Zoning affects housing affordability

Zoning shapes not only the way our communities look but also how—and whether—people can afford to live in them. “On Common Ground: Zoning Innovation” highlights how municipalities across the country are rethinking traditional zoning codes to unlock more diverse housing options, promote walkable neighborhoods, and address exclusionary legacies. Below is an overview of the key themes and takeaways from the report, along with examples of how localities are putting innovation into practice.

Why Zoning Reform Matters

Traditional use-based zoning—where a single district is limited to one type of land use (e.g., single-family housing only)—can create artificial scarcity, drive up housing costs, and perpetuate exclusionary practices. As Toccarra Nicole Thomas of the Form-Based Codes Institute notes, “Nearly every state in the union has a severe shortage of homes … it is clearly at the root of the housing crisis” (National Association of REALTORS®). Reforming zoning is now widely recognized as a critical lever for expanding housing supply, improving affordability, and fostering more equitable communities.

Key Zoning Innovations

1. Form-Based Codes (FBCs)

Rather than focusing on permitted uses, Form-Based Codes (FBCs) regulate the physical form of buildings—how structures relate to sidewalks, streets, and public spaces. By emphasizing building mass, frontage, and pedestrian orientation over strict use separation, FBCs encourage mixed-use, walkable neighborhoods and streamline approvals for infill development.

• Example: Greenville, SC adopted an FBC overlay that allows townhomes, stacked duplexes, and small-lot cottages within what were previously single-family zones—opening the door to “missing middle” housing forms without lengthy, case-by-case rezoning (National Association of REALTORS®).

• Benefit: Predictable built form reduces uncertainty for developers and homeowners, accelerating project timelines and cutting administrative costs.

  
  

2. Missing Middle Housing

“Missing middle” refers to a range of housing types—such as duplexes, fourplexes, bungalow courts, and accessory dwelling units (ADUs)—that fit between single-family homes and large apartment complexes. By allowing these building types in traditionally “low-density” areas, communities can gently increase density, diversify housing stock, and support walkable neighborhoods.

• Example: Spokane, WA revised its code to permit duplexes and cottage clusters by right in most residential districts. As a result, smaller, more affordable units populate corridors close to transit and job centers, serving both empty-nesters and young families.

• Benefit: These smaller footprints and simplified parking requirements help keep land-and-construction costs down, making homeownership—and rental housing—more attainable.

  
  

3. Inclusionary and Incentive Zoning

Inclusionary zoning mandates or incentivizes developers to set aside a percentage of units for households below certain income levels. When paired with density bonuses, reduced parking requirements, or expedited permitting, inclusionary tools encourage affordable units in otherwise market-rate projects.

• Example: Louisville, KY leverages inclusionary zoning in its central neighborhoods to promote equitable housing access, while offering bonus density for projects that include a specified share of affordable units.

• Benefit: By integrating affordability into mainstream developments, communities avoid creating isolated “pockets” of low-income housing and instead foster socio-economic diversity within the same blocks.

  
  

4. Overlay Districts & Specialized Zones

Overlay districts layer additional rules—such as design guidelines or land-use permissions—onto existing base zones. Examples include “Attainable Housing Districts” or “Livable Centers,” which may allow higher density, reduced setbacks, or mixed uses in targeted areas without requiring wholesale code rewrites.

• Example: Petoskey, MI piloted an “Attainable Housing Overlay” around its downtown core, permitting smaller lot sizes and ADUs where conventional zoning had prohibited them. By capturing properties already served by water and sewer, the pilot encouraged infill without expanding municipal infrastructure costs.

• Benefit: Overlay tools can be adopted more quickly than a full zoning rewrite and can be fine-tuned over time based on local feedback.

  
  

Real-World Impacts

• Accelerated Approvals: Jurisdictions that have adopted form-based or hybrid codes often report 25–50% faster permitting times, since developers no longer need to navigate conditional use processes to secure “by-right” entitlements.

• Housing Diversity: Cities like Madison, WI and Tacoma, WA have seen significant increases in “missing middle” units—cottage clusters and ADUs—once code changes removed minimum lot sizes and parking mandates in selected neighborhoods.

• Affordability Gains: In communities using inclusionary zoning with strong bonus incentives, as many as 10–20% of new units become income-restricted, helping keep average rents and prices within reach for local workers.

  
  

How Communities Can Get Started

1. Audit Existing Code: Identify sections that unreasonably restrict density (e.g., large minimum lot sizes, excessive setback requirements, parking minimums).

2. Engage Stakeholders Early: Host workshops with neighborhood associations, builders, and low-income housing advocates to build consensus around shared goals.

3. Pilot an Overlay District: Test a small area—such as a downtown block or a corridor along a transit line—where form-based guidelines, relaxed lot standards, or ADU allowances are introduced.

4. Monitor & Adjust: Collect data on housing production, approvals, and infrastructure impacts; solicit public feedback; then expand or refine the overlay language as needed.

5. Scale Up: Once initial pilots show positive results, phase in citywide or countywide code reforms that codify proven innovations.

   
   

Conclusion

Zoning reform is no longer an abstract exercise; it’s a frontline strategy to address escalating housing costs, fight sprawl, and build community resilience. From Greenville’s progressive form-based overlay to Spokane’s embrace of missing middle typologies, municipalities are demonstrating that flexible, context-sensitive codes yield tangible benefits—more choices for households, shorter commutes, and stronger local economies (National Association of REALTORS®).

For planners, elected officials, and concerned citizens alike, the key takeaway is clear: by adopting targeted zoning innovations—whether through form-based codes, inclusionary mandates, or smart overlay strategies—communities can ensure that new homes meet the needs of diverse families without sacrificing design quality or neighborhood character.

References

• “Zoning Innovation from Coast to Coast,” National Association of Realtors, March 2023. (National Association of REALTORS®)

This blog post synthesizes findings from “On Common Ground: Zoning Innovation” to illustrate how zoning reform can unlock housing choices and drive community vitality.