Solving Affordability with More Density

Most of us love the idea of having a single-family home on a two-acre lot, big enough to support livestock. But when it comes to housing affordability, says Zillow, Seattle, most of us also say they see a path through adding density.

Zillow reported more than three quarters of homeowners across 20 large metro areas agree local governments should do more to keep housing affordable–and most agree that allowing more building would help. But while there is meager support for new large multifamily buildings, more than half of homeowners say they and others should be allowed to convert their homes to create additional housing.

The Zillow Housing Aspirations Report, which asked homeowners for their feelings about how best to help quell affordability issues by allowing more homes into their neighborhoods, and comes as in-law suites, backyard cottages and “granny flats” gain attention as possible solutions to sharply rising housing costs. Previous Zillow research has shown that even modest rezoning to allow for more accessory dwelling units — creating two, three or four dwellings where only one sits now — could spur creation of millions of new homes nationwide.

“This kind of mid-density is often referred to as ‘missing middle’ housing, slotted between single detached homes and much larger apartment complexes of several hundred units,” Zillow said. “’Missing middle’ units are the only type of home to have gotten more affordable in the past year, but very few have been built in the past 20 years compared to previous decades: They make up only 4.3% of homes built since 2000 compared with 8.2% in the 1980s.”

The survey said 57% agreed that homeowners should be able to add additional housing on their property, and 30% said they would be willing to invest money to create housing on their own property if allowed.

The strongest support comes from younger and lower-income homeowners and those in the West, where housing tends to be the most expensive. The highest support was in the San Diego (70%), Seattle (67%) and San Francisco (64%) metros, while the lowest was in the Detroit (47%), Phoenix (50%) and Dallas (51%) areas.

Support was also strongest among homeowners of color, Zillow said. Two-thirds (67%) of black homeowners supported this type of density, compared with just over half (54%) of white homeowners – perhaps because of persistent homeownership gaps due in large part to historical discriminatory and exclusionary housing policies.

Advocacy was more muted for larger multifamily buildings. Only 37% of homeowners surveyed said they would support a large apartment building or complex in their neighborhood — and that support was more starkly divided among generations. Nearly 60% of younger homeowners (18-34) were open to large buildings, compared with only a quarter of those 55 and older.

Overall support for development of these larger apartments is highest in the Chicago (47%), Miami (45%), Washington, D.C. (44%), and San Francisco (43%) metro areas, and lowest in the Atlanta metro (29%).

However housing comes about, more than three-quarters of homeowners surveyed said single-family neighborhoods should remain that way, with more older homeowners (81%) agreeing than younger homeowners (69%). And a little more than half said adding homes was acceptable if they fit in with the general look and feel of the neighborhood. Homeowners expressed concern about the impact of more homes on traffic and parking, with 76% saying that it would have a negative impact. Nearly half said it would have a positive impact on amenities and transit.

A new California “accessory dwelling laws” went into effect Jan. 1. The laws cut through government red tape and give homeowners broad leeway in constructing Accessory Dwelling Units on their properties—in backyards, and even converting garages.

The law does not specify lot size; does not require the owner to live on site; allows building height of up to 16 feet (even if it means blocking a neighbor’s view) and provides for “junior ADUs” within the primary residence measuring up to 500 square feet. In some cases, “setbacks”—the space between houses—could be as little as four feet.

Jeff Lazerson, a columnist for the Orange County Register, wrote three recent columns on the new laws. He said within the next few years, Californians could realize a “gargantuan” increase to its housing stock, coupled with lower average market rent charges in many parts of the state.

“Necessity is the mother of invention,” Lazerson wrote (https://www.sbsun.com/2019/12/05/2020-may-be-a-good-time-to-build-a-granny-flat/). “For way too long California’s compounding housing headaches have been a dearth of housing units and obscenely high rent prices for the minuscule number of available living quarters. This piled on to the final property prices which already suffered from high land and building costs. Compounding this shortage further was the failure of housing completions to keep up with California’s growing population demands.”

Lazerson said not everyone in California is happy about the new laws. Some local governments, such as Pasadena, are considering legal action against the state, saying the state exceeded its authority. Other stakeholders are concerned about the potential environmental impact, citing groundwater and noise. And others expressed alarm that these units could attract illegal immigrants and induce overcrowding

Lazerson noted a 1,000-square-foot, two-bedroom ADU would cost around $250,000 –“30% less for a manufactured or modular ADU, according to developers I interviewed. If you were to rent it for $3,185 per month (the average two-bedroom rent in Los Angeles, according to Rent Jungle), it would take about 6.5 years to recoup your cost. Not bad! If you were to rent it for $2,385 per month (the average two-bedroom rent in Orange County, according to Rent Jungle), you are ahead by $899 per month.”

Zillow Senior Economist Cheryl Young said in an era of historically low supply and escalating housing prices, the need for more solutions to create housing opportunities is greater than ever.

“Homeowners in major markets are generally supportive of providing a range of housing options that allow for not only more housing units, but also a diversity of housing types in existing communities,” Young said. “Homeowners may continue to shy away from adding large multifamily buildings nearby, but are open to adding units in their own backyards. This ‘missing middle’ housing, they believe, could help alleviate the housing crunch without sacrificing neighborhood look and feel while improving local amenities and transit. These findings show that broad-based support, especially from homeowners, provides the middle ground necessary to move the needle needed to bring relief to the housing crunch.”