Rebuilding the Housing Ladder in NC

North Carolina’s housing crisis doesn’t have a single cause — and it won’t have a single fix. The housing market functions like a ladder: each rung depends on the ones below it. When the bottom rungs are missing or broken, pressure builds across the entire system — pushing up rents, locking out first-time buyers, and squeezing the middle class. Rebuilding that ladder requires targeted reforms that address different segments of the market at the same time.

Key Findings

North Carolina’s housing market is missing rungs. A healthy housing market serves everyone — young renters, first-time buyers, growing families, downsizing retirees. When the market can only build at the top, pressure builds across every rung below it, and people at every income level end up priced out of what they need.

The problem is what we’ve made illegal. Townhomes, duplexes, rowhouses, ADUs, single-room occupancies — these are the housing types that created affordable, walkable communities across North Carolina for generations. In most cities and towns today, many of them are simply not permitted. High costs are a direct result of rules that limit what can be built and where.

Land costs are driving prices up. In cities with inefficient zoning, land can account for up to 50% of a home’s total sale price. Rules that require large minimum lot sizes, excessive setbacks, or low-density construction force each household to shoulder a bigger share of that land cost — making attainably priced homes mathematically impossible to build.

Hidden regulations act as poison pills. Setbacks, stepbacks, floor-area ratios, height limits, and density caps are buried deep in local land-use ordinances. Each one individually may seem minor. Together, they block the kinds of homes that working and middle-class North Carolinians need most.

Reform requires follow-through. Changing the code is necessary but not sufficient. If a city legalizes ADUs and gets none, something else is blocking them — understaffed permitting departments, outdated inspection practices, or other bottlenecks. Accountability structures must outlast the initial text amendment.

What North Carolina Should Do

• Legalize ADUs and tiny homes in all residential zones, creating starter homes, downsizing options, and rental income opportunities on existing lots
• Allow townhomes, rowhouses, duplexes, and 4-plexes statewide — the historic housing types that built affordable, walkable communities before single-family-only zoning
• Permit single-stair buildings, which reduce construction costs, unlock more flexible floorplans, and make infill development on irregularly shaped parcels financially viable
• Allow residential uses in commercial zones, putting homes near jobs and turning underutilized parking lots into neighborhood assets
• Legalize single room occupancy residences (SROs), which provide the lowest-cost private housing option and a critical entry rung for people priced out of everything else
• Eliminate or dramatically reduce minimum lot size requirements, which inflate land costs and price out starter homes, tiny homes, and cottage courts
• Remove minimum parking requirements, which add construction costs passed directly to residents and businesses, and increase stormwater runoff
• Strip out dimensional poison pills — setbacks, stepbacks, floor-area ratios, and density caps — that make attainably priced housing impossible to build even where it’s technically “allowed”