In recent months, a slew of cities and states have sought to forego single-family zoning in favor of higher density housing options—hoping it may be a cure for the ongoing affordability crisis.
From California to Oregon, North Carolina, Minnesota, and Virginia, legislation has been introduced and, in some cases, approved, all of it designed to allow for higher-density zoning in areas previously reserved exclusively for single-family housing. The move to higher-density zoning is seen, by some, as a way to alleviate affordability concerns amidst rising home prices.
“I do think, as a country, we need more affordable housing,” said Suzy Lindblom, COO of Planet Home Lending.
MReport spoke to lawmakers from Oregon and Washington, as well experts from ACC Mortgage, Planet Home Lending, and LendingTree to discuss the impact of straying from single-family zoning. Here’s what we learned about this important trend and the implications it could hold for both homebuyers and the mortgage industry.
A Nationwide Discussion
Legislation introduced in Virginia (HB 152) would legalize duplex homes, townhouses, and cottages in any place currently zoned for single-family housing. A report by City Lab stated the Commonwealth is struggling with affordability and inventory as interest in the market has spiked following the pending arrival of Amazon’s HQ2.
Washington’s Senate Bill 6536 debuted in February and would ban single-family zoning in most of the state’s cities—including Seattle.
Some bills haven’t been so lucky, of course. California’s ongoing battle with affordability and inventory took a hit earlier this year as Senate Bill 50 failed approval by just three votes, according to the Los Angeles Times.
SB 50 would have allowed homeowners to convert a garage, office, or spare room into living quarters. The legislation had a provision for allowing three homes on land previously zoned for single-family.
National lawmakers have also shown a sense of urgency when it comes to addressing America’s housing woes, as the House Financial Services Committee passed several laws in February, including H.R. 4351—the “Yes in My Backyard Act” (YIMBY). The legislation would require cities that receive Community Development Block Grant funding to submit a plan to track and report the implementation of land-use policies that promote housing production.
Industry Experts Weigh In
Tendayi Kapfidze, Chief Economist for LendingTree, told MReport that, despite worries expressed by some critics, removing single-family zoning does not restrict single-family homes.
“The zoning restriction creates affordability problems in many of the most desired metro areas and removing it should be a priority for cities that want to be competitive in the future,” he said.
He added that April’s data found the average existing single-family home price was $288,700, while the median condo price was $267,200. Kapfidze added “the difference is even greater for homes in the same market as condos are more often in more expensive locations.”
He continued, adding there is an increasing demand for denser neighborhoods and cities are “physically running out of space.”
Lindblom noted that California now allows a three-unit apartment on land previously zoned for single-family, as long it is within a half mile of public transportation.
“I think that is critical,” she said. “It’s going to change how we look at single-family zoning, and we need to adapt to it, but upzoning, as it’s called, hasn’t always worked. It’s important that we focus on the appropriate restrictions. Minneapolis did up-zoning as well, like California did, but they put in criteria that you have to have 10% of the units be affordable housing and meet borrowers with a median income.”
Lindblom also agrees that more cities will follow suit in the months and years to come, allowing for higher density housing. One interesting twist on these trends, specifically on the west coast, is accessory dwelling units—usually a garage conversion or a small house on the same property as a larger home.
“That’s critical to help people be able to afford housing, especially in these high markets like California,” Lindblom said. “I do see a change, and I think we’ll continue to see this change, and I think, as an industry, we will adapt to this change to help more consumers get into housing.”
Oregon’s HB 2001
Oregon’s House Bill 2001—which was approved on August 8, 2019—mandates that cities with a population more than or equal to 25,000 must allow higher density housing types such as fourplexes and townhomes in areas previously zoned for the development of single-family housing. Cities between 10,000 and 25,000 population would have to allow duplexes in single-family zoned areas.
“People are absolutely outraged,” said City Commissioner Amanda Fritz, who is the Portland City Council’s liaison to the League of Oregon Cities, according to a November edition of the Willamette Week. “There were multiple people saying it needs to be repealed.”
West Linn, Oregon, Mayor Russ Axelrod also referred to the legislation as “stupid” during a work session last year, according to the Willamette Week.
Speaking to MReport, Fritz called HB 2001 a “statewide preemption of local authority.” Fritz said the city officials spent four years on a comprehensive plan and looked at “every single lot” to see which areas were appropriate for “upzoning.”
“The state legislature decided that they were going to pass this law with pretty much no consultation with any of the cities in Oregon. We have over 200 cities in Oregon and nobody was asked, ‘Is this something that’s going to be helpful?’” Fritz said.
Fritz said city officials were doing the same work in a “more thoughtful and careful” way. She also said the idea that more housing is appropriate anywhere in the city “completely disregards the climate crisis.”
Oregon has a statewide land use planning system that has 15 different goals that must be balanced. Fritz added, “This law just says, ‘Nope, forget all about that. Forget about the climate crisis. We just want housing at any cost.’”
Fritz explained that no members from the League of Oregon Cities Board were in favor of the legislation, and they were not consulted before the bill was passed.
Gordon Howard, Community Services Manager with the Oregon Department of Land Conservation and Development, noted that Tina Kotek, Speaker of the House of Representatives, introduced the bill in February 2019. Kotek had been working on the bill for more than six months prior.
Howard said, like many other regions of the country. Oregon has what is perceived to be a housing crisis—a shortage of housing units for all income levels.
Howard said the bill—passed with bipartisan support—has several benefits, mostly designed to increase the number of housing choices. He said townhomes and duplexes were once staples of neighborhoods between the 1920s and 1950s, but most cities later rezoned these areas to exclude anything but single-family homes.
