This research brief explores the potential that smaller housing units offer in meeting evolving housing needs and the regulatory barriers that inhibit their construction. The brief and the accompanying white paper, Responding to Changing Households: Regulatory Challenges for Micro-Units and Accessory Dwelling Units, focuses on five U.S. urban areas (New York, Washington D.C., Austin, Denver, and Seattle), and outlines the regulatory, financial, and political barriers that impede the development of smaller, denser housing types, such as micro-units and accessory dwelling units. Read the white paper (PDF) or view the press release.
The Community Reinvestment Act (CRA) is in need of a major overhaul. Since the CRA was enacted in 1977, and since the last major rewrite of the regulations more than 15 years ago, much about the financial services industry has changed. This chapter discusses why the regulatory system needs to be redesigned to allow for more regular and timely updates, allowing more rapid responses to what is working and what is not. By being more amenable to continuous improvement, the CRA should be more open to innovation and experimentation given the greater opportunity for making midterm corrections. This chapter starts with a brief overview of the CRA and its successes. It then outlines some ways to facilitate more regular updating of the CRA regulations, followed by a review of a number of ways to increase the effectiveness of CRA in helping to stabilize and revitalize low-and moderate-income (LMI) communities.
Nearly half of all poor, urban renters in the United States live in rental buildings of fewer than four units, and such buildings make up nearly half our nation’s rental housing stock. Yet small rental properties remain largely overlooked by researchers. We present two reports—from New York City and Baltimore—both providing suggestive evidence, drawn from a variety of sources, about the characteristics of small rental housing. We find that while small buildings offer lower rents and play a crucial role in housing low-income renters, these lower rents are largely explained by neighborhood location. Ownership matters, however. In New York, lower rents are associated with small buildings with resident landlords. Further, we also find better unit conditions in small rental buildings when compared to most larger properties, especially in small buildings with resident landlords. In Baltimore, we find that smaller-scale “mom-and-pop” owners dominate the small rental property market, but that the share of larger-scale owners increases in higher poverty areas of the city. The properties owned by these larger-scale owners receive fewer housing code violations and that these owners appear to invest more frequently in major improvements to their properties.
Responding to Changing Households: Regulatory Challenges for Micro-Units and Accessory Dwelling Units
In many areas of the country, the existing stock of rental housing falls significantly short of the need, both in terms of affordability and the sizes and configurations of available housing matching the needs of prospective tenants. In response to these and other concerns, a number of jurisdictions have revised their regulations to permit the development of more compact rental housing units, including both accessory dwelling units (ADUs) and micro-units.This paper provides a detailed analysis of the regulatory and other challenges to developing both ADUs and micro-units, focusing on five cities: New York; Washington, D.C.; Austin; Denver; and Seattle. This research was conducted as part of the What Works Collaborative. For more, see the accompanying research brief, Compact Units: Demand and Challenges; download a zip file with city-level data; or view the press release.