More Housing Options, Lower Prices: Evidence from Houston, Portland, and Auckland
Eight states have recently passed laws allowing smaller homes like duplexes and townhomes, also known as “middle housing,” in areas previously restricted to only large, expensive houses. In “Missing No More: Planners Should Harness Private Developers to Build Middle Housing,” Nicholas J. Marantz and Jake Wegmann examined how these new homes affect affordability and neighborhood stability in Houston, Portland, and Auckland, New Zealand. Their research findings challenge common concerns about allowing developers to build diverse housing types.
Key Takeaways:
- In Portland, a study cited by Martanz and Wegmann suggests the city’s middle housing reforms could reduce costs by roughly one-third in affected neighborhoods, potentially making homes affordable to households earning below the area’s median income.
- In Houston, townhouses built after reform were $215,000 cheaper than new single-family homes while still providing family-sized living spaces.
- Auckland’s rents rose just 11-15% over six years after middle housing reform, compared to 41-59% increases in other New Zealand cities that didn’t reform zoning.
These case studies demonstrate how reforms can increase affordability and expand housing options. Let’s examine each city’s approach in greater detail:
Houston expanded starter home options: By reducing minimum lot sizes from 5,000 ft² to 1,400 ft², Houston enabled the construction of over 25,000 townhouses. These townhouses built on former single-family lots cost about $215,000 less than single-family homes built during the same period. Their analysis also showed development occurred primarily in census tracts with above-median incomes, contradicting fears of gentrification.
Portland encouraged smaller, more affordable homes: Their 2020 Residential Infill Project:
- Allowed duplexes through fourplexes in single-family zones, and up to up to sixplexes with affordable housing
- Increased size limits for middle housing and decreased size limits for single-family homes to prevent mansionization
- Removed owner-occupancy requirements for those middle housing types
A peer-reviewed evaluation cited by Marantz and Wegmann found that middle housing increased from 6% to 18% of citywide production. The evaluation showed this reform could cut average housing costs in affected neighborhoods by approximately one-third, making homes affordable to households with incomes slightly below the area median.
Auckland’s zoning reforms slowed rent growth: After New Zealand allowed middle housing on 75% of Auckland’s residential land in 2016, three-bedroom rents rose only 11.2% compared to 41-45% elsewhere in New Zealand. A regression analysis showed apartment rents were 21-33% lower than they would have been without the reform.
These case studies offer clear lessons for policymakers:
- Eliminate owner-occupancy rules for duplexes to sixplexes, as Portland successfully did
- Reduce minimum lot sizes, following Houston’s approach that created affordable townhomes
- Permit middle housing in single-family zones, mirroring Auckland’s effective strategy
These proven reforms have increased housing options and improved affordability in other cities. By implementing similar changes, California can help families find reasonably-priced homes in neighborhoods they prefer.