New Laws Open Doors to Affordable Shared Housing Arrangements

A growing number of states are considering reforms to allow residents to lower their housing costs by sharing homes, a shift that promises to boost the supply of rental housing and improve affordability. Shared housing was common for most of American history, but it declined sharply over the past 70 years as local zoning codes became more restrictive.

In 2024, the list of states seeking to reverse that trend grew by three as Colorado, Hawaii, and Washington passed legislation to enable shared housing.

Hawaii and Washington passed legislation requiring local governments to allow microunits, a low-cost housing arrangement—with much lower rents than studio apartments—in which residents have private rooms but share bathrooms, kitchens, and common living areas, similar to college dorms or some senior living facilities. These states join Oregon, which passed a similar law in 2023.

Colorado, meanwhile, passed a “Golden Girls” law—a reform named for the four women who lived together in the classic TV show—that removes local caps on how many unrelated people can share a home. With this legislation, the state became the third in the nation, after Iowa in 2017 and Oregon in 2021, to loosen shared housing restrictions.

Although the Hawaii and Washington approaches differ from Colorado’s, both are designed to allow less-expensive ways of living.

Microunits

Hawaii, Oregon, and Washington’s microunit laws reflect a recognition of a key fact that research has increasingly shown: States and localities that have substantially increased their housing supply have slowed rent growth and cut homelessness, and allowing microunits can help address the shortage of affordable rental options.

Though local zoning and building codes in some Washington jurisdictions barred the creation of such living arrangements, this housing model’s potential to reduce persistent housing shortages and high rents is attracting overwhelming, bipartisan support in state legislatures.

After roughly seven decades in which local zoning and building codes barred creation of microunits, the growing interest in this type of housing, which used to be known as single-room occupancies, also has been bolstered by the improved quality of modern design and construction.

In Washington, where rents increased by 42% from 2017 to 2023, legislators passed H.B. 1998—authorizing microunits in urban areas that allow buildings with six or more units—with near-unanimous bipartisan support. One estimate indicates that the measure could generate more than 2,400 low-cost units annually in the state, including by converting offices to housing, which lawmakers authorized statewide in 2023 through H.B. 1042.

A recent study by The Pew Charitable Trusts and Gensler, a global architecture, design, and planning firm, showed the impact that these two bills could have. Converting an office building in downtown Seattle to microunits with shared bathrooms and kitchens, for example, would cost $190,000 per unit, less than half of the $400,000 to build a similarly affordable studio apartment. As a result of these lower construction costs, Pew and Gensler estimated that rents for the converted units would be $1,000 a month, compared with the $1,530 cost for a studio in the same part of the city.

In Hawaii, where rents are the highest in the nation, lawmakers in both chambers unanimously passed H.B. 2090, allowing the conversion of vacant offices and other commercial buildings into microunits statewide. On Oahu, for example, 13% of offices are sitting unused. Converting these empty commercial spaces to housing can help alleviate the state’s housing shortage and control rent growth. And allowing microunits makes those conversions more financially feasible and likely to materialize compared with permitting only conventional apartments with plumbing in every unit.

Similarly, allowing microunits will help Oregon reach its ambitious goal, set in 2023, of adding 360,000 housing units over 10 years, nearly doubling its housing production rate.

The legislative changes in Hawaii and Washington also addressed parking mandates that increase the cost of developing new housing. Washington’s law bars requirements to add off-street parking for developments near a major transit stop, while under Hawaii’s law, office-to-residential conversion projects need only provide half as much off-street parking as other developments.

House sharing

Even before Colorado in 2024 passed H.B. 1007, which lifted limits on the number of unrelated people who can live together, several cities in the state, including Denver, were already enacting similar policies. However, the new law will allow more people to share homes in Fort Collins, Commerce City, Littleton, and other cities where “U plus 2” laws allow no more than three unrelated people to live together. Denver, which changed its rules in 2021, had previously allowed no more than two people who are not related to share a home.

In 2017, Iowa barred cities from enacting or enforcing laws based on whether the occupants of rental properties are related. Some supporters of the measure argued that limiting whether people could live together discriminated against LGBTQ+ people, while others focused on how such restrictions led to underutilization of existing homes and raised costs. And given the myriad problems with co-living constraints, the legislation passed with a large bipartisan majority. Oregon followed suit in 2021 when lawmakers there nearly unanimously prohibited the enforcement of local limits on shared housing on similar grounds.

Other states, however, continue to maintain restrictive regulations. In Kansas, for instance, after a property management company bought two homes in Shawnee and rented the rooms to individuals, the city council adopted an ordinance to prohibit four or more adults from living together if any of them are unrelated. The “co-living ban” was passed even though rents in surrounding Johnson County had risen by 13.3% from 2019 to 2022, when the ordinance was enacted. The Pacific Legal Foundation, a public interest law firm, filed a federal suit challenging the constitutionality of the ban for interfering with how people choose to associate.

Final thoughts

Throughout the country, several companies focus on providing low-cost co-living housing. Their offerings illustrate the potential benefits of these arrangements for the nation’s 22.4 million households that are cost-burdened—meaning they spend 30% or more of their income on rent.

One provider, for instance, offers rooms in Austin, Texas, for $500 to $700 a month, compared with the average $1,282-a-month price for a studio in the city. Another company reported that, nationwide, it has created more than 14,000 rooms to date, with its median tenant earning $27,000 a year. In the Washington, D.C., region, the provider’s highest-cost market, units can rent for as little as $1,000 per month, nearly half of the roughly $1,900 average monthly rent for a studio in that city.

Additionally, microunits and co-living can help address a growing mismatch between the nation’s housing stock and the size of its households. The median size of new single-family homes has risen sharply in the past four decades, from 1,500 square feet in the 1960s to 2,328 square feet in 2022. But while the homes have grown, the number of people living in them has decreased from an average of 3.33 in 1960 to an all-time low of 2.5 in 2022. Further, since 1960, the percentage of single-person households has more than doubled from 13% to 29%.

This new crop of state laws—and emerging business models—are a sign that shared housing is on the rise. If more states adopt laws like those in Colorado, Hawaii, Iowa, Oregon, and Washington, millions of Americans who pay over 30% of their income in rent could soon have less-costly options—and evidence indicates that homelessness would probably decline as well.

Kery Murakami is a principal associate and Gabe Kravitz is a manager at The Pew Charitable Trusts’ housing policy initiative.