A big culprit in the housing shortage bedeviling many of the country’s most popular and dynamic cities is a long history of zoning that enshrines the single-family home (SFH) at the cost of other more economical forms of housing. That’s starting to change, just a little bit, and all potential homebuyers and homeowners should be aware of what such changes can mean for them, mostly positive, by the way.
In the San Francisco Bay Area, a U.C. Berkeley study found that SFH-only zoning covers some 82% of residential land. That’s the norm across the country. A data analysis by the New York Times a few years ago showed major cities typically had 70% to 90% of residential land restricted just for detached homes.
As cities became built out (meaning there’s little vacant land), this meant growth in housing units became increasingly difficult to achieve, requiring central-city, high-rise development in many places to accommodate population growth. Severe shortages developed in many West Coast cities and elsewhere, leading to homelessness and to brutally long commutes for residents who couldn’t afford the escalating prices of a home.
Now, a handful of cities are ditching SFH-only zoning, relaxing it or studying such moves. Minneapolis made headlines in 2019 when it became the first major U.S. city to eliminate single-family zoning. SFH-only zoning is also referred to as exclusionary zoning, by the way, and it played a role in racist policies that kept minority residents out of many cities’ most attractive neighborhoods, a history Minneapolis acknowledged in making its change.
Upzoning the West Coast
For the record, banning exclusionary zoning doesn’t mean a ban on single-family homes — it just means other types of housing can be built, too. Berkeley plans to end exclusionary zoning by 2022. The Sacramento City Council approved, allowing up to four units on virtually every residential lot. And Oakland, San Jose, San Francisco and South San Francisco are studying similar moves.
Oregon passed a state law that banned cities of 10,000 or more from having exclusionary zoning. Portland went further and upzoned, allowing more duplexes, triplexes and fourplexes as well as more accessory dwelling units (ADUs) and cottages to be built amid existing single houses. Washington state is considering a statewide ban similar to Oregon’s. Seattle recently upzoned a small section of the city although advocates are calling for more, so it’s a place to watch. And Tacoma is considering the same.
Elsewhere, Charlotte, N.C., is taking steps to reduce large swaths of exclusionary zoning, Atlanta is considering it, and Connecticut took a step in that direction by recently requiring that cities and towns allow homeowners to build ADUs.
More housing units, but not enough
• If you’re a SFH-zealot and want to live only among SFHs, slow-growing or shrinking cities are less likely to upzone because there’s less urgent housing demand. And suburbs are always a good bet.
• If you’re a density-loving YIMBY (yes, in my backyard) yet you live in a SFH area, you’ll have to be patient. Even with relaxed zoning, permitting takes time, and your NIMBY (not in my backyard) neighbors may just find a way to slow things down.
• If you’re waiting for denser development so you can move closer to a city center, you’ll really have to be patient, and lower prices may never arrive. In many cities, demand is so strong that even adding thousands of units wouldn’t halt the rise in home prices. There are decades of under-building of housing units to make up for.
Let’s see how upzoning unlocks housing supply’s so-called “missing middle,” or housing priced for a region’s middle class. In Austin, Texas, a developer used a zoning loophole to build six homes in the city’s desirable North Loop neighborhood on a lot that would normally house two single-family homes. Each sold in the mid-$400,000 range — about $200,000 less than the area average. Homeowners in these new homes now have access to all the amenities of the area — retail, restaurants and parks, all within walking distance — for about two-thirds of the cost.
Existing homeowners benefit, too
Neighborhood associations often warn that upzoning will reduce area home prices, but the evidence doesn’t bear that out. One UCLA study found that upzoning an area can increase property values. More availability in an already desirable area can drive more demand.
Existing homeowners can benefit from upzoning by converting a garage or basement into an ADU, to earn rental income. For how to finance and build an ADU, see the three-part series by Dee Gill.
What’s more, as upzoning produces a variety of home types and sizes, retirees who want to stay in their community but also to downsize now have options.