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Real Property, Trust and Estate Law Journal

Summer 2023

The “Availability of Affordable Housing” Crisis: Tiny Homes and Urban Infill

Hayden Baird Earl


  • Discussion on how assisted dwelling units, or tiny homes, can help to alleviate the United States' affordable housing crisis.
  • Tiny homes can assist in alleviating this problem because they offer residents economic benefits through their affordability and versatility.
  • Article addresses these problems by concluding that tiny house reform can be effectuated through public education campaigns, incentives, and municipal flexibility.
The “Availability of Affordable Housing” Crisis: Tiny Homes and Urban Infill
Mireya Acierto via Getty Images

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Author’s Synopsis: This Article discusses how assisted dwelling units, or tiny homes, can help to alleviate the United States’ affordable housing crisis. Tiny homes can assist in alleviating this problem because they offer residents economic benefits through their affordability and versatility, as well as offering residents social benefits by promoting diverse neighborhoods. Tiny homes also help to reduce urban sprawl, and their legalization can protect residents’ health, safety, and welfare. However, although tiny homes may ease a part of the housing crisis, they are currently overregulated and local parochialism hurts the chances of tiny homes being accepted in many jurisdictions. This Article addresses these problems by concluding that tiny home reform can be effectuated through public education campaigns, incentives, and municipal flexibility.

I. Introduction

Home prices have been increasing steadily for years, but at the onset of the coronavirus pandemic, both homebuyers and renters saw prices surge and supply drop precipitously. Americans are more worried about the availability of affordable housing than they are about drug addiction, the health and economic impacts of the COVID-19 pandemic, and crime. These worries are exacerbated in densely-populated areas where six-in-ten adults say that availability of affordable housing is a major problem. Politicians have promised to “eliminate [this] barrier” by augmenting the supply of affordable housing surrounding these urban areas. However, as studies show, there are economic and regulatory factors contributing to the construction of these “affordable housing” projects that—quite frankly—make such “affordable” housing unaffordable.

The COVID-19 pandemic increased costs of some supplies and demand for residential land is high, which are contributing economic factors to this issue. But various government actions have also contributed to skyrocketing housing prices in today’s market. A California government employee explained the housing crisis to a group of taxpayers, justifying the cost of housing in California with myriad reasons, such as “environmentalist mandates (such as the California Environmental Quality Act), [] absurdly high fees for building permits (often equal in cost to the value of the materials used in construction), to unchecked immigration, [] restrictive zoning, [] numerous court orders,” and more—all justifications related to government regulations. Since increasingly restrictive governmental regulations are haphazardly exterminating available affordable housing in urban areas, it stands to reason that retracting or changing such regulations may resurrect the availability of affordable housing in densely-populated regions. One such way municipalities may do this is by amending zoning codes to allow the placement of tiny homes in the vacant, underutilized areas near city centers.

Tiny homes are typically 100 to 400 square feet, though some are as large as 1,000 square feet, and they are placed on either a foundation or wheels. People are drawn to the tiny home movement (“the movement”) for various reasons, such as a desire to live a more minimalist lifestyle; a disinclination to keep a large house at an old age coupled with a desire to remain in the same neighborhood, or children wanting to provide a separate space for their aging parents instead of resorting to a nursing home; tiny homes are eco-friendly and sustainable; tiny homes often leave people with no mortgage or debt; and property owners can rent tiny homes and supplement their own mortgages. In response to this movement, some municipalities amended their regulations to allow tiny homes, sometimes known as accessory dwelling units (ADUs), in residential zones so long as they meet specific requirements.

Though some jurisdictions see merit in the movement, as is reflected in the occasional allowance of tiny homes, the mass of zoning regulations throughout the country discriminate against the movement through heavy regulations, costly requirements, and—in many instances—outright prohibition. Ironically, the average cost of a tiny home is $30,000 to $60,000, paid for by the resident or landowner, whereas the cost to build affordable housing units is exponentially more costly—and that cost is paid through taxes. The cost of building affordable housing in dense cities is, in fact, preposterous, with San Francisco’s estimate nearing $1 million per “affordable” housing unit. Municipalities are so focused on augmenting density in these urban areas that they fail to remember the first word of the problem they are failing so brilliantly to fix: affordability.

I do not hold that the government should stop the construction of housing projects for the low to middle classes or stop supporting homes for the elderly. I do argue, however, that loosening restrictions on tiny homes will allow individuals, communities, and families to utilize the movement to provide more for themselves and alleviate the burden that the government has regulated to the point of positioning itself as the main caregiver.

This Article focuses on the housing crisis and how the movement can benefit our society. It will also discuss the zoning issues that currently make tiny homes too difficult—or illegal—to reside in and why those regulations exist. Part II discusses the availability of affordable housing crisis, which compares median household incomes with median home prices and rent, and briefly explains urban sprawl and the “trickle down housing” theory that legislatures rely on while facing this issue. Part III analyzes the benefits of tiny homes, focusing on the idea of “urban infill” and the ways in which the prohibition of these homes might circularly violate the zoning purpose of “promoting health, safety, morals, or the general welfare of the community.” Part IV explains the problems facing tiny homes by illustrating how different tiny home regulations affect the movement in varying ways and how local parochialism is one of the movement’s largest obstacles. Finally, Part V introduces tools and strategies that can help make tiny home living more accessible and achievable.

