Allowing Accessory Dwelling Units Would Contribute to Housing Affordability in Maryland

Chair Barve, Vice Chair Stein, and members of the committee, thank you for allowing me to offer informational testimony today on House Bill 1259. I am Emily Hamilton, a senior research fellow at the Mercatus Center at George Mason University, where I am codirector of the Urbanity Project. I am also an alumna of Goucher College in Towson. The Mercatus Center is dedicated to advancing knowledge relevant to current policy debates. Toward this end, its scholars conduct independent, nonpartisan analyses of legislation, rules, and proposals. My remarks today will focus on three points:

1. Restrictions on the right to build housing in Maryland are responsible for high housing costs.
2. Allowing homeowners across the state to build accessory dwelling units (ADUs) would be an important step toward permitting a relatively affordable type of housing to be built.
3. State policymakers have an important role to play in setting limits on how much localities can restrict the right to build housing. ADUs are banned in many single-family neighborhoods in Maryland, and allowing them to be built is one way that state policymakers can improve housing affordability.

I have attached to this testimony a policy brief authored by my colleagues Salim Furth and Jess Remington that discusses these ideas in more detail.

Land Use Regulations Limit Property Owners’ Right to Build Housing, and They Drive Up Housing Costs

Land use regulations limit property owners’ right to build housing. When increasing demand for housing meets a market where zoning rules constrain housing supply—as in high-cost regions in Maryland— the result is that a limited supply of homes becomes more expensive, and low-income families are forced to look elsewhere. This outcome harms the state’s most vulnerable residents and undermines the state’s continuing role as a center of economic opportunity.

In large part owing to these rules, many residents across the state are suffering from high housing costs. The vast majority of Maryland renters who earn less than half of their region’s median income are housing cost burdened, meaning that they spend more than 30 percent of their income on rent. Between 2000 and 2017, inflation-adjusted median gross rent across the state increased by about one-third.

Accessory Dwelling Units Would Aid Housing Affordability

SB 871 would give homeowners across the state the opportunity to build an attached or detached ADU. It would protect homeowners from some local rules that have proven to be barriers to ADU construction, including requirements that ADUs must have their own parking space and requirements for setbacks that can prevent a garage from being converted into an ADU.

ADUs offer homeowners several potential benefits. They create the potential for homeowners to offset a portion of their mortgage payment by renting out part of their space. One study of ADU construction in Los Angeles finds that homeowners who choose to build them increase their property values by 46 percent on average.

ADUs also create opportunities for greater housing flexibility to meet peoples’ needs as the country’s demographics change. ADUs make intergenerational living feasible, allowing young adults or elderly people to live with family members in spaces that can be built to meet any accessibility needs.

These units have the benefit of being one of the most affordable types of housing that can be built. Because they’re built on land that already contains a single-family home, their land cost is zero. They’re often more affordable than alternative types of housing for renters. In Washington, DC, basement apartments are the most common type of ADU. They tend to rent for hundreds of dollars less per month than standard one-bedroom apartments in the same neighborhood. A survey of homeowners with ADUs in Los Angeles County finds that ADUs typically rent for $400 less per month than the county’s median rent.

The State Has a Role in Allowing Accessory Dwelling Units to Be Built

Zoning and other land use regulations are generally implemented at the local level, but the state has an important role to play in setting limits on how much localities may stand in the way of new housing being built. Because localities are “creatures of their state,” states have the legal authority to set limits on local regulation. The effects of local rules that prevent homes from being built in one locality spill over to the next. Local land use regulations that limit population growth, economic growth, and income mobility within one city or county limit growth and opportunity for the state as a whole.

Conclusion

Housing affordability is a central challenge in the lives of many Maryland residents, and the principal source of this challenge is local land use regulations that limit property owners’ rights. Allowing Maryland homeowners to build ADUs is one way to increase housing choice and allow for a more flexible housing supply. Stepping in to set limits on local land use regulations and to increase homeowner rights is an appropriate role for state policymakers because local land use regulations that stand in the way of housing affordability and economic opportunity affect the entire state.

Attachment

“Ordinances at Work: Seven Communities That Welcome Accessory Dwelling Units” (Mercatus Policy Brief)