Atticus is the CEO of PadSplit, an affordable, shared housing model that creates financial independence for workers.
Ask anyone in the housing industry and they’ll tell you that they’ve been talking about a housing shortage for more than a decade. Following the housing crash, new construction decelerated dramatically, and we still aren’t close to the pace of building that started in the mid-2000s. Meanwhile, construction costs have skyrocketed (even pre-Covid), and interest rates remain at historic lows. Put it all together and any adherent to the laws of supply and demand could see the trend of rapidly increasing home prices coming from a mile away.
The housing shortage has become a far bigger problem in the past year, however. Many homeowners didn’t love the idea of showing off their home as quarantines set in, so many baby boomers looking to downsize decided to stay put. New use-cases for homes abounded overnight with people needing additional space for home offices and school pods. Supply chain disruptions added cost increases while permit office closures further constrained new supply. The result? An abundance of homes that would have hit the market never actually materialized.
Now, we’re in a situation where we need much more housing supply. We’ve needed it for a long time, and we still need the ability to create more housing much faster. Single-family zoning remains the biggest single obstacle standing in the way of rapid and cost-effective housing creation. Land-use professionals and policymakers inside local governments across the country know the history of these regulations. They know that these ancient policies were designed for a different era, for a completely different set of problems and for a completely different demographic of nuclear families that no longer exist. But, like zombies, these regulations are hard to kill. They’re also scary to confront — especially for elected officials.
Fortunately, we’re beginning to see a few local jurisdictions begin to try — through upzoning.
Upzoning Single-Family Neighborhoods
Upzoning can be explained in a few different ways. Some describe it literally as the changing of zoning ordinances to build “up” with taller buildings, resulting in more housing options but with the same footprint on the earth. Others refer to upzoning as the removal of exclusionary zoning policies that limit “upward” mobility for predominantly lower-income individuals. Regardless of which definition is being used, upzoning’s outcome is more housing density and usually the removal of policies that only allow for single-family homes or for closely related individuals to be able to reside together.
Affordable housing advocates have pleaded for upzoning for decades, knowing full well that systemic racism runs deep in local housing ordinances, and that more multi-family and shared housing increases inventory (i.e., supply), which allows for more options for those who need it most. With the housing shortage now at all-time highs, affordable housing advocates are no longer the only ones decrying policies that favor only nuclear families. Rather, policymakers on both sides of the aisle and at every jurisdiction are paying attention. Consider this alarming statistic that illuminates the disconnect: In the U.S., over 50% of the population is made up of small households, but only 12.5% of the housing stock is comprised of studios and one-bedrooms. The country’s focus on single-family homes has become unsustainable.
As anecdotal proof, I recently spoke at a public meeting in Rome, Georgia — a ruby “red” town northwest of Atlanta. A city councilperson told me afterward she was ready to “throw their zoning code in the trash” because they knew they couldn’t continue on with them as they were currently constructed.
Upzoning Reduces Friction And Increases The Housing Supply
In the City of Atlanta, a new policy was enacted in 2018 to allow for the construction of accessory dwelling units, hoping to slow gentrification by taking advantage of available space. Meanwhile, towns across California are striking down single-family zoning laws to make way for more multi-family developments. In January, the Federal Housing and Urban Development Agency issued guidance for local jurisdictions regarding shared housing, warning that restrictive zoning codes that prohibit it — like single-family housing — might violate fair housing laws. And President Biden just proposed $5 billion to incentivize local jurisdictions to remove zoning and regulatory barriers for housing creation.
These initiatives are just a few examples of the groundswell of activity that’s beginning around upzoning. As policymakers awaken to the housing shortage, they’re realizing that changing their zoning is unequivocally the most effective and efficient tool they have to address the problem and reduce the untenable amounts of friction that exists in housing today. They’re hearing from developers who are desperate to build or renovate homes while hearing from constituents about the lack of options. Not for nothing, some may also be more attuned to the racial protests ongoing throughout the nation and how zoning exacerbates the racial wealth gap.
Look at the City of Houston’s housing policies as an example of how local regulations have inhibited housing creation and thereby affordability. Houston is the fourth-largest U.S. city in terms of population, but its rents have not skyrocketed like others. In fact, according to one report, Houston ranks 53rd in terms of the average rent for a one-bedroom apartment. This is partly due to the fact that Houston doesn’t have zoning laws, making it far easier to build than most metropolitan areas. As supply increases in Houston, so does the relative affordability compared to other supply-constrained cities.
Simply put, upzoning allows policymakers to get more heads in beds across the housing spectrum, and that’s great news for advocates of multi-family construction, shared housing and affordable housing who preach that “bedrooms are for people” in order to maximize space.
Look for this trend to continue as the push for more supply and more affordable housing increases. The longer we wait, the deeper the housing deficit becomes. If we’re going to dig a hole, let’s instead bury those single-family zoning zombies once and for all.
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