II. The “Availability” of Affordable Housing Crisis

As described in the introduction of this Article, there is unquestionably a concern for the housing market in this nation. The White House released a fact sheet explaining the administration’s plan to increase the supply of affordable housing issue, and it focused on two causes for the shortage. The first cause is the “large and long-standing gap between the supply and demand of affordable homes for both renters and homeowners,” which makes it “harder for families to buy their first home and drives up the cost of rent.” The second cause is that investors have the capital to out-bid traditional homeowners, illustrated during the first four months of 2021 in which one in every six homes sold was purchased by investors and converted into rental properties. This type of investment purchase “speeds the transition of neighborhoods from homeownership to rental and drives up home prices for lower cost homes, mak[ing] it harder for aspiring first-time and first-generation home buyers, among others, to buy a home.” Additionally, these real estate investment purchases raise the costs of homes in lower markets, creating a trickle-down effect and making home ownership a feat for potential buyers and renters of all socio-economic statuses. Moreover, wages have not risen with the cost of housing.

A. What is “Affordable” Housing?

The notion of “affordable” housing was codified in the early 1980’s to mean that rent payment should be no more than thirty percent of a household’s income. The rationale was that housing is only one of multiple basic necessities, and if people spend more on housing, they may not have sufficient funds left for their other needs. Though this formula worked decently when it was enacted, and for years after, it is now woefully out of date. Based on this formula, a single mother working minimum wage could not afford the rent of a two-bedroom apartment anywhere in the United States. The federal minimum wage is $16.71 an hour, which is less than what an individual needs to make to afford rent for an average two-bedroom apartment anywhere in this country. Not only are minimum wage workers unable to live by the thirty percent rule, but salaried workers cannot either. Below is a list five urban cities and their accompanying median household incomes, average base rents, average home values, and average apartment sizes to illustrate this claim: both renters and homebuyers, low and middle class, are struggling to afford this foundational necessity—a home.

As the table above shows, the cities that I chose to examine would barely allow the median household income earners (for purposes of this Article, I will simply refer to this as “household”) to “afford” rent on an average apartment — and this “rent” does not take into account the various fees renters are forced to pay such as filing fees and HOA fees. Many rentals charge non-waivable monthly fees on top of the base rent, which, after adding such fees to base rents, likely would put the household “in the red.” For example, in Salt Lake City, a young woman lived in a condo for which she paid $1,500 a month without knowing of the extra fees for garbage service and water. She was told of the unpaid fees for these services after three months and after she had accumulated $700 in extra payments. Where households are still somewhat close to meeting the thirty percent rule to rent a home, they are nowhere close to meeting it to purchase a home. Further, if these households cannot “afford” rent because they need to provide for other necessities, there is likely no way to sufficiently save funds to alleviate the high prices of homes. Unfortunately, this is not a problem these households face right now because there is an alarming lack of homes on the real-estate market.

B. The Housing Crisis

As a personal anecdote, I live in the Salt Lake City metropolitan area in a quintessential middle-class neighborhood. In discussions with surrounding friends and neighbors, I have heard on numerous occasions, “My house is worth hundreds of thousands more than when I bought it, but I couldn’t afford to buy anywhere else if I sold, so I would be an idiot to move.” This sentiment—accurate and felt across the nation—is likely the biggest cause of this crisis. Though these friends and neighbors are likely correct, there are more externalities forcing them to stay put and, consequently, raising the prices of the homes being placed on the market.

1. The COVID-19 Pandemic

The COVID-19 pandemic has caused unforeseen issues, but experts are unsure whether they are relying on this explanation too much, or if people have changed and accepted the roles of remote work and pandemic-era society, making this market the “new normal.” It is true that most homeowners are older, making them a heightened risk for COVID-19 and possibly reluctant to let strangers roam their home. It is also true that the pandemic brought uncertainty to people’s jobs, but it also brought freedom to their jobs with the introduction and guaranteed placement of remote work.

2. High Demand, Low Supply

Experts have known for years that the nation would eventually lack housing supply, but the timeline was shorter than they assumed. After the 2008 housing crash, construction workers left to find other jobs; government regulations and neighborhood objections consistently slow construction projects; President Trump’s immigration policies decimated the labor force with many American citizens unwilling to perform the labor, making single-family home construction run at its slowest pace since 1995; and President Trump increased tariffs from ten to twenty-five percent on home builder’s most-used construction materials, making those materials more expensive for consumers. This low supply has met with high demand to create a hot issue for politicians throughout the U.S.

High demand was driven, in part, by relatively low interest rates during the COVID-19 pandemic. These low rates incentivized home-owners to remain in their homes with their low rates, or to even purchase investment properties. Over the last ten years, over seven million single-family homes have been added to the rental market, and “the vast majority . . . are owned by individuals, not big institutional investors.”

