Zoning Reform Is Key to Expanding Housing Supply

Written by:

Rudi Davis

Date:

23 Feb 2026

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Minneapolis eliminated single-family zoning citywide, allowing duplexes and triplexes in neighborhoods previously limited to detached homes. This change led to more construction and kept rents stable or falling, according to Marc Norman, Associate Dean at NYU School of Professional Studies Schack Institute of Real Estate. The city achieved this without affordability mandates, suggesting that zoning reform alone can foster market-driven affordability.

“When Minneapolis got rid of mandatory single-family zoning in most neighborhoods and allowed duplexes and triplexes, you saw more construction and relatively stable to decreasing rental rates,” Norman explains. “There wasn’t an affordability mandate on that change, but they got more supply.”

The Minneapolis case is part of a growing movement among U.S. cities to loosen zoning restrictions to address housing shortages. Los Angeles adopted a small-lot ordinance permitting four to eight units, up from the prior limit of one. Florida’s Live Local program is designed to promote housing production, and New York is identifying publicly owned land for affordable housing. Norman views these local experiments as sources of lessons that other cities can adapt to their own needs.

How Post-War Zoning Limited Housing Flexibility

Norman traces today’s housing shortage to post-World War II zoning codes, which restricted the natural evolution of housing types. Before these codes, housing adapted to changing needs: mansions became rooming houses, rooming houses were converted to multifamily buildings, and properties shifted use as demand fluctuated.

“Housing traditionally would flow – the mansion became the rooming house, the rooming house became the multifamily development,” Norman says. “There was more fluidity in how people could change the use depending on living patterns, and after World War II, we froze a lot of types and didn’t allow that flexibility anymore.”

By locking neighborhoods into single-family or narrowly defined uses, zoning codes now prevent housing from adjusting to new market realities. Even as demand for multifamily housing rises, single-family neighborhoods stay unchanged. Office buildings remain empty as housing shortages persist. This rigidity blocks the kind of adaptation that once helped cities meet housing demand.

Norman points to SoHo as an example of how regulation can stifle this evolution. In the 1970s and 1980s, artists illegally converted industrial lofts into housing. When the city later legalized these conversions, it imposed requirements that only licensed artists could live there, along with other restrictions. These rules limited the scale of conversion and kept the market from fully responding to demand.

“In SoHo, all the regulations – first it was illegal, but artists did it anyway. Then, when it was made legal, you had to be a licensed artist and comply with a lot of different rules,” Norman recalls.

LA’s Small-Lot Ordinance and Local Resistance

Los Angeles’ small-lot ordinance lets developers replace a single-family home with four to eight units, increasing density in areas that previously allowed only one house per lot. Norman describes the ordinance as innovative but notes that it faces strong resistance from neighborhood groups opposed to greater density.

“LA has its small-lot ordinance, where you can take a single-family residence and put four to eight units on it. That’s really innovative, but it’s hard to get through – lots of NIMBYs – so it doesn’t work in every city,” Norman says. “But it’s an interesting way to think about densifying neighborhoods.”

The small-lot approach permits more units without the need for expensive infrastructure, such as elevators or fire stairs, that is required in larger apartment buildings. The result is lower construction costs and the potential for more affordable rents. These units are typically townhouses or small multifamily buildings that fit within the existing neighborhood scale.

Norman also highlights the opportunity for homeowners. A property owner with a large lot can subdivide the lot and construct additional units, thereby generating rental income or selling them. This spreads the financial benefits of development beyond large companies to individual homeowners.

However, many single-family neighborhoods resist increased density, citing concerns about parking, traffic, and changes to neighborhood character. Norman acknowledges these worries but argues that the benefits of more housing supply – lower rents and less displacement – outweigh the disruptions of modest density increases.

A Cautionary Tale of Housing Shortages

Norman contrasts Minneapolis and Los Angeles with San Francisco, where tight zoning and limited new housing have fueled displacement and soaring prices. As rents climbed across the city, higher-income residents moved into once-affordable neighborhoods, displacing lower-income residents. Wealthy buyers, including Mark Zuckerberg, purchased Victorian homes and combined them into single-family compounds, removing multifamily housing from the market.

“In San Francisco, rents were going up everywhere, and people were moving into what were more affordable units,” Norman says. “A Mark Zuckerberg, for instance, buying up Victorians and combining them into compounds – buildings that once were multifamily became single-family, or units that were affordable became extremely expensive.”

San Francisco’s experience shows what happens when cities do not increase housing supply in response to demand. With limited options, higher-income residents compete for housing across all price points, driving rents even higher and displacing lower-income residents. Displacement spills over into neighboring regions as people move farther from job centers.

Norman notes that what once seemed unique to San Francisco is now occurring in cities such as Washington, D.C., Raleigh, and Miami. These markets exhibit similar patterns of rising rents and displacement as demand for urban living grows and zoning regulations keep supply tight.

“While San Francisco or New York were on the extreme before, the same elements of the housing crisis started hitting places like D.C., Raleigh, and Miami,” Norman says. “People want to live in more urban environments, but there’s an impediment to increasing density or multifamily in historically residential, low-scale, single-family neighborhoods.”

Zoning Reform as a Practical Solution

Norman argues that zoning reform is a scalable and adaptable solution to the housing crisis. While the details differ – Minneapolis ended single-family zoning, Los Angeles allows small-lot subdivisions, and other cities are legalizing accessory dwelling units or cutting parking requirements – the core principle is to allow more flexibility in land use and housing types.

The main obstacle is political. Zoning reform faces opposition from neighborhood groups, homeowners, and local officials who fear that more density will alter neighborhood character or reduce property values. Norman recognizes these concerns but contends that the benefits of greater housing supply – including lower rents, less displacement, and more economic opportunity – outweigh the costs.

“The fact that certain cities are moving away from some of the barriers to conversion is a great thing,” Norman says.

He recommends that cities focus on reforms that add the most housing with the least disruption. Allowing duplexes and triplexes in single-family zones is less disruptive than permitting large apartment buildings. Legalizing accessory dwelling units allows homeowners to generate income without major changes to the neighborhood’s appearance. Small-lot subdivisions can increase density while preserving the scale of development.

Zoning Reform’s Broader Impact

Norman’s analysis suggests that zoning reform is essential for tackling the housing crisis. Cities that allow greater flexibility in land use see more construction, stable or falling rents, and less displacement. Minneapolis demonstrates that these outcomes can occur without requiring developers to meet specific affordability mandates, pointing to the power of market-driven affordability when supply is allowed to respond to demand.

As more cities confront housing shortages and rising rents, evidence from Minneapolis, Los Angeles, and San Francisco indicates that zoning rules that restrict new housing keep prices high and displace lower-income residents. By removing these barriers, cities can create the conditions for more construction and greater affordability.

Looking ahead, Norman believes that local zoning reform will remain central to easing the housing crisis. While not a cure-all, it is a necessary step for any city seeking to stabilize rents, reduce displacement, and create a more inclusive housing market. The Minneapolis model shows that even modest reforms can have a measurable impact, offering a template for cities nationwide seeking practical solutions to rising housing costs.