The Year of the Starter Home
Lawmakers across the country are introducing bills that would make it easier to build smaller single-family homes on small lots.
Happy Tuesday, and welcome to another edition of Rent Free. State legislatures across the country are starting to convene. As they do, it's becoming clear that 2026 will be another very active year for supply-side housing reform.
In states both red and blue, lawmakers are introducing bills to whittle away at the red tape holding back home construction in the U.S.
It's a sign of an increasingly developed and national YIMBY ("yes in my backyard") movement. Dozens of states will consider proposals to legalize accessory dwelling units (ADUs), allow more apartments near transit stops, crack down on local aesthetic design mandates, and more.
Rent Free Newsletter by Christian Britschgi. Get more of Christian's urban regulation, development, and zoning coverage.
While it's too early to tell where the sparks will really fly, some common reform themes are starting to emerge. In particular, it looks like 2026 will be the year of the starter home bill.
Lawmakers from both parties are considering bills that would make it easier to build smaller single-family homes on smaller lots.
Salim Furth, a researcher at George Mason University's Mercatus Center, says that there's a lot of additional supply to be had from starter home reform. It's a product that people want to buy, builders know how to build, and the wider housing industry knows how to insure and finance.
"What American builders know how to build in quantity is big apartment buildings and subdivisions," he tells Reason.
This week's newsletter takes a deep dive into the handful of starter home bills that have been introduced thus far.
Additionally, I'll cover the emerging contradictions of New York City Mayor Zohran Mamdani's rent control policies and President Donald Trump's proposal to ban corporate buyers from owning single-family homes.
As an additional note, while the flood of housing reform legislation being proposed makes 2026 an exciting year for this housing journalist, it also makes covering this policy area a challenge. All things considered, it's a good problem to have, but it does mean I could use the help of Rent Free's loyal readers.
If you are a YIMBY reformer working on policy in your state (or city), please reach out. I'm eager to cover what you're working on.
Florida's Big Swing on Starter Homes
In the Sunshine State, Sen. Stan McClain (R–Ocala) has introduced Senate Bill (S.B.) 948.
The very ambitious piece of legislation would cap minimum lot sizes at 1,200 square feet on existing lots and in new subdivisions. It would also limit local governments' ability to impose height, density, and setback restrictions that, in sum, would prevent attached three-story townhome developments on residential land.
Those provisions make it one of the more radical starter home bills introduced to date. Making the bill more radical still is another provision that would require courts to give much greater scrutiny to all local land use regulations.
Florida, like most states, applies a "fairly debatable" (i.e., rational basis) test to local land use regulations. Practically, this standard is highly deferential to the government. It means that courts will uphold any regulation for which there's some rational basis. A property owner's challenge to a zoning regulation will be successful only if they can show that it's manifestly unreasonable and arbitrary.
S.B. 948 would instead require local governments to show that their land use regulations further a compelling governmental interest and are the least restrictive means of furthering that governmental interest.
This is more akin to the "strict scrutiny" standard that courts use to assess restrictions on First Amendment–protected free speech rights.
If S.B. 948 did pass with that provision included, it would place extreme limits on the ability of local governments to adopt or enforce modern zoning codes. Its implications would stretch well beyond starter homes.
Zoning codes as we know them today largely concern themselves with arbitrary restrictions on use and density without any direct connection to the actual nuisance impacts of development. Courts have generally rubber-stamped these restrictions on private property, and with it, America's housing cost crisis.
Imposing free speech–level protections on real estate development turns the clock back a century or so, before courts decided that the right to make productive use of your own property was a second-tier liberty.
Under this standard, local restrictions on everything from new apartment buildings to new coffee shops would become much more vulnerable to legal challenges.
If passed, Florida property owners would likely have the strongest protections against zoning restrictions in the country. Montana considered a similar bill in 2025 that was ultimately unsuccessful.
That radicalism means S.B. 948's passage is a long shot, particularly given the Legislature's short 60-day session this year, says Kody Glazer, the chief legal and policy officer for the Florida Housing Coalition.
"This bill has a long way to go to actually pass given the timeframe we're working with," Glazer tells Reason. There's also an additional risk that the state's budding property tax revolt could monopolize lawmakers' attention, he says.
Florida last passed major statewide zoning reform in 2023. That year, the Legislature passed the Live Local Act, which included sweeping density bonuses for residential projects that include affordable units.
Three years on, Glazer says that lawmakers are interested in taking up the issue again. He notes that McClain is the chair of the Senate committee with jurisdiction over housing policy, showing Republican leadership's interest in doing something.