Though it is clear there are problems to be fixed, economists and analysts have individual theories on it all: “[w]e’re all looking for a unified field theory for what’s going on . . . . We have all these disparate pieces of information . . . . It’s hard to put it all together.” But, with the different pieces of information these experts acquire, they agree on one certainty: this nation needs more homes, and it needs them now.

C. Urban Sprawl and the Trickle-Down Housing Theory

Not only does this nation need more homes, but it needs them in certain areas for certain prices. As city populations grow, their geographic bounds extend, often creating what is known as urban sprawl. Urban sprawl is characterized by “low-density residential housing, single-use zoning, and increased reliance on the private automobile for transportation,” which increases pollution, traffic congestion, and energy use. Though urban sprawl may grant larger yards, or it may be economically beneficial for some during the construction phase, it also has many drawbacks for society and not just the environment.

Generally, the poorest citizens are left in the city while the wealthier citizens relocate, taking their tax dollars with them and creating an economic disparity. This affects the city’s education system, maintenance, and even crime prevention. A government report also found that urban sprawl perpetuates the issue of affordable housing because municipalities regulate the zoning so strictly that they make it nearly impossible for affordable housing in urban sprawl. A way in which politicians and developers say urban sprawl will fix this issue is through the theory of trickle-down housing.

Trickle-down housing is the theory that the more homes you build for the middle and upper class, the more middle- and upper-class homes will become available for the lower class to purchase and move into. Politicians, and therefore, legislatures, have relied on this economics theory for decades, thinking that it would create opportunities for poorer citizens to move into wealthier neighborhoods. However, there is considerable expert pushback on this theory and very seldom support. In a reference to the more conservative leanings that tax cuts for wealthy individuals and corporations will put money in the pockets of the working class, President Biden announced his plan to raise taxes on those same individuals because “trickle-down economics has never worked. It’s time to grow the economy from the bottom and the middle out.” Experts, no matter their political leanings, generally agree with this statement.

Therefore, building upper-class homes will not help the middle-class, just like building middle-class homes will not help the lower class. At this time when our nation is in desperate need of affordable homes and even salaried workers cannot afford the average rent for an apartment, it begs the question: what sort of homes must we build, and where?

III. The Benefits of Tiny Homes

As briefly discussed above, there are multiple reasons people and society may benefit from tiny homes. Though there are many emotional and spiritual arguments that proponents of the movement make, I will focus on reasons some municipalities have used to allow them in their jurisdictions. Since this is the focus of my Article, I will specifically concentrate on pre-existing landowners in such jurisdictions that may desire to place a tiny home on their land.

A. Tiny Homes Provide Economic Benefits

Tiny homes are significantly cheaper to purchase than traditional homes or even cheaper to construct than a mother-in-law apartment within a house. Depending on the chosen amenities, tiny homes can range in price from as low as $8,000 to more than $150,000. However, the average cost of a tiny home is around $50,000, and it still provides the resident with all the amenities of a traditional home—just in a more efficiently-compact space. Aside from the fact that a tiny home is less of a financial burden than a traditional home in terms of initial costs and utilities, they provide various economic benefits to renters, owners, and the society at large.

1. Affordable Housing and Tiny Homes

Affordable housing advocates promote the fact that tiny homes give families and individuals of modest means the ability to live in more expensive areas that would have certainly remained out of reach any other way while paying around the same amount they would for a studio apartment. In a country where the average employee cannot afford a home in seventy percent of the country, forty percent of adults would face financial difficulty if confronted with a $400 bill, and one quarter of adults have no retirement savings, mixed-income housing options such as tiny homes can provide a potentially unthinkable experience for some people.

Preliminary research shows that mixed-income housing programs provide to renters more than just affordable rent in affluential areas. In addition to “lower rent burden and higher housing quality,” researchers “saw lower rates of asthma symptoms, marginally lower rates of depression and anxiety, and significantly greater perception of safety as well as lower rates of neighborhood disorder.” There are socio-economic and cultural benefits to the renters as well. A study funded by the Department of Housing and Urban Development found that the affordable housing participants received varying types of support from their more affluent neighbors. The participants received educated information, assorted support and resources, child support, information about childcare, and help with finding respectable schools and tutors for their children.

The owners of the land and tiny home can also significantly benefit from their mutual relationship. There are federal programs that help owners reduce the costs of adding a tiny home to their property, and there are various examples of local programs that waive fees and provide incentives for homeowners to add tiny homes (or, as many municipalities call them, Accessory Dwelling Units, and “ADUs” for short) and rent at affordable rates. The City of Santa Cruz waives development fees and has its own loan program for ADU owners that will rent to lower-income households. Barnstable, Massachusetts waives inspection fees, monitors the units, designates staff to assist the owners through the administrative process, helps reimburse owners for eligible rehabilitation and upgrades to the affordably rented ADUs. Owners are also offered tax relief in response to negative effects the units might have on their deed restrictions, and they give owners $20,000 to help create an apartment within their own home if they desire. Wellfleet, Massachusetts offers interest-free loans to develop ADUs or bring them up to code, and it gives tax exemptions to homeowners on the portion of property being used by the unit.

