Building the foundation for attainable housing in Idaho

The Idaho State Legislature is taking important steps to improve the housing supply.  The House Business Committee met on March 25 to discuss Senate-approved bills that would create more opportunities for building accessory dwelling units (ADUs) (SB 1354aa) and starter home subdivisions (SB 1352aa). This important issue occupied most of the two-hour committee meeting, and a third bill (SB 1353aa) regarding twin home and duplex regulations was unable to be heard. I was invited to testify on SB 1354.

https://www.youtube.com/watch?v=WQezvbfcB4A

Housing advocates hope these bills make it across the finish line before Sine Die. Idaho has waited long enough to see action on improving the housing supply. The House Business Committee made it clear that this is a high priority, and we need to create attainable housing in Idaho.

Like a castle moat protecting inhabitants from invaders, housing regulations, including permitting and zoning, serve as a barrier to entry for homebuyers. The American Planning Association documented that since the mid-20^th century, it was not uncommon for communities to have lot requirements of over 20,000 square feet and even up to 5 acres. This was done to stop smaller homes because the localities didn’t think there would be enough property tax revenue relative to the number of children who would live in them.

This continual regulatory restriction, combined with the loss of construction workers post-2008, created the buildup of unmet demand for starter homes facing the nation today.

But opponents of housing attainability policies argue (as was stated in the committee hearing), “We don’t want to usurp local control.”

But it isn’t local control when the state grants the ability for localities to create the zoning. Just like with occupational licensing, the state (not the industry) sets the licensing requirement. In Idaho’s natural push for deregulation, zoning reform should be at the top of the list. For the housing market to function closer to a free market, developers, home buyers and sellers need flexibility, not poorly planned land-use that enshrines the first in a specific location and bars others from entry.

The state must intercede on behalf of the free market to help the average Idaho homebuyer who has been priced out.  Especially when localities have a reputation for keeping others out. In California, it took 37 years to create an Accessory Dwelling Unit policy that actually improved the housing supply, because localities circumvented the state-expressed desire for more homes at every turn. Finally, in 2019, the state required all localities to approve all permits without discretion. The number of permits grew by 88% within three years of adoption.

It is not just California blocking new entrants to its communities.

In Idaho, the data show that for every town decreasing supply by 1%, the neighboring communities will see a price increase of 0.45%. Where the town unfairly limits supply, it only sees a marginal price increase of 0.059% locally. It’s clear some communities take advantage of this trend and discourage housing attainability through downzoning already spacious neighborhoods, keeping the average Idaho homebuyer out.

An important aspect that all housing policy should consider is the role that Home Owner Associations (HOA) and covenants play in creating more choice in the marketplace. The current versions of the bills improved the verbiage to reflect some of the value that HOAs play in market choice. However, the bills should be amended further to respect the choice of future neighborhoods that would like to form HOAs restricting certain types of development.

State-level zoning deregulation is an opportunity to make housing attainable for the average Idaho homebuyer. A study from the American Enterprise Institute found that a moderate decrease in housing lots nationally from 8,000 to 5,400 square feet would have added 4.8 million units since 2000.

Policies like SB 1354aa, 1352aa, and 1353aa encourage slightly higher density, allowing Idahoans to efficiently utilize its land without sprawling over the farmland and natural resources that define our region. Idaho homebuyers have few attainable choices in the existing marketplace. These proposed policies deregulate the housing restrictions that are barring new entrants, creating more attainable choices in the marketplace.