Part 2 in a series discusses how making it easier to build more, smaller houses would bring down home prices and help bring back the starter home. Read Part 1: “How re-legalizing starter homes cuts new house prices.”
Legalizing “missing middle housing” allows homebuilders to “make it up on volume”: sell a higher volume of units, each at a lower price, by lowering the cost of inputs per unit. Those lower costs come from both dividing land and materials between multiple units, and building smaller units that use fewer materials.
Much has been written about how Houston reduced minimum lot sizes, spurring a wave of moderately-priced townhouses. Yet Houston’s famously unusual land use regulation may make comparisons difficult. Instead, let’s look at three growing (but conventionally zoned) cities that have changed their zoning codes recently to allow smaller houses, and seen homebuilders respond with hundreds of new, lower-priced homes…