On top of the governmental benefits that most homeowners can acquire from affordably renting a tiny home, they will supplement their monthly income through rent. To meet the rent standards of the affordable housing program, the general rule is that the owner would need to charge no more than thirty percent of the household income. But even if the renter makes $20,000, a rent set at thirty percent of that income will generate $500 of income each month for the owner.

2. Tiny Homes as “Granny Flats”

The investment in a tiny home might also be fiscally responsible if it is intended for an aging relative. The term “granny flat” generally describes tiny homes for the elderly, often used by families accommodating aging parents. Granny flats are growing in popularity for multiple reasons. As parents age, they no longer have the desire or energy to maintain the large homes that are the “new normal,” which makes them want to downsize but remain close to family.

Granny flats are also attractive to the adult children. Typically, if an aging parent requires supervision, the family must consider an assisted living facility or nursing home. This is a daunting decision both for the reason and the price—an assisted living facility costs around $54,000 annually, and a nursing home costs around $108,405 per year. But these facilities are viewed as necessities to care for loved ones.

However, perception of these facilities as necessary and the children’s role as the caregiver changed during the COVID-19 pandemic as family members withdrew their parents “to get them out and bring them home.” For the individuals making the same decision to “bring them home,” they might be faced with insufficient space inside the home or a need for the parties to have some independence. Granny flats answer this problem by offering the elderly independence and main floor living. Granny flats are also close to the adult child’s home, which allows for the adult child to supervise an elderly parent and may afford the opportunity for the elderly parent to provide occasional childcare. Further, the cost of an average tiny home is the same as just one year of residency in an assisted living facility.

3. Benefits to Local Residents

Tiny homes are also credited with attracting young professionals to live and remain in urban areas, and they are recognized as attracting large companies in cities concerned about housing opportunities for potential employees. These attractions, coupled with inviting affordable-housing options for others, bring additional jobs to the local economy—and with those jobs—incoming taxes. Allowing tiny homes “provide[s] a larger tax base” and “increase[s] revenue in each jurisdiction.” Allowing private citizens to help alleviate the housing crisis also mitigates the amount of taxpayer’s money that is spent on building more affordable housing, which, as many experts argue, is a high cost and low result project.

For example, there are 28,200 homeless residents in the nine counties of the San Francisco Bay Area. A study says it “would cost an estimated $12.7 billion to permanently house” those homeless residents in affordable housing accommodations. This calculation “assumes mid-range construction costs of $450,000 per unit.” By allowing private citizens to alleviate some of these burdens by installing tiny homes with price tags significantly less than what the government would spend, the taxpayer’s money can contribute to the community in more efficient ways.

In addition to providing fiscal benefits to the citizens, tiny homes provide societal and social benefits such as expanding one’s network to more diverse individuals. Most neighborhoods lack diversity because of the stable price tags placed on the property that exclude groups of different socio-economic statuses, which leads people to lack diverse networks in terms of income, religion, race, and family status. Research shows that children with a diverse friend group have greater levels of social competence “and increased self-esteem, well-being and resilience.” They are better at perspective-taking, more able to understand the immorality of race-based discrimination, and “show more leadership potential and are more popular.” This same research shows that diverse schools do not provide these children with these character traits, however, and that outside interaction is needed before the children establish “self-segregating” traits in school. In neighborhoods that are predominantly white because of the racially-segregating housing market and its accompanying instruments, parents will sometimes lack the opportunities to diversify their children’s friend group before their child enters school and self-segregates with the rest of its classmates. More studies show the benefits of diversity in the lives of adults.

Having diverse relationships allows you “to experience aspects of the world that are unique and unlike your own,” which leads to many mental and emotional benefits. Further, research shows that having a diverse team makes one “better at assessing risks and gathering accurate facts, and companies with greater diversity . . . report higher innovation rates.” Finally, a study measuring the cortisol levels in its participants found that creating “cross-racial friendships can actually reduce anxiety in both academic and social situations.”

So not only would allowing tiny home rentals benefit residents because their taxes would go to a more efficient use, but the diversity within their neighborhoods would greatly improve the social and leadership skills of their children, and it would benefit the adults’ emotional well-beings and even their careers.

B. Tiny Homes Can Reduce Urban Sprawl

Tiny homes would also combat the negative externalities of urban sprawl. Though there are benefits to urban sprawl, such as increased living space and backyards, it also relies heavily on transportation for the simplest of tasks. There is pushback to this form of living by a movement called New Urbanism. New Urbanism pushes for “walkable blocks and streets, housing and shopping in close proximity, and accessible public spaces. In other words: New Urbanism focuses on human-scaled urban design.” Though much of New Urbanism is applied to new development, it is also applied to “urban infill.” Urban infill is the idea of “filling in the gaps” of the undeveloped spaces in urban sprawl. Tiny homes can fill these gaps in developed residential areas, which would increase density, diversity, taxable incomes, local jobs, and hopefully bring forth more efficient public transportation. Further, it creates new homes in already built areas, which can reduce urban sprawl.

By reducing urban sprawl through infill development with tiny homes, the communities can obtain significant advantages. These advantages include: (1) reducing pressures of development on open spaces and farmlands; (2) expanding public transportation services or establishing more “walkable” areas, which benefits individuals economically and benefits the environment; and (3) “providing increased private investment in older neighborhoods.”

