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America’s Upzoning Bills Are Already Creating More Housing

While the bills getting passed in cities and states nationwide seem minor, market forces have acted on them

February 28, 2022

Various U.S. cities and states have, in the last few years, weakened the grip that zoning and other land-use regulations have on the housing market. A number of cities have reduced or abolished parking minimums, while others have legalized somewhat higher densities by allowing duplexes or slightly more intensive development by-right. 

Politically, these modest upzonings are easier, and by some counts even popular. But do they lead to meaningful new construction? It’s early, but there are some promising signs. 

California

California’s SB 9, which went into effect early this year, is among the bills brought forward by YIMBY state senator Scott Wiener. SB 9 allows homeowners to divide their land or build duplexes or accessory dwelling units across most of California. 

The bill is by no means radical. It exempts historic districts, limits development to homeowners residing on the property for at least three years, and requires compliance with local design codes. Research by housing policy analysts found that the bill’s ultimate impact would likely prove modest. Already, some California cities are attempting to reduce SB 9’s ability to preempt local rules. But it was more likely to pass than more radical reforms such as SB 50 and SB 827, also advanced by Sen. Wiener, which would’ve allowed genuine urban-style densities statewide.

One company is taking advantage of the liberalization. Homestead works with homeowners to facilitate ADU development. The firm builds and manages units on eligible lots, taking a percentage of the revenue from the successful rental or sale of the ADU. To date, the firm has undertaken over 80 developments.

“For everyone to [be able to] take advantage of ADU laws, managing a construction project can’t take up all of your time, or even a lot of it,” co-founder Sam Schnieder told Dwell. So Homestead manages it for the homeowners, letting them “upcycle an existing space into new housing and passive income.”

Memphis, TN

In late 2021, Memphis joined the ranks of cities allowing modest density increases. The city’s reform lets residential developers build 3-6 unit properties. These are typically classified as commercial projects, thanks to international building standards, but can now be constructed under residential classification. Memphis’ new rules allow for alternatives to sprinklers for fire mitigation, shared egress points between some units, and dropped requirements for separate schematics, according to Opticos Design.

Daniel Herriges with Strong Towns discusses why the reclassification is important. The expense and knowledge requirements of building to the commercial code means fewer developers can build at that density. Now that Memphis has made it easier, he writes, there should be a litany of small-scale developers in the city who are now ready to do small infill projects on commercial corridors. One such developer is Jones Urban Development Co., which now builds cottage homes throughout Memphis but would like to scale up. 

Minneapolis

On the other hand, Minneapolis’ efforts to nix single-family-only zoning and allow triplexes by-right have so far gained mild interest. As of September 2020, only three developers had responded with plans to build, and by March 2021, 70 total units had been added, reports Axios.

Yet, as one developer noted while speaking to Axios, the answer is yet more reform. The cost of demolition makes it uneconomical, he said, to tear down one home just to build three. A law that would streamline 6-story buildings – which had been part of the city’s early zoning reform talks – would’ve moved the needle far more in encouraging redevelopment of single-family sites.  

That said, it’s too early to discern the impact – 2020, when the initial measurements were passed, was a tough year economically, especially in Minneapolis. Moreover, argues Herriges, it will take some time for developers to adjust to the new options available.

Oregon

In 2019, Oregon’s bipartisan zoning reform did away with single-family-exclusive zoning laws and legalized construction of denser housing, with fourplexes being the upper bound. Archinect notes that this was the first such sweeping state-level legalization of missing-middle construction. 

Ever since, denser development has increased in Bend, with 650 units under construction in the city as of late January, compared to 62 a year prior. 

At least one existing development is impacted by the new law, Frog Pond West in Wilsonville, was initially conceived as a single-family development thanks to community preference. Now part of the complex must change in response to the new law.  


So far, it’s too early to say whether these and other reforms will add a significant amount of housing. But the Homestead example in California shows that market actors may be ready to respond. There are developers nationwide who specialize in everything from ADUs, to tiny homes, to the 4-, 5-, and 6-plexes (or more) that make up America’s “missing middle” vernacular. They are often discouraged by governments and by institutional investors who will only lend within the existing regulatory framework. 

If that framework changes to allow more housing diversity, the market will inevitably respond with companies like Homestead who wish to maximize the full potential of the new by-right zoning. This should increase housing supply and cool prices, showing that a modest liberalization—while not ideal—is still better than none at all.

This article featured additional reporting from Market Urbanism Report content staffer Ethan Finlan.