State Housing Policy Is Having a Moment
Local zoning is not where it's at
I was recently invited to participate in a panel discussion about state housing legislation. The topics that we were to discuss – single-stair buildings, ADUs, reducing parking minimums – were all subjects I’ve covered here in this newsletter, but since I cover a lot of topics beyond housing, I’m often a mile wide and an inch deep. To prep for the panel, I spent a few hours (!) boning up on the subjects and trying to memorize some research facts and the minutia of various bills (Washington allows single-stair buildings up to six stories, New Hampshire up for four, etc.). Though some of the facts I learned along the way made it into the discussion, a lot of them didn’t and I wanted to share them somehow. Since I live in Pennsylvania where none of these statewide reforms has been passed, I have grown even more impressed by how many other states have adopted great housing policy.
My main takeaway after poring over state housing legislation, is that the cutting edge in zoning is really happening in states, not cities, these days. After decades of local control over zoning and land use, states are stepping in with reforms that aim to increase housing supply, improve affordability, and dismantle exclusionary barriers. That said, many state policies are scaled-up versions of ideas that were tested—and proven—at the city level first.
Take Houston, which reduced minimum lot size requirements to just 1,400 square feet back in 1998, leading to tens of thousands of small-lot single-family homes. This year, Texas enacted SB 15, which ensures that minimum lot sizes for new construction don’t exceed 1,400 3,000 square feet in cities of more than 150,000 people. The state bill goes further, preventing municipalities from adding additional requirements like excessive setbacks or open space mandates that would undermine the flexibility these smaller lots provide.
This local-to-state progression is playing out across multiple policy areas. Here are eight major directions in state housing legislation:
1. Shrinking Minimum Lot Sizes
Minimum lot size requirements have long been a tool of exclusion. A University of Colorado Boulder economist found that when cities increase their minimum lot sizes, home prices rise, neighborhoods see increased white homeownership, and household incomes go up.
States are pushing back. Beyond Texas’s 1,400 square foot standard, Maine recently signed LD 1829 into law, capping minimum lot sizes at 5,000 square feet in designated growth areas—a little more than one-tenth of an acre. For a state that ranks 38th in population density, that’s meaningful progress toward building the density needed for more affordable housing.
2. Reviving the Starter Home
There are perverse incentives in the housing market to build as large a home as possible on large lots, making housing expensive and inaccessible. By creating smaller lots and enabling attached housing, states are trying to bring back the “starter home.”
Rhode Island’s H. 5798 explicitly allows townhouse construction where each unit has its own single-family home property, without any minimum lot size requirements. Utah took a different approach with its Homes Investment Program, created in 2024, which provides low-interest loans to developers who build starter homes that are 1,400 square feet or less and cost under $400,000. The program runs for three years and is managed by the Office of State Treasurer.
3. Accessory Dwelling Units Go Mainstream
According to the Mercatus Center’s annual taxonomy, 18 states now have statewide ADU reforms in place. The best ADU reforms build off past legislation and share common characteristics: no homeowner occupancy requirements, no parking mandates, and no discretionary review processes.
It has seemed like the fewer barriers the better, but you can take that too far. San Diego’s ADU bonus program initially allowed essentially unlimited ADUs, which led to a good deal of pushback. The policy was scaled back to three ADUs per lot, with lots over 10,000 square feet allowed up to six ADUs. Between 2021 and 2024, San Diego permitted 5,720 ADUs—though only 875 were part of bonus program developments, including just 368 affordable homes.
California’s AB 1033 is breaking new ground by allowing ADUs to be sold separately if a city opts in. San Diego was one of the first to adopt this policy, motivated by having one of the lowest homeownership rates for people under 30.
To speed ADU adoption, some states are promoting pre-approved designs. Many California cities have pre-approved ADU plans that fastback the permitting process, while Oregon has created a permit-ready plans program for detached garages and is expanding to dwelling units.