C. Legalizing Tiny Homes Can Protect Citizens’ Health, Safety, and Welfare

In addition to reducing urban sprawl, allowing tiny homes can protect the health and welfare of a municipality’s citizens. However, zoning regulations often prohibit structures like tiny homes. The government derives its zoning authority from the police power granted by the Constitution. Such regulations must bear a “substantial relation to public health, safety, morals, or general welfare.” Thus, the purpose of zoning regulations is to protect the public. However, zoning restrictions making structures like tiny homes illegal often have the opposite effect.

Large cities with pricey housing markets have high rates of illegal ADUs. Some estimates say Los Angeles has as many as 200,000 illegal ADUs—subject to zero regulatory oversight. Because the ADUs are not legalized, many of them “display[] truly deplorable living conditions.”

Mayor Bill de Blasio of New York City estimated that at least 50,000 illegal units, such as basement apartments, exist in the city. These illegal homes are necessary for New York because “[t]he number of low-income New Yorkers far exceeds the number of affordable homes.” These homes are illegal for various reasons, whether the square footage is too small, there are not enough windows or doors, or, in Mrs. Velez’s case, a homeowner who rents her basement in New York, the home sits a couple of inches below the curb level. Mrs. Velez relies on the $800 a month rent to supplement her Social Security, as her only two sources of income. However, she is legally required to evict her tenant, a retired law enforcement officer, or raise the basement apartment, which would cost $6,500 in architectural fees, plus labor and costs, and she already owes the city $18,000 in fines for the violation. With the high costs of “legalizing” an apartment, along with the accompanying fines for having one without a permit, it is no wonder owners do not want the city to inspect and regulate a home they believe is fine—just to tell them they will have to spend money they do not have to raise the apartment an inch.

But there are serious risks of these owners not wanting the government involved. Hurricane Ida killed eleven people in basement homes, and most of those homes were illegal. The people drowned because there were not enough exits, so they could not escape. Some of these illegal homes “pose deadly threats to the people who live in them . . . but others may only be illegal because they run afoul of a tangle of technical and possibly outdated city regulations.” Mayor Bill de Blasio recognizes this issue, and he pledged to legalize such homes, but the plan failed and he later “expressed skepticism that a realistic solution was possible.”

The City of San Jose, California recognized this problem and saw that its tight zoning regulations might have produced effects opposite of the duties with which it was charged—namely, protecting the health, safety, and general welfare of its people. Instead of admitting defeat, it created an amnesty program for the owners of illegal ADUs in its jurisdiction. This program waives illegal construction penalty fees and helps applicants apply for additional fee waivers and financial help that can total over $10,000—adding extra incentive for owners to begin the legalization process. The program says it benefits potential users in five ways: (1) it reduces the risks to the occupants; (2) it reduces owner liability; (3) it increases property value; (4) it eliminates worries and grants peace of mind; and (5) it can save a substantial amount of money. Each of these “benefits” relates to the zoning power granted to municipalities, showing that the city understands its duty to its people—and is acting accordingly.

Thus, New York City and Los Angeles are cautionary examples of the dangers of overregulation, enforcement, and denial of affordable living. New York City is also an example of a city enforcing outdated regulations, to the detriment of its citizens, and causing nonconformity of regulations out of financial weariness—which, as Hurricane Ida unfortunately demonstrated, caused the death of its citizens. On the other hand, San Jose is an example of municipal leniency and understanding, coupled with a firm grasp of its foundational zoning responsibilities. By amending zoning regulations—and potentially creating a similar amnesty program—to legalize tiny homes, municipalities would be abiding by their charge to protect the health, safety, and general welfare of the people. Unfortunately, many zoning codes still exclude ADUs, either expressly or by omission, and municipalities cite different reasons for such a decision.

IV. Problems Facing Tiny Homes: Land Use Regulations and Local Parochialism

As this Article notes, land use regulations throughout the nation tend to restrict tiny homes. Some jurisdictions expressly restrict ADUs, some restrict them by omission, and others restrict them through overregulation. Since there is little to analyze regarding regulations that strictly prohibit these homes, this discussion instead will focus on the municipalities that have permitted them—but at the same time effectively banned them. The discussion will then highlight the reasons that local governments find tiny homes undesirable.

A. The Overregulation of Tiny Homes

California passed a law in 2016 that requires cities to relax their regulations regarding ADUs. The law requires cities to permit one ADU for every single-family home, streamline the permitting process, waive parking requirements if the ADU is located within a certain proximity to a transportation service, change the floorspace requirements, and more. California believed this legislation would help ease the affordable housing crisis. In response to this legislation, most Californian cities complied with the mandate by amending their zoning rules and permitting ADUs, “but they imbedded many costly regulatory requirements within the ‘authorization’ that dramatically curtail the likelihood that ADUs will actually be developed.”

These “costly regulatory requirements” include off street parking, which is costly and sometimes impossible in California; minimum lot size requirements (in many cases, it would be impossible to find lots large enough in California to satisfy some of the size requirements); maximum square footage of the ADU; inability of the owners to rent the ADUs; design requirements requiring architects, making it an even more costly investment; and rules requiring the use of expensive building materials and intensive architectural plans to be submitted to a review committee.

