Relaxing zoning regulations in the United States could lead to millions of new homes and ease the housing affordability crisis, according to a Zillow analysis.
Creating an additional home on one in 10 single-family lots would bring in 21% more or 387,000 additional homes over the next two decades. Even allowing one single-family home to host a livable in-law suite above the garage, in the basement, or a cottage in the back yard would yield the same results.
Zillow projected that redeveloping single-family lots to accommodate a second home over the next 20 years could produce about 10 million new homes across the 17 metros analyzed, a 20% boost over the 50 million homes these markets currently have. Allowing for two units on just 10% of single-family lots would add 27%, or 3.3 million homes, on top of that 10 million.
“The challenge of solving big metros’ housing affordability crisis is the scale of what’s needed,” said Skylar Olsen, director of economic research at Zillow. “If it was just a few more affordable apartment buildings, it wouldn’t be a problem, but we need a lot of additional supply to put the pace of long term price and rent growth in line with income and wage growth.”
The shortage in new housing development, together with strong demand, has pushed prices up, especially in pricey, coastal cities. Median home value in Los Angeles and the San Francisco Bay area has doubled, while price appreciation in Seattle has grown by nearly two-thirds over the past two decades.
In comparison, metros in the South where it has historically been much easier to build new homes have reported a home-price growth rate of a little more than 10% in that time.
The analysis revealed that easing zoning regulations would not only tackle the housing shortage and affordability crisis but also expand the range of home types available.
In Los Angeles, permitting four homes on 20% of single-family lots could yield a housing inventory increase of more than 2.3 million homes, or a 53.4% gain over the current stock when combined with the homes already expected to be built.
“Asking a few neighborhoods to absorb that change on their own is asking for a community to accept a totally different neighborhood in the future – a neighborhood different from the one they bought into and grew to love,” Olsen said. “So the questions become if we could share the influx of new housing across the full metro, could we add enough and would anyone really notice?”