“Every single study I’ve ever seen on the cost of development finds that it costs more to provide new services to undeveloped areas on the edge of town without any existing urban services than for increased infill and redevelopment in existing urban neighborhoods because urban services are already there, even if they have to be upgraded and improved,” Howard said. Howard added that increasing housing density could lead to more housing choice for prospective buyers and help consumers find properties that “fit with their long-term needs."
In response to the bill’s opposition, Howard said many people are simply used to living in single-family neighborhoods and may have an aversion to change—even if it has long-term benefits for their community and even their own neighborhood.
He added that there will likely be “significant opposition” moving forward and when the time comes for cities to write codes around the legislation.
“If the city refuses to adopt its own code of the state law, the legislature directed creation of a model code that the city would be required to use as part of their zoning ordinance when reviewing development plans,” Howard said. “The city really doesn’t have the option of defiance. I suppose they still do, but it would be a very messy court case.”
Virginia’s HB 152
Virginia delegate Ibraheem Samirah—representing the 86th District and author of the Commonwealth’s HB 152—said the bill was created through a “multifaceted” approach.
He said a person’s ability to have a good place to live determines how much time you spend commuting, the type of job you have, and the access to good schools. Samirah said the most important tool for housing is zoning, and it could resolve much of the affordability crisis.
“We should certainly be putting money into housing trust funds and methods of building out neighborhood projects that are solely dedicated for lower-income individuals,” Samirah said. “All of those solutions have limits too, though. They don’t necessarily rise to the scale of the housing crisis in major metropolitan areas. They don’t fundamentally change what is preventing the market from keeping up with demand.”
“Our housing shortage is about markets and how restrictive landuse practices, mainly exclusionary zoning, are preventing us from building housing types that are market rate or below market rate in the neighborhoods that are desirable for jobs, transit, and amenities.”
He explained that he used research from the Brookings Institution and George Mason University’s Mercatus Center when crafting his bill, which shows the lack of supply for the middle-housing market—housing for people that make around 100% to 200% of the median income or below.
“That research suggests that loosening zoning restrictions on property owners so they can build middle housing can start to put a substantial amount of new units in the right housing markets while chipping away at some long-standing social inequalities in neighborhood choice,” Samirah said.
He also noted that people who opposed the YIMBY movement are not in the majority and they don’t represent “even a small minority.”
“Elevating the issue to the state level so that the folks that are called NIMBYs (Not in My Backyard) would not be able to exercise outsized influence on the political process is very important,” he said.
Samirah added that the Commonwealth continues to address its housing needs using the “weakest tool” to resolve the program—more single-family housing. He continued by calling the land-use the “least-land efficient, least-environmentally efficient, least-economically efficient for local budgets, and the worst way of planning out new communities.”
Compounding the issue, Samirah said, is Amazon’s HQ2. While Amazon’s expansion is expected to bring plenty of business to the area, it has caused housing costs to rise across the state, not just in the headquarters’ location in northern Virginia.
A report by CoreLogic last year, however, noted home prices in cities near the proposed headquarters—Washington-ArlingtonAlexandria and Silver SpringFrederick-Rockville—reported a minimal change.
Annual home-price growth over the past year for Washington Arlington-Alexandria and Silver Spring-Frederick-Rockville rose slightly to 3.5% and 2.3%, respectively, compared to 3.4% and 2.1%.
When compared to national trends, though, the two divisions were shown to outperform other markets. Home-price growth fell from 5.3% to 3.5% over the past year in 2019.
“While anecdotal, this does suggest that the HQ2 announcement possibly buoyed the market in what might have otherwise been a period of slowing home price growth for the Washington, D.C., metro area,” CoreLogic stated.
“I’m beginning to hear complaints coming out of places like Richmond, which are two hours away driving from D.C., and they’re saying that they’re getting D.C. traffic. This is going to be an ever-increasing problem because people are looking for cheaper housing, and cheaper housing does exist farther and farther out,” Samirah said. “The farther you drive, the better it gets. But costs will catch up. This is causing an undue burden on people of color and lower-income individuals overall.”
Despite the concerns, Samirah said there are certain places in the county where single-family housing still is relevant—mostly places that don’t have issues with congestion and traffic.
“Those areas are still developing. It might be attractive for people to go to these single-family homes, single family zoned areas,” Samirah said. “I tend to believe that’s not exactly the case for the majority of America. We underestimate how many people truly want to embrace the benefits of density, whether it be living within walking distance of a job, having robust public spaces, having access to different cultural experiences, or relying less on cars through a solid public transit system.”
The Changing Face of American Housing?
Robert Senko, President of ACC Mortgage, said it is important to provide affordable housing, especially in markets where land is a premium.
“There is no perfect answer, balancing old neighborhoods that were less densely populated, versus trying to provide more housing in a convenient location at reasonable prices,” he said.
Along with the markets mentioned above, Washington’s Senate Bill 6536 would ban single-family zoning in most of the state. Single-family zoning makes up 70% of Seattle’s zoning. The bill would also ban any zoning that restricts construction of multifamily housing in cities with populations of more than 15,000.
“The time to act is now to create more housing options in traditionally single-family zones,” the legislation reads. “The exclusion of missing middle housing is rooted in inequity as a way to keep some families out of certain neighborhoods.”
Steve Staid, the Chief Servicing Office for Gateway First Bank, said of increased housing density, “I’m not sure there is another solution right now.”
“Everyone is talking about growth in areas, like those big metroplexes, but the growth is outstripping the ability to build single-family houses anyway. It’s got to go high density,” he said.