Santa Cruz has been recognized as a great example of a community embracing ADUs because it offers subsidized construction loans, has a trust fund to help low-income households build ADUs, waives its ADU fees, and has self-help booklets with guidelines and designs for those seeking to build an ADU. However, even with the programs Santa Cruz offers to make ADUs common in its community, very few have been built. This result shows that “[e]ven in ostensibly enthusiastic jurisdictions, hidden regulatory barriers may limit the attractiveness of ADUs.”

In Santa Cruz, these regulatory barriers are that the unit cannot exceed 640 square feet on a lot smaller than 10,000 square feet; the property owner must occupy either the ADU or the principal residence, and the other residence must be occupied by seniors (aged sixty-two or older), family members, or a low-income family; and if the owner used the city’s incentives, the ADU may be subject to rent control. The inability to rent the ADU to whomever the owner desires is enough of an annoyance to deter most potential landowners from risking such an investment.

Other cities, like Santa Monica, limit the occupancy of the unit strictly to family members—either to a dependent or a caregiver. Fontana prohibits renting units to anyone besides low-income individuals or the elderly (sixty-two or older). Vista allows the owner to rent only to low-income households. And Newport Beach and Cerritos permit rentals only to seniors.

There are less “conventional” ways cities prohibit ADUs while also regulatorily “permitting” them. West Covina, though it has allowed ADUs since 1983, has only had three ADUs constructed since 1994. The assumed reason for the lack of ADUs in this city is that it requires owners to obtain a conditional use permit, which adds additional costs and is a timely and onerous process. Chula Vista’s ADU ordinance “has been hailed as one of the least restrictive of California’s zoning ordinances,” but requires that “the flat portion of a lot must be greater than 5,000 square feet for any ADU to be constructed.” One councilwoman said that this requirement, in California, is “tantamount to an outright prohibition for most property owners.”

There are countless examples of cities nationwide that “allow” tiny homes yet control and regulate the requirements to the point of prohibiting them. Though some property owners will ignore the regulations—seeing the exclusionary requirements as tedious and unnecessary—and the property owners will construct an ADU without permission, municipalities should be aware of the dangers overregulation causes.

B. The “Homevoter Hypothesis” and Value Depreciation Arguments

While there are proven benefits to allowing tiny homes in communities, there is considerable pushback against the movement. Unsurprisingly, this resistance generally comes from the residents, and government actors “jealously guard their authority to regulate land uses—which is arguably their most significant power—but the majoritarian nature of local government politics . . . leaves elected officials susceptible to the demands of homeowners who view costly and exclusionary land use regulations as a form of home-value insurance.” This leads to one of the societal issues facing the movement: the homevoter hypothesis and its effect on suburban zoning regulations.

In 1997, Washington state held an election for taxpayers to determine whether they should contribute $300 million to construct a new stadium for the Seattle Seahawks NFL team. The referendum barely passed, but the voting pattern was interesting to theorists: the residents living closer to the stadium supported the idea, and residents living away from it considered it a waste of money. This pattern shows the idea that voters tend to evaluate the merits of proposals “based on how they think it will impact their property value.” This is the foundational principle of the homevoter hypothesis: “[a] homeowner will generally make . . . responsible political decisions . . . because anything that affects the community will ultimately be reflected in her home’s value through capitalization.” Though this concept is easy enough to grasp, the originator of the homevoter hypothesis dug much deeper into the social and societal meanings of these actions.

The man who coined this hypothesis, William Fischel, based his work on the work of economist Charles Tiebout. Tiebout explained that since public goods are financed with property taxes, local power needs to “seal the link between taxes and benefits” to maintain organization, retention, and order. This “additional local power” is “the power to exclude residents who do not pay their fair share in property taxes”—the power to use zoning regulations to exclude those in lower socio-economic classes. Fischel took Tiebout’s work and explained that property tax is a “services rendered” fee, homebuyers get a “service package” from the community, and “they pay for exactly what they get” since “local zoning sees to it that they cannot shirk by building a smaller than average house.” Since moving is an expensive and painful process, homeowners tend to be politically motivated to stop undesirable actions the community might take (that is, change the “service package”) to make their contributions less fair.

Thus, the homevoter hypothesis does not just explain that homeowners make choices based on the value appreciation of their property, but also on the overall fairness of what they contribute to, and get out of, the community. This hypothesis was described more bluntly by Bruce Hamilton, who took a less culturally sensitive approach to the principle. He said that unless the community used its zoning authority to regulate the construction and occupation of affordable housing, then individuals who desired premium services, such as better schools and public safety, would be allowed to reside in the community without paying their “fair share” of the services and instead could get them cheaply “by occupying small housing units in otherwise fancy neighborhoods.” This is, however, exactly what proponents of the tiny home movement desire—to allow individuals access to these “premium services” and “get them on the cheap.” But, due to the homevoter hypothesis, both because homeowners fear devaluation of property and because they view the idea as unsavory, the exclusionary effects of these zoning regulations work as intended—at least according to Fischel, Tiebout, and Hamilton.

