Housing Freedom

Policymakers in many states have begun to realize that the consistent protection of the rights of builders and homeowners should be a statewide matter, not subject to local political whims that create a patchwork of competing and counterproductive rules that can materially change across neighboring jurisdictions within the same metropolitan area. Reforms that preempt burdensome local zoning codes are becoming more common.

This category measures the strength of state laws that protect individuals’ property rights and housing choices from local restrictions. It favors states and governors that have enacted statewide reforms to rein in local governments in several ways. Yet not all states have enacted such reforms, and the severity of local zoning laws varies from state to state. We can’t ignore those constraints either. This category can be thought of as a mix of recent reforms and the most significant local restrictions that remain in states that have not enacted statewide reforms.

This category should not be construed as a measure of housing affordability for a state. Many of these reforms are new, and their effects will take time to be realized and documented. Others are older but have not kept up with housing demand. Over time, more freedom for property owners will lead to more housing options for everyone. The resulting increases in the supply of housing types that people actually demand can bring down prices at all points. Whether and how quickly these effects materialize in a state will depend on policy and market conditions over a long-term horizon. The policy snapshot we measure here is therefore best thought of as measuring a state’s movement toward supply-expanding reform in the present.

Three states receive an A (in rank order): Idaho, Vermont, and Montana. All these states have enacted some of the biggest statewide reforms across most of the dimensions scored in this category.

Nine states receive an F for the opposite reason: They didn’t significantly reform their housing laws, and their status quo is among the lowest scoring in the country. Those F‑grade states are (in rank order; ties listed alphabetically): Oklahoma (tie), Pennsylvania (tie), Georgia, Wyoming, Mississippi, Minnesota, Alabama (tie), Louisiana (tie), and Michigan.

Seven governors receive an A (in rank order): Idaho’s Brad Little (R), Montana’s Greg Gianforte (R), Vermont’s Phil Scott (R), Connecticut’s Ned Lamont (D), Texas’s Greg Abbott (R), Maine’s Janet Mills (D), and New Hampshire’s Kelly Ayotte (R). All these governors signed significant housing policy reforms during their tenure.

Nine governors receive an F (in rank order): Oklahoma’s Kevin Stitt (R), Georgia’s Brian Kemp (R), Wyoming’s Mark Gordon (R), Mississippi’s Tate Reeves (R), Pennsylvania’s Josh Shapiro (D), Minnesota’s Tim Walz (D), Alabama’s Kay Ivey (R), Louisiana’s Jeff Landry (R), and Michigan’s Gretchen Whitmer (D). In each of these cases, the governors share their state’s poor grade, and the housing-related bills they did sign don’t pertain to the broader supply-side expansions scored here. Some of those bigger reforms were indeed considered in their state legislatures but never made it to the desk of these governors. That hurt their grade and the state’s grade.

This category consists of 10 scored variables organized into four groups:

• Accessory dwelling units (two variables)
• Minimum lot sizes (two variables)
• Building types (three variables)
• Parking minimums and rent control (three variables)

Data in this section come from the National Zoning Atlas, the Mercatus Center at George Mason University, the American Enterprise Institute’s Housing Center, the Parking Reform Network, and the National Apartment Association’s survey of rent control laws. The variables that measure land shares are based on land area zoned for residential use unless otherwise specified. They are also scored in bands of 20 percentage points—for example, a land share of 50 percent receives a score of 5 because it’s in the middle band of 40–60 percent of all land—to account for the fact that the state data published by the National Zoning Atlas vary in sample size.

An accessory dwelling unit, or ADU, is a secondary, usually smaller dwelling on the same single-family lot as a primary residence, such as a backyard cottage. ADUs can give homeowners a way to house an aging parent or an adult child or to earn some rental income without buying another lot. Yet many local zoning codes ban them outright or attach conditions that make them hard or unaffordable to build.

The first variable in this group measures state laws that prevent or limit local zoning restrictions on ADUs. A law with narrow coverage or lots of exceptions earns less credit than one with broad protections. Our score is based on the Mercatus Center’s four key elements of a successful statewide ADU law, which

• bans requirements that the ADU be owner-occupied;
• has strict limits on the amount of parking required on the lot where the ADU is built;
• endows ADUs with by-right status, which means a property owner is legally entitled to build one without needing to apply for a special variance or permit; and
• allows both attached and detached ADUs.

