How Communities Can Influence More Economical Housing

From the original article on December 4, 2021. Author: CatoTheJunger.

Short Term Rentals

Short Term Rentals (STRs) like AirBnB, VRBO, etc suck up the housing supply of communities. Homeowners and, increasingly common, investment firms can make more money renting out houses, condos and apts to tourists than to workers and families.

STRs can be beneficial to downtowns when restricted within walking distance of them, but as entire neighborhoods and apartment buildings become free4all hotels they displace the middle class and destroy communities. This can be fixed and made into a win/win though.

Municipalities can institute ordinances (laws) that regulate these STRs from cleanliness, to where/when they can be operated, even written to give an edge to part time ma&pa owners. There is much discretion available to how you want these businesses operated in your hometown.

A popular part of STR ordinances in cities that have started to adopt them is putting a cap as a % of total housing stock in the city. You can have them zoned to stay outside of residential areas. All of this is legal power your city already has (except AZ).

By concentrating STRs towards downtowns you get the tourists and visitors into your locally owned shops and restaurants while not making much of a housing impact. Families tend to avoid the hustle and bustle of the city center anyways.

Back to that except AZ part. Big Tech (AirBnB), Big Finance (BlackRock) and Real Estate companies have been lobbying hard to keep regulations away from STRs as it hurts their bottom lines. If it means a quick buck, they’ll turn a whole city into a hotel.

In AZ, they’ve successfully gotten the state to make it illegal to *regulate* STRs. They’re trying the same thing in MI and other states. Keep on the lookout, talk to your state reps and tell them you don’t need state bureaucrats micromanaging your towns.

In cities all over, cost of living is rising to new heights all the while a greater share of existing and new housing is being bought and converted to makeshift hotels. This is unsustainable and only you at the local level can change this.

Financial Incentives

Municipalities can incentivize housing development and adding vacant/unused properties via Deed Restrictions, Vacancy taxes/fees, and subsidized infrastructure via water, sewer, and electrical.

Deed Restrictions: These are legal clauses attached to the deed of a property. They can govern use and what can be built. Cities can pay property owners to deed restrict their houses to be for full time residents only, not to be used as vacation properties or second homes.

Vacancy Taxes: Municipalities can levy property taxes on secondary properties (non-homestead) and/or tax based on best use (most states) Either way these taxes can incentivize those that hold vacant/improperly used land/buildings to turn into homes or sell to someone who will.

Vacancy Fees: Some states dont allow those kinds of above taxes to be levied but dont fret there are loopholes! Via public utilities cities can charge fees to cover costs of infrastructure and move that burden on to those not paying into the system. The same incentive as above.

Subsidized Infrastructure: Cities can subsidize new or re-developments buy offering free hookups to water/sewer, cost sharing agreements for pavement, and major electrical. In return for deed restrictions for primary resident homeowners/renters.

Municipalities have the power of the carrot and stick and should not shy away from making deals with serious, ambitious developers that can make positive impacts. Many in public govt are unaware of these solutions. Share these with them!


Housing can be increased by infilling empty/abandoned lots that dot the cityscape, allowing accessory dwelling units (ADUs), more multi-family housing like multiplexes or renovating large homes into apartments.

Infilling: You have probably noticed empty/abandoned lots in the middle of neighborhoods. By using the incentives in yesterday’s thread, a city can get more housing while helping neighborhoods become whole once again. Wins all around.

ADUs aka the mother-in-law suite. These are often small, 1bd1ba, living spaces put on top of garages or attached to the back of an existing house. These are great for young professionals or for a retired homeowner to move into while renting out the main house.

Multiplexes/Apt Conversion: Multiplex properties are versatile in that their footprints are not that much larger than a traditional home, but allow for double, triple, even quadruple the amount of families while still retaining charm and not living the pod life.

Converting large older buildings that are no longer occupied by wealthy mercantile families gives many young professionals the opportunity to live in real neighborhoods while keeping beautiful buildings of the past in use and maintained.

Both the multiplexes and apt conversion can easily come about by rezoning appropriate areas of the city as “multifamily,” with as few or as many caveats as the citizens please.

Economical Housing Developments

So far I’ve talked about different policy changes communities can make to encourage more economical housing. Now Ill discuss cheaper ways to build housing developments. Remember though that to be successful with major projects you need a serious developer.

The first is traditional and inexpensive single family units: trailers! These have come a long way and can be built well enough to last as long as stick built homes and retain value. They also look quite aesthetically pleasing when desired. Perfect first home.

Modular homes are quite similar in that they are prebuilt in factories (reducing waste, saving $), but assembled to be as big or small as one orders at the job site. They are virtually indistinguishable from normie homes and are quick+clean to assemble.

3D printed homes are starting to be built and the first sold this year. There are massive savings in time, labor and materials. Austin has already greenlit a 3D printed community to address their housing shortage. This could be a game changer.

It's very important to remember that there is strength in numbers, particularly economies of scale. The bigger the development, the cheaper it will be per unit. Imagination is paramount in tackling housing regardless if you build traditionally or use new tech.

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