Property devaluation because of ADUs is a factually unsound argument, but it is cited consistently by homeowners opposing zoning changes. Of these concerns, they claim that (1) renting the primary residence will become harder; (2) home values will depreciate; (3) the character of the neighborhood will alter; (4) zoning changes are never good; (5) owners will have less control of their property; (6) higher-density neighborhoods will have negative impacts on the community; (7) and more housing inventory means their home values will decrease. These concerns are seen by many as justifications behind more undesirable reasons for opposing ADU reforms, but some of them are legitimate considerations.

Forbes Real Estate Council, which is composed of industry experts, deliberated on these homeowner concerns. Regarding home values, some experts were concerned about the impact ADUs would have on home values, but research shows that the markets allowing them “get a boost of new life. The additional flexibility makes established areas more interesting financially for occupants and investors, and additional entry-level inventory boosts the entire market.” The values are also not impacted because the character of the neighborhood does not have to change. The local municipalities have the authority to require the ADUs to conform with the character of the neighborhood, which many already require, so tailoring the structures to the community will not devalue or change the quality of the surroundings.

Concerning the control property owners have over their property, upzoning grants added flexibility and control over their property, not less. The zoning amendments simply give homeowners more opportunities to do what they wish with their land. Further, the negative effects that urban sprawl has on the mental, emotional, and physical well-being of citizens, as well as the negative environmental consequences of urban sprawl, make higher-density communities a positive change for communities. Also, some use the term “high density” to refer to ADU zoning reforms to conjure up pictures of high-density apartment buildings. It is important to note that most jurisdictions that allow ADUs, even without overregulation, only allow one ADU per lot, and ADUs cannot, by definition, host large populations. When discussing increasing the population of a community by allowing ADUs, the increase would be minimal.

However, these concerns persist—factually based or not—and the homevoters pressure local governments to prohibit zoning changes allowing these structures.

C. Local Parochialism: NIMBYisms Effects on Tiny Home Zoning Regulations

The homevoter concerns are often seen as “justifications” masking less desirable reasons for wanting to omit tiny homes from their community. Though the homevoter hypothesis can create positive externalities since homeowners often pressure local governments for safer communities, better schools, and more efficient services, the homeowner anxieties can also “generate exclusionary impulses,” and, rather than the community being concerned for home values, “communities fear who may reside in the tiny homes: households with incomes lower than theirs.” These exclusionary impulses are Not In My Backyard statements (NIMBYisms) that have grounded much of the forward progress the movement made in jurisdictions nationwide.

First, it is easy to assume that individuals who desire to live in a tiny home do so strictly out of economic necessity, but that is not necessarily the case. As this Article notes above, tiny homes are used not only for affordable housing for low-income residents, but they are also used by young professionals and as granny flats. Millennials are also having smaller families—if any at all—and they work long hours, meaning they have less leisure time than their older generations. Since they have less leisure time, they enjoy spending it outdoors and with company instead of performing household chores. They also graduate with substantial student debt, and they are more environmentally conscious than previous generations. These factors are causing millennials to seek smaller, more efficient and environmentally friendly homes. However, to many, living in a tiny home is perceived as something akin to a residing in a trailer park. With this belief in mind, homevoters speak out against allowing anything like a “trailer park” to exist in their backyard, bringing with it potential negative externalities.

When Los Angeles held public comment for proposed ADU zoning reforms, press reports claim the reform was not enacted because residents were concerned about a “population ‘invasion,’ especially in wealthier neighborhoods,” and that it would “strain public infrastructure.” Though the term was not specifically used (that we know of, though the comments were closed and we cannot obtain reports), the population invasion the commentators were concerned about was the Hispanic population that makes up a large portion of southern California. Though masked as concern for density, the city did not enact the changes based on these racially based concerns. This NIMBYism, not wanting an “invasion” of poor Hispanics in wealthy neighborhoods that cannot afford the public services that they receive, hence the strain on public infrastructure, is one example of homevoters using their voice to ensure property value and “fairness.”

Other, less cryptic, NIMBYisms regarding the debate about allowing tiny homes in residential neighborhoods include, “Those people will move into your neighborhood,” “People will move into our town who haven’t earned the right to move here,” and “It will lower property values.” Others worry about the increases in crime that adding ADUs will bring to the community.

When Arlington, Virginia was considering allowing homeowners to build rental units on their property, the city was faced with fierce homevoter opposition. Quotes from some homevoter opponents include, “You work hard to get your family into a single-family neighborhood;” “We moved here for the quality of life Arlington affords;” and “We paid a lot for our homes.” Though all those opponent statements are likely true and facially fine, the connection between the comments and advocating against ADUs makes those statements reminiscent of the “those people” admonition from earlier.

This local parochialism generates and perpetuates homevoter beliefs and fears that their safe haven of a home will no longer be a sanctuary. It also bolsters voters’ intolerant biases towards those potential renters simply because of their diversity. This parochial intransigence has created a network of NIMBYisms that governments value due to the transactional nature of their relationship. Even when ADUs are legally authorized, governments have found ways to appease the homevoters by over burdening the potential owner with heavy regulations coupled with the risk of little reward, acting as an administrative deterrent on tiny homes.

