Regulations Keep Millions of Bedrooms Empty During a Housing Crisis

Zoning laws, occupancy limits, and short-term rental restrictions are keeping housing off the market and driving up costs.

The U.S. is facing a housing affordability crisis, and new data from Realtor.com highlight an often missed contributing factor: millions of empty bedrooms. Census data reveal 31.8 million "excess" bedrooms in American homes—compared to just 4 million in 1970. Overregulation, particularly in zoning and local occupancy laws, is among the culprits.

Realtor.com tries to put a positive spin on the bad news. We have, as they put it, a record number of potential "guest bedrooms." However, there are local barriers across the country that make that option difficult and sometimes illegal—as well as regulations that actually encourage the empty bedroom phenomenon. 

To some extent, the "excess" is the result of broad social trends. Household size has been in a long-term decline, from 3.1 persons per household in 1970 to 2.5 in 2023. As Americans have become wealthier, they can afford bigger houses—and stay put even when their children move out.

But even if homeowners would like to make use of those "guest" rooms, they can run afoul of local laws. Research I conducted for the American Enterprise Institute found that in 23 of the 30 largest U.S. cities, there are laws that limit occupants deemed "unrelated," defining a "family" only as a group whose members are related by blood, marriage, or adoption. In St. Louis, no more than three unrelated persons may live together. In Sugar Land, Texas, the limit is four. Private homeowner associations may be even more strict. In the Chase Oaks Homeowners Association in Plano, Texas, a "household" can comprise no more than two unrelated persons, though there is an exception for live-in employees. 

Those who would like to form a household of five single adults or multiple unmarried couples in order to share costs are not permitted to do so—no matter how many bedrooms are available. These relics stand in the way of allowing the widowed, divorced, and never-married to build households. 

Short-term rental restrictions further exacerbate the problem. In New York, the nation's largest city, such restrictions require host owners to be present when rooms are rented—and for the renters to have access to the whole house. Airbnb has called this a "de facto" ban. San Francisco requires a $975 short-term rental registration fee and imposes a hotel-level room tax of 14 percent for "transient occupancy." These cities are taking steps to limit short-term rentals rather than encouraging them. This disadvantages homeowners struggling to make their mortgage payments who could otherwise avail themselves of an additional source of income. 

According to Census data the number of "roomers and boarders" declined by at least 400,000 between 1970 and 2005. Restrictions on the "unrelated" are not the only culprits. Rent control laws—as in New York, where 960,000 apartments are price-regulated—have a similar effect. As a Brookings Institution report puts it, "Once a tenant has secured a rent-controlled apartment, he may not choose to move in the future and give up his rent control, even if his housing needs change." This "misallocation," is not without major consequences, Brookings continued, most notably "empty-nest households living in family-sized apartments and young families crammed into small studios." 

The same is true of the over 3 million units of public and subsidized housing in the U.S., whose tenants are prohibited from taking in unrelated persons not on the lease—or are subject to a higher rent if formally adding another tenant. Data from the Department of Housing and Urban Development show that 17 percent of public and voucher housing tenants are "overhoused"—they have more bedrooms than tenants. In New York City, that number is estimated to be 30 percent of the 177,000 subsidized units.

The time when extended families lived under one roof may be in the past. However, there's no reason for local laws to stand in the way of living arrangements that allow the most efficient use of the housing we already have. It's time to rethink outdated housing laws and policies that force millions of bedrooms to remain empty. Reforming these regulations is a practical step toward easing the housing crisis without building a single new home.