If a statewide ADU law has all four elements, it receives a perfect score. If it has three, it receives a 7.5. If it has two, it receives a 5. If it has only one, it receives a 2.5. Only states that don’t have a statewide law allowing ADUs receive a 0.

The second variable uses National Zoning Atlas data to measure the share of single-family residential land where ADUs are allowed. This accounts for the local zoning conditions in states without a statewide ADU law. The higher the share, the higher the score. States with a binding statewide ADU law automatically receive a 10. States that allow ADUs in less than 20 percent of the residential land receive a 0. (States with a statewide ADU law get the average of both variables, while states without one are scored on this variable alone.)

Minimum lot size rules dictate how much land must come with each new home. A high minimum locks out those who want to buy or build smaller homes on less land, even when a buyer would prefer one and a builder is willing to provide it.

The first variable measures whether state law protects smaller lots. A state earns credit for a qualifying statewide “starter home” law that caps minimum lot sizes for new developments at less than a quarter acre. Some of these laws apply only to certain communities or new developments, so earning credit doesn’t mean every lot in the state can be divided into smaller ones. This is a simple binary: 10 points if a state has a qualifying law, 0 if it does not.

The second variable uses National Zoning Atlas data to measure the share of single-family land zoned to require minimum lot sizes larger than half an acre. The larger the share, the lower the score. This measures the legal requirement, not the size of existing lots. (Minimum lot sizes can change over time, and some existing houses might actually violate the minimum lot rules for new construction if they were built today.) This variable and the previous one are averaged together to get the total group score.

Many zoning codes permit property owners to construct only site-built single-family homes on most land zoned for residential use, which shuts out duplexes, triplexes, and manufactured homes. All these are often less expensive options for first-time buyers and renters. This group has three variables intended to capture the permissiveness of zoning laws regarding the different types of housing beyond a traditional single-family home.

The first variable in this group measures whether a state has enacted a statewide law that treats manufactured housing—built of various materials and constructed elsewhere—the same as housing built on-site. This is also a simple binary: An applicable statewide law receives a 10, while the absence of one receives a 0. That is not to say that local zoning laws don’t allow this type of construction, but without state protections, the rights of property owners in this regard may be both variable and subject to the discretion of local zoning authorities or political coalitions opposed to manufactured housing.

The second variable measures the share of land zoned for either residential or mixed use—usually a blend of commercial and residential—where duplexes are prohibited. The third variable measures the same share for triplexes. The lower the share of land where these housing types are prohibited, the higher the score.

Parking minimums require builders to include a set number of parking spaces with each new home development, townhouse, or apartment building, whether or not the people who live there want or need them. These minimums can influence both the location of homes and whether it’s feasible to build them in the first place. This artificial floor on the number of parking spaces is set by the government, not market demand, and the mandated parking spaces take up land and resources that could otherwise go toward more housing or any other use of the land that market participants deem most desirable. Removing a parking minimum doesn’t ban parking, of course. It simply lets the market decide how much to provide.

Similarly, rent control laws override the market when it comes to the rents to which property owners and tenants might otherwise agree. These controls have been shown to discourage property owners from building new rental housing or renting out the units they already have, thereby decreasing the number of available rentals. They also discourage investment in improving existing properties.

The first variable scores states on whether they have a law that overrides local parking requirements. State laws usually set a lower minimum than the prevailing local limit. A state earns 10 points for an override that applies statewide, 5 points for ones that apply only to areas near public transit, and 0 points if a state has no qualifying statewide limit on local parking requirements.

The second variable is based on data from the National Zoning Atlas about the share of residential land subject to parking minimums. The presence of the minimums is what is being scored, not the limit itself. (The consensus in the empirical analysis of these policies is that these minimums are almost always higher than the market demand for parking.) Lower shares earn higher scores.

The rent control variable awards 10 points to states with laws that prohibit local rent control, 5 points to states with neither state preemption nor widespread local rent control, and 0 points to states where either widespread rent control exists or there is a statewide law that mandates rent control.