V. Tiny Home Reform: What Can Work?

Studies are needed to understand exactly how and where these homevoter biases come from, but in some cases the biases will likely never completely dissipate. The Department of Housing and Urban Development performed an intensive case study of multiple jurisdictions that adopted ADU reforms to determine what other municipalities can do to successfully adopt and implement these zoning changes and minimize the negative effects that arise with these changes. This study recommended that the jurisdiction publicly educate its citizens, be aware of over regulation, and provide extra incentives to those who take advantage of ADUs. Municipalities should also be flexible and consistently reevaluate regulations to ensure the rules are not outdated.

A. Public Education Campaign

Community education is a decisive first step towards achieving community support. The Department of Housing and Urban Development found that “for an ADU program to succeed, it has to . . . be supported by a public education campaign that increases awareness and generates community support.” If over regulation is created by NIMBYisms, as both circumstantially and directly shown above, proponents of the movement must focus on public education to generate awareness and disseminate sufficient facts to quell the public’s anxieties.

In jurisdictions in which over regulation exists, this type of a public education campaign can rally the community to change such regulations and make ADUs more accessible for homeowners and renters.

In 2021, the City of Salinas in California won a grant from AARP to improve its housing crisis. Though the city did not focus on relieving the fears of the public, the city spent its grant money on educating citizens on the ease of creating ADUs. The city held several workshops that taught its citizens how to build ADUs, and the workshops held distinct characteristics that made it easy for public attendance and awareness: the workshops were bilingual, open to the public, after work hours, and included childcare. The city also held a workshop specifically for architects, designers, and engineers. The city also has preapproved ADU plans, in four architectural styles that still allow for configurable style choices, which citizens may use to ease the burden and costs of building; the city also has brochures available to everyone who desires more information. This knowledge is essential to quelling the fears of those who may not build an ADU because they do not understand where to start.

NIMBYisms, however, are a more difficult hurdle. The key to overcoming such sentiments is to engage the public early in the process because “failure to engage residents in dialogue and include them in decision-making from the onset strengthens and rigidifies opposition.” This may be done through blurring the identities of the “us” (the residents) and “them” (the intruders). “An effective media and public education strategy, therefore, is to blur the boundaries between service users and other residents.”

B. Over Regulation

Regulation of ADUs should be tailored to balance community needs with housing needs. The HUD report explains that “communit[ies] can tailor ADU ordinances to suit [their] demographic, geographic, and socioeconomic characteristics.” For example, parking is an important aspect of homeownership, but requiring parking can limit ADUs. However, Seattle’s ADU regulation does not require the owner to provide parking if the ADU is located within a certain proximity to a transport service. This tailored regulation is one way that the city opened more avenues for potential ADU owners. Seattle recognized this overbearing regulation, yet understood the need for transportation, and tailored its rule to suit the community characteristics.

This principle could also be applied to Mrs. Velez’s situation in New York City. The city needs to reevaluate whether it is within the city’s, and therefore its citizens’, best interest to force her to evict her tenant and spend tens of thousands of dollars to raise the apartment two inches, or whether that regulation is outdated and restricts the amount of safe and functional affordable homes in the city.

Further, the minimum lot size requirements imposed in some jurisdictions are essentially a ban on ADUs, and those requirements need to be greatly reduced, or abolished completely, so long as the structure abides by local fire safety codes and setback lines.

C. Provide Extra Incentives

Ample evidence also supports that providing extra incentives increases the use of ADUs. The HUD report concluded that successful ADU programs provided “loan programs, tax incentives, streamlined permitting, and reduced development fees . . . In order for an ADU program to succeed, it has to be flexible, uncomplicated, [and] include fiscal incentives.”

D. Flexibility and Constant Reevaluation

For ADU reform to work, communities need to be flexible, constantly reevaluating their regulations, be open to suggestions, and perhaps most of all, they need to be educated. This education and flexibility will help alleviate the NIMBYisms that are the largest opponent to the movement, but are born of local parochialism, and may be lessened through targeted campaigns.

VI. Conclusion

This nation is suffering an available affordable housing crisis that affects people of different income status, race, country of origin, and family status. Governments throughout country keep promising to build more homes, but this does not help the low- to middle-class populations, and it contributes to urban sprawl and its accompanying negative externalities. One way in which private citizens can help alleviate the housing crisis, as well as urban sprawl, is through urban infill with tiny homes. There are regulatory schemes that permit tiny homes—or ADUs—but many of these “permissive” regulations simultaneously prohibit them through over regulation. These jurisdictions face considerable pressure from homevoters to deny ADUs from their communities due to local parochialism and NIMBYisms, which can be alleviated through public education campaigns that generate community support and societal pressures to lessen the restrictions. Further, communities can incentivize homeowners to build ADUs by offering tax incentives, fee waivers, loan programs, and reduced development fees. Though tiny homes will not completely solve the housing crisis, they place the power to help in the hands of the people, granting with them the benefits of mixed-income housing. If municipalities are to alleviate the available affordable housing crisis, they must lessen their restrictions on these homes, proponents must properly educate the public to reduce NIMBYisms, and cities must be capable of flexibility within their zoning codes.