In addition to the starter home bill, bills allowing ADUs on residential land statewide and apartments near transit stops have also been introduced.
While S.B. 948 is unlikely to pass this year, Glazer says that getting it out there and holding a committee hearing or two for it will be a productive way of starting the conversation on this type of reform.
"It's a good way to build momentum for 2027, 2028 when we have a new governor, new speaker, new senate president," he says.
Massachusetts Takes Starter Homes Directly to Voters
Massachusetts will also consider a starter home policy this year that is more modest in the particulars. The proposal would allow single-family homes on lots as small as 5,000 square feet, provided the property is serviced by public water and sewer infrastructure.
While that's less eyebrow-raising than Florida's legislation, the Massachusetts proposal is remarkable in one respect: it'll likely be put to voters as a ballot initiative.
For the most part, the venue for YIMBY reform proposals has been state legislatures and city councils. Since September of last year, Massachusetts activists have been collecting signatures to ask voters directly whether they want to adopt more permissive starter home regulations.
"We have a legislature that, in my opinion, has not gotten things to the finish line on zoning reform," says Andrew Mikula, one of the lead organizers behind the starter home campaign.
In 2021, the Legislature passed the MBTA Communities Act, which requires local governments to allow apartments near transit stops. The passage of the law has generated a lot of controversy. State officials have had to devote a lot of resources toward getting local governments into compliance.
That experience has "turned a lot of lawmakers off from doing broader preemptive action again," says Mikula.
Last week, William Francis Galvin, secretary of the commonwealth, certified that 11 initiatives had surpassed the 74,574 signatures required to proceed to the next step in the state's ballot initiative process, including the starter home initative.
Massachusetts's multistep ballot initiative process gives the Legislature the opportunity to pass or amend the starter home proposal. If they take no action, petitioners have until July to collect the additional 12,000 signatures needed to place it on the November ballot.
Mikula says that he fully expects the Legislature to take no action on their proposed reform. His campaign's internal polling shows 65 percent of voters in support of the initiative, with an additional 12 percent of voters undecided.
On the substance of their proposal, Mikula says that localities in Massachusetts, like most New England states, maintain some of the largest lot sizes in the country.
"There are a lot of towns in Greater Boston that have access to urban infrastructure and utilities that require half an acre or more to support a single-family home," he tells Reason. The proposed ballot initiative would enable more starter home development where there's the greatest demand for it, and where existing infrastructure can support it, he says.
The Best of the Rest
Indiana: Last year, Texas was the red state that made the biggest moves on housing policy. This year, Indiana might claim that title.
House Bill (H.B.) 1001, sponsored by state Rep. Doug Miller (R–Elkhart), packages together all the common elements of the YIMBY policy playbook.
That includes a starter home policy. The bill would forbid localities from imposing minimum lot sizes larger than 5,445 square feet for single-family homes, and 1,500 square feet for townhomes. It would also allow ADUs on single-family properties and preempt localities' ability to impose aesthetic design requirements.
On the multifamily side, H.B. 1001 would also allow buildings to be built with one staircase and with smaller elevators. It would also limit the number of parking spaces localities could require and allow residential construction in commercial and mixed-use zones.
Omnibus YIMBY bills have generally fared poorly in state legislatures, particularly in states like Indiana, where there's not much of a record of state intervention in local zoning regulations.
Nevertheless, the fact that a state like Indiana—which does not have a severe housing cost crisis—is considering such comprehensive reform is a testament to how eager legislators from both parties are to bring costs down.
It's worth noting that even though Indiana hasn't reached New York or California levels of unaffordability, zoning laws still limit the choices of homebuyers and renters. Reform provides them more options, even if prices are reasonable.
Maryland: State officials are lining up behind the Starter and Silver Homes Act of 2026. Authored by the state's Department of Housing and Community Development, the bill would allow single-family homes to be built on 5,000 square foot lots with water and sewage connections.
The bill is one of three pieces of legislation Gov. Wes Moore included in his "housing growth and affordability agenda" that he announced last week. The other two bills would attempt to streamline permitting and allow apartments on state-owned land near transit stops.
The legislation would also prevent local governments from applying aesthetic design requirements to single-family homes and allow property owners to subdivide their properties into more single-family lots.
Arizona: On a glummer note, Arizona housing activists tell Reason that they will not be running a starter home bill this year. The state successfully passed a starter home bill in 2024, only to have it vetoed by Gov. Katie Hobbs, who cited fire safety concerns and the need to exempt areas around military bases from the reform.
Last year, lawmakers tried again with a new bill that specifically addressed the concerns Hobbs mentioned in her veto statement. That legislation didn't pass the full Legislature, which lawmakers blamed on continued opposition from Hobbs' office.
