To Support Families, Repair the Housing Ladder

This year, the U.S. population could shrink for the first time in history, and it’s not just because of immigration trends. Since 2008, the country’s total fertility rate has been below the replacement level of 2.1 births per woman. The perils of this trend are well-trod ground by now: A falling population will mean challenges for entitlement programs and for meeting the needs of a growing number of retired people dependent on a smaller working-age population.

There are several explanations for this decline in birth rate. One underappreciated reason is high housing costs and a shortage of affordable options in the places people want to live. Many demographic studies find that reduced housing affordability — particularly when it comes to owning the home you live in — goes hand in hand with starting families later in life and having fewer total children.

With that in mind, it would be easy to assume that we now need a package of family-specific housing policies, such as more single-family zoning (“family” is right there in the name!). But in fact, those policies have been in place for generations, and they’re failing.

Increased family formation requires a broad-based liberalization of land use regulations that will allow homes to be available at each major life transition — from moving out of mom’s house, to raising babies, to finding room for teenagers, to finding a retirement community near the grandkids.

Zoning that restricts the quantity and type of housing that can be built is one important cause of housing affordability problems. Over the past century, policymakers have used land use and building regulations to systematically remove low rungs from the housing ladder. Single-family zoning severely limits the areas where more cost-effective multifamily housing can be built. Research shows that fertility is lower in tightly regulated housing markets than in more flexible ones.

The least-expensive homes — single-room occupancy units with shared kitchens — have been all but eliminated. The amount of land where manufactured housing can be sited is shrinking precipitously. The availability of apartments — including family-friendly ones — townhomes, and other starter homes is also affected.

The morass of rules driving construction toward more expensive types of housing has fueled a mismatch between types of households and the housing stock. Figure 1 below shows the ratio of housing units by bedroom count relative to the number of households of each size. Blue depicts studio apartments to one-person households, red shows one-bedroom units to two-person households, green shows two-bedroom units to three-person households, yellow shows three-bedroom units to four-person households, and purple shows units with four or more bedrooms to five or more person households.

Figure 1: Growing housing mismatch


This relative and growing abundance of large houses compared to large households may make it appear as if Americans are living in housing that’s family-friendlier than ever. However, Figure 2 shows that the number of children each woman is having plummeted during the shift toward larger housing units.

Figure 2: Total U.S. fertility rate


Putting these pieces together, Figure 3 shows that the U.S. has nearly two single-family houses for every household with children at home. This trend provides reason to doubt that further skewing the housing stock toward single-family homes will lead to more babies.

Figure 3: Ratio of single-family houses to households with children

Some demographers who study fertility argue that declining marriage rates for women during their peak fertility years are the primary cause of declining birth rates. As such, it’s worth unpacking how housing markets affect marriage prospects for adults in their 20s and 30s. Zoning has made it much harder for people with low incomes to find housing they can afford independently. This has pushed an increasing share of adults to live with their parents as Figure 4 shows. Still more are living with roommates or extended family.

Figure 4: Percent of adults ages 25-45 who live with their parents


For some people, these shared-living arrangements may be positive, but for others, they create barriers to dating, marriage and starting families. When people are living with relatives or friends, they are often staying in housing they can afford at the expense of living where well-paying jobs may be located, creating an additional barrier for young people trying to achieve financial stability before starting families of their own. For many 25-year-olds living in their childhood bedrooms, moving to a single-family house would be entirely out of reach. What they need to make progress in their personal and professional lives is a small apartment in the place where their career and social opportunities are located.

Architectural determinism is poor family policy. You can’t legislate babies by legislating big houses. But you can give people the freedom to climb the housing ladder one rung at a time, starting families along the way. Relaxing all types of land use regulations — those that are standing in the way of more single-family houses and, perhaps even more importantly, those that are standing in the way of less-expensive options — is the path toward improved affordability and more family formation.

Governing’s opinion columns reflect the views of their authors and not necessarily those of Governing’s editors or management.