MReport July 2020

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M R EP O RT | 11 COVER STORY I n recent months, a slew of cities and states have sought to forego single-family zoning in favor of higher density housing options—hoping it may be a cure for the ongoing afford- ability crisis. From California to Oregon, North Carolina, Minnesota, and Virginia, legislation has been introduced and, in some cases, ap- proved, all of it designed to allow for higher-density zoning in areas previously reserved exclusively for single-family housing. The move to higher-density zoning is seen, by some, as a way to alleviate affordability concerns amidst rising home prices. "I do think, as a country, we need more affordable housing," said Suzy Lindblom, COO of Planet Home Lending. MReport spoke to lawmakers from Oregon and Washington, as well experts from ACC Mortgage, Planet Home Lending, and LendingTree to discuss the impact of straying from single-family zoning. Here's what we learned about this important trend and the implications it could hold for both homebuyers and the mort- gage industry. A Nationwide Discussion L egislation introduced in Virginia (HB 152) would legalize duplex homes, townhouses, and cottages in any place currently zoned for single-family housing. A report by City Lab stated the Commonwealth is struggling with affordability and inventory as interest in the market has spiked following the pending arrival of Amazon's HQ2. Washington's Senate Bill 6536 debuted in February and would ban single-family zoning in most of the state's cities—including Seattle. Some bills haven't been so lucky, of course. California's ongoing battle with affordability and inventory took a hit earlier this year as Senate Bill 50 failed approval by just three votes, ac- cording to the Los Angeles Times. SB 50 would have allowed homeowners to convert a garage, office, or spare room into living quarters. The legislation had a provision for allowing three homes on land previously zoned for single-family. National lawmakers have also shown a sense of urgency when it comes to addressing America's housing woes, as the House Financial Services Committee passed several laws in February, including H.R. 4351—the "Yes in My Backyard Act" (YIMBY). The legislation would require cities that receive Community Development Block Grant funding to submit a plan to track and report the imple- mentation of land-use policies that promote housing production. Industry Experts Weigh In T endayi Kapfidze, Chief Economist for LendingTree, told MReport that, despite worries expressed by some critics, remov- ing single-family zoning does not restrict single-family homes. "The zoning restriction creates affordability problems in many of the most desired metro areas and removing it should be a priority for cities that want to be competi- tive in the future," he said. He added that April's data found the average existing single-family home price was $288,700, while the median condo price was $267,200. Kapfidze added "the difference is even greater for homes in the same market as condos are more often in more expensive locations." He continued, adding there is an increasing demand for denser neighborhoods and cities are "physically running out of space." Suzy Lindblom, COO, Planet Home Lending noted that California now allows a three- unit apartment on land previously zoned for single-family, as long it is within a half mile of public transportation. "I think that is critical," she said. "It's going to change how we look at single-family zoning, and we need to adapt to it, but up- zoning, as it's called, hasn't always worked. It's important that we focus on the appropriate restric- tions. Minneapolis did up-zoning as well, like California did, but they put in criteria that you have to have 10% of the units be afford- able housing and meet borrowers with a median income." Lindblom also agrees that more cities will follow suit in the months and years to come, allowing for higher density housing. One inter- esting twist on these trends, specifi- cally on the west coast, is accessory dwelling units—usually a garage conversion or a small house on the same property as a larger home. "That's critical to help people be able to afford housing, espe- cially in these high markets like California," Lindblom said. "I do see a change, and I think we'll continue to see this change, and I think, as an industry, we will adapt to this change to help more consumers get into housing." Oregon's HB 2001 O regon's House Bill 2001— which was approved on August 8, 2019—mandates that cities with a population more than or equal to 25,000 must allow higher density housing types such as fourplexes and townhomes in areas previously zoned for the development of sin- gle-family housing. Cities between 10,000 and 25,000 population would have to allow duplexes in Cities in Oregon, California, and more have passed laws limiting single-family zoning in lieu of high- density. Lawmakers and experts discuss what this means for the industry. By Mike Albanese

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