With the governor not moving on starter homes, activists say they will pursue other reforms.
Mamdani Acknowledges Rent Control Is Bankrupting Property Owners
On his first day as mayor of New York City, Zohran Mamdani toured a dilapidated apartment building owned by landlord Pinnacle, which is currently in the process of selling its 83-building portfolio to Summit Properties, another investment company, in a bankruptcy sale.
The point of Mamdani's visit was to underscore his administration's commitment to protecting tenants and holding bad landlords accountable for letting their properties fall into disrepair.
And yet the city's own legal filings asking to intervene in the Pinnacle sale frankly acknowledge that New York's rent control laws are a primary obstacle to any property owner maintaining Pinnacle's rent-stabilized buildings.
"The City submits that [Pinnacle] and Summit have failed to demonstrate that the Properties can support the proposed sale price and maintenance needs and costs given the regulated rents," reads the city's request to intervene in the Pinnacle sale. A judge rejected that request on Thursday.
Regulated rents in this case refer to the maximum legal rents that Pinnacle is allowed to charge on some 5,000 rent-stabilized units it's attempting to offload in its bankruptcy sale.
For decades, New York state law has given the city's Rent Guidelines Board to set maximum allowable rent increases on close to a million rent-stabilized units.
A 2019 state law, which Mamdani's current housing adviser, Cea Weaver, was instrumental in passing, further restricts landlords from raising rents to cover the costs of building improvements.
The result has been more and more buildings being pushed into the red as operating costs (not including financing costs) have outstripped what property owners are legally allowed to charge in rent. Tens of thousands of rent-stabilized apartments sit vacant because their owners can't recoup the cost of legally mandated repairs.
Weaver and other left-wing housing activists in New York have repeatedly argued for the city government to socialize the housing stock, so that the public, and not profit-seeking landlords, can maintain it.
That doesn't appear to be an option either, according to the city's legal filings in the Pinnacle case.
"If Summit cannot—or does not—remediate the violations the costs of doing so might well fall upon the City, which might have no means to recover such costs," it reads.
So if the city acknowledges that landlords can't cover the costs of upkeeping rent-stabilized properties, and neither can the city, one wonders how exactly Mamdani's promised rent freeze is going to work on a practical, financial level.
Perhaps we'll have to wait until after the revolution to figure that one out.
Trump Calls for Ban on Institutional Investors Owning Single-Family Homes
President Donald Trump said last week that his administration would ban large institutional investors from owning single-family homes. The president and his housing advisers have said this ban will be enacted via an executive order that they hope Congress will codify.
BREAKING: President Trump announces steps to ban large institutional investors from buying single-family homes.
"People live in homes, not corporations." - President Donald J. Trump ???????? pic.twitter.com/MvG2mGodR2
— The White House (@WhiteHouse) January 7, 2026
The idea that the president could enact such a sweeping restriction on his own seems legally dubious. Additionally, I wrote a piece last week explaining why a ban on corporate participation in the single-family market is misguided and destructive.
Large corporate investors are responsible for a small percentage of new home purchases and own an even smaller share of the overall housing stock. The number of homes owned and rented out by investors of any size has been falling for a decade.
Institutional investors' primary activity in the market right now is in the area of build-to-rent development. Shutting that down would make homebuyers no better off while reducing supply and choices for renters.
Read the whole thing here.
Quick Links
- Speaking of Florida's Live Local Act, the three-year-old law is really putting up the numbers. The Florida Housing Coalition estimates it's gotten 52,000 units in the development pipeline, making it one of the most successful supply-side reforms to date.
Florida's Live Local Act flew under the radar when it passed in 2023. Almost 3 years later, there's 52,000 Live Local units in the pipeline per @FLHousingC's tracker. Obvs pipeline units are just that. Even so, that's got to make it one of the most productive YIMBY bills ever. pic.twitter.com/zqWaZmh6GJ
— Christian Britschgi (@christianbrits) January 12, 2026
- President Trump is expected to unveil additional housing affordability proposals during a speech in Detroit today.
- California lawmakers consider making the state's rent control law stricter and permanent.
- In addition to supply-side regulatory tweaks currently being considered, Congress is working on a housing funding bill.
- New York plans on loosening environmental rules to speed up home production.
- I discuss Zohran Mamdani's housing policies and Trump's proposed ban on corporate buyers in the latest episode of the Freed Up podcast that I co-host with my colleague Robby Soave. If you are interested in hearing my housing takes sandwiched between discussions of the board game Risk and the show Mad Men, this is the podcast for you.