unimpressive, given the need. But this amounts to many, many more homes than previous amendments to the zoning code have produced. This goal is to be met in part with the help of a new, state-sponsored tax incentive and a $5 billion contribution of additional city and state funds, for which the City Council speaker, Adrienne Adams, fought vigorously.

“City of Yes highlighted what municipal-led initiatives can achieve,” said Annemarie Gray, who used to work in planning and housing policy for the city under the de Blasio and Adams administrations and now serves as the executive director of Open New York, a nonprofit that supports housing expansion. But what is necessary going forward, in her view, are aggressive measures taken at the level of the governor’s office and the State Legislature. Some of this would involve changing certain zoning codes outside the city, especially near commuter rail lines, to accommodate apartment buildings.

Despite the obvious need, recent efforts to increase housing density in New York’s commuter suburbs have failed. Assemblyman Robert Carroll, who represents Park Slope and other adjacent Brooklyn neighborhoods, told me that “during the last two years, we have been unable to convince a single suburban county to build more housing.”

Recently, Mr. Carroll has taken the side of “the missing middle” for a site in Windsor Terrace, in his district, where the Arrow Linen and Uniform Supply Company has stood since 1947. In conjunction with a developer, the longtime owner would like to turn it into a 13-story apartment complex, in a plan ginned up well before City of Yes was passed. Mr. Carroll and many members of the community are pushing for something closer to seven or nine stories with more affordable units than have been proposed.

In an article in City Limits last year, Zellnor Myrie, a state senator who has since announced a run for mayor, wrote that between 2010 and 2020, parts of his district, which includes lower-income neighborhoods in Central Brooklyn, added 7,400 new housing units, while in Windsor Terrace, that figure stood at 268. In six of those years, he wrote, the neighborhood actually suffered a net loss of housing.

What is striking about the debate, no matter how contentious, is the shape it has taken and that such a message has really resonated. “The push to build housing in neighborhoods that haven’t is very strong,” Shahana Hanif, the local councilwoman for Windsor Terrace, who now has the most significant say in the fate of the project, told me. Many people who live in the neighborhood, which has plenty of single-family houses owned by gentrifiers, have argued for a development entirely made up of affordable apartments. The tension has not been between those who want all and those who want nothing.

When Mayor Eric Adams unveiled the final budget of his first (and possibly last) term in office on Thursday, there was no sign of proposed cuts to libraries in the $114.5 billion document, as there had been in years past.

There were no warnings that the surge of undocumented migrants to New York City would prompt budget cuts. There were no new big-ticket initiatives, as one might expect in an election year, with the mayor facing a battalion of well-funded challengers and a federal corruption trial that is set to begin just weeks before the Democratic primary in June.

Instead, the mayor offered a more optimistic budget blueprint, one filled with increasing revenues buoyed by surging business taxes and lower spending for a migrant influx that has slowed in recent months.

“I think it’s really underrated how well of a fiscal manager I have been for the city,” Mr. Adams said on Thursday. “We turned the city around,” he added.

During his budget address, Mr. Adams said his administration had “set the table for success” by managing expenses and spending strategically.

The mayor’s budget projects spending some $2 billion less for asylum seeker services than originally projected through the 2026 fiscal year, an apparent byproduct of the outgoing Biden administration’s border restrictions and the city’s own efforts to pressure migrants to leave the shelter system.

The city says it has seen 28 straight weeks of declines in its census of asylum seekers.

The reduced spending projections on migrants also seem to acknowledge that the administration had been overstating its projected costs, as the city’s independent budget watchdog contended this month.

“Perhaps the biggest gimmick here is that $2.4 billion of the $2.7 billion that the mayor is claiming in savings is merely correcting for his past overbudgeting of asylum seeker costs, which the Independent Budget Office has highlighted,” Brad Lander, the New York City comptroller, said in a statement. Mr. Lander is running for mayor.

But the city also projects spending $550 million more this fiscal year on homeless shelter services unrelated to asylum seekers, and another $325 million on rental assistance, as the city’s conventional homeless population surges.

On Thursday, the mayor attributed the rising homeless population to people migrating to New York City’s shelters from elsewhere in the United States.

Mr. Adams said there was “a substantial number of people” from outside New York coming to the city but that he wasn’t sure why.

The city projects budget gaps of $4.2 billion in the 2027 fiscal year and $5.4 billion in the 2028 fiscal year. The city is planning to put no additional money into reserves, even as the nonpartisan Citizens Budget Commission argues that the city is understating those upcoming budget gaps.

“The city chose not to take this opportunity to add to its reserves but should do so if revenues continue to exceed projections or spending is lower than expected,” Thomas DiNapoli, the New York State comptroller, said in a statement. “With the potential for significant policy changes at the federal level in the coming year that could affect city finances, this should be imperative.”

This proposed budget is Mr. Adams’s fourth, and the last before he mounts what appears to be an uphill bid to retain the mayoralty. Mr. Adams is facing trial on five federal corruption counts in April. His legal defense fund is in the red.

The budget funds several relatively modest initiatives that the mayor announced in his State of the City address this month, including increasing homeless shelter capacity and building up to 100 beds with temporary, wraparound services for mentally ill patients who are transitioning out of hospital care and have no homes to go to.

The mayor’s budget proposal is negotiated with the City Council, and by June 30, it must pass a budget for the fiscal year beginning July 1.

“The investments in this plan simply do not meet the moment or match the scale of the needs of the city,” said Justin Brannan, the chair of the City Council’s Finance Committee. “New Yorkers are struggling, especially working families. They need the city to help them, help with the outrageous cost of child care and early childhood education, help by investing in an affordable CUNY, help them unwind in a safe, clean park and we’re not seeing any of that in this plan.”