• Commentary

With the Prospects for Home Ownership Dimming, Build-to-Rent Offers a Promising Alternative

Like much of the nation, Georgia faces a severe housing shortage—a crisis driving prices out of reach for too many families. While it affects all socio-economic types, the housing shortage is particularly acute for working-class families seeking entry-level homes So why are so many Georgia communities trying to ban “build-to-rent” homes (BTRs)?

BTR homes are exactly what they sound like—dwelling units built specifically to rent instead of to sell. For many in this economy, homeownership is simply not an option. Still, in several towns and counties across Georgia, NIMBY—not in my backyard—impulses persist to quash BTR development proposals. Several localities have banned them or imposed stifling restrictions

Banning BTRs would foreclose one among several innovations that aim to solve the ever-widening gap between the numbers of households and available homes. Other cutting-edge ideas include accessory dwelling units and tiny homes. BTRs in particular offer starter homes in these challenging economic times. In this environment, a functional housing market must resemble a ladder more than it should a trampoline. Instead of leaping to the American Dream of owning a detached single-family dwelling, young adults who move often and have little money need rungs between their parents’ basements and full homeownership. Enter the BTR … and its ardent opposition.

The purpose of zoning is to stop nuisances—deafening machinery, polluted air and soupy waters in residential areas. Zoning is not meant to keep unwanted populations out, but it has often been designed this way. Indeed, small cadres of homeowners across the country (loud, but hardly the majority) insist that government forestalls neighborhood change of any sort, fearing reductions of the value of their investments.

There are data both to support and undermine this hypothesis—still, American homeowners saw their properties’ collective value grow around $6.9 trillion just last year. But their pecuniary objections are beside the point. Policy decisions are subordinate to a deeper question: whether limiting neighborhoods to single-family-owned homes is constitutional. Though the Supreme Court hasn’t given a straight answer, the justices have indicated their wariness—and it is easy to see why.

NIMBYs will often use flimsy excuses to defeat development proposals. Some of the greatest hits include more crime, increased traffic, overcrowding and sullied aesthetics. While some of these excuses are plausible, they are far from probable given what YIMBYs—pro-development yes-in-my-backyarders—are currently proposing: “not change for its own sake, but change as a natural result of people doing productive things.”

BTRs are an exemplar of positive development. Often they are single-family dwellings with no discernible neighborhood impact. BTRs also serve a vital market need for families. There is currently a huge waiting list for BTR communities from families. The few downsides are incurred in exchange for marked economic upside for BTR tenants who retain more cash to invest in their adopted communities.

The Supreme Court has long been suspicious of exclusionary zoning because the same purported reasons for rejecting reforms appear in case after case after case. In the 1920s, the Court suggested that the Constitution afforded a fundamental right to establish a home. In the decades that followed, a majority of justices set about dismantling barriers to this right, including NIMBY efforts to restrict home occupancy to nuclear families or prevent a home for intellectually disabled adults. The Court’s recent decisions have shown a commitment to upholding constitutional protections for fundamental property rights, which includes the right to establish a home—whether that home is rented or purchased.

At the moment, the anti-BTR movement is concentrated in the Peach State because of the rapid growth in Atlanta and its suburbs. It is for this same reason, though, that BTRs and other alternative housing arrangements are more needed than ever. There simply are not enough homes. Courts in North Carolina and New Jersey have “found that owner-occupancy requirements violate” their state constitutions. Last year in the Georgia House and Senate, there were two bills to limit local governments restricting new development like BTRs. We urge Georgians to push their local and state lawmakers to permit BTRs and other housing developments. It is not only the moral and constitutional thing to do; it will also bring greater prosperity.

Brian Hodges and Sam Spiegelman are attorneys at Pacific Legal Foundation, a nonprofit legal organization that defends Americans’ liberties when threatened by government overreach and abuse. Tyler Webb is a research fellow with Georgia Public Policy Foundation, a Georgia based think tank working to improve the lives of Georgians by promoting public policies that enhance economic opportunity and freedom.