Making Room: Rediscovering America’s Most Affordable Housing Option

Re-legalizing SROs and modern co-living is the next frontier in zoning reform

Co-living is having a moment. The housing model traditionally known as Single-Room Occupancy (SRO), which once served millions of Americans before being nearly regulated out of existence, is suddenly back in the mix of serious housing reform discussions.

Pew Charitable Trusts has published research on the viability of a co-living resurgence, and recently held a national convening in Washington, DC (at which I was a speaker) focused on creating new co-living housing through office-to-residential conversions. Ryan Puzycki published a piece on the “banished bottom of the housing market” in his City of Yes Substack, laying out the practical case for re-legalizing SROs in modern cities. A slightly more skeptical article in Reason re-examined SROs and looked at some of the impediments to their successful return. And Matt Yglesias tweeted his general support for the idea.

The momentum is encouraging. People are saying aloud what should have been obvious for decades: we have a housing and homelessness crisis because we spent 70+ years banning the very types of housing that once made it possible for ordinary people to live affordably - including single room occupancy.

A forgotten history

For much of American history, renting a room (rather than an entire apartment) was completely normal. Boarding houses, rooming houses, and SRO hotels formed a significant portion of the housing stock in cities from the late 19th century through the middle of the 20th. They served workers arriving in growing industrial centers, travelling laborers and seasonal employees, immigrants building new lives, students and young professionals, and seniors who wanted companionship and mutual support. They were not marginal or disreputable. They were mainstream, practical, decent places to live for millions of people.

Beginning in the 1950s, however, we eliminated SROs through zoning and regulatory pressure; sometimes explicitly, and sometimes by stealth. Cities imposed minimum unit sizes that made small rooms illegal. They required off-street parking for every unit even in walkable neighborhoods where it made no sense. They rewrote land-use regulations and licensing standards to treat room-rental arrangements as hotels or institutional uses. And while there were legitimate issues with some of the SRO housing stock, many of these changes were fueled by moral panic, coded language about “undesirable” residents, and the belief that removing the poor from view would somehow produce orderly, respectable cities. The result was the destruction of hundreds of thousands of units and the slow disappearance of one of the most scalable, affordable, and humane forms of housing available.

We are living with the consequences. The United States has a shortage of roughly seven million homes, with low-income renters hardest pressed. Homelessness is endemic, with America’s most prosperous cities simultaneously playing host to the most dystopian scenes of human suffering. Many workers - our teachers, nurses, restaurant staff, retail employees, and municipal workers - cannot afford to live close to their jobs. Young professionals share overcrowded apartments, not because they are trying to emulate Friends or Big Bang Theory (or even Golden Girls), but because a 700 square foot studio apartment costs more than half their income. Meanwhile, millions of bedrooms and thousands of vacant office buildings sit empty every night.

How Co-Living Works Today

Modern co-living has nothing to do with the caricature of a dingy flophouse. It is a practical housing model in which a resident rents a private, lockable bedroom and shares common spaces like kitchens, bathrooms, and sometimes other facilities with other adults. It’s a way to let people live more freely and affordably by using space intelligently, lowering housing costs, and creating community for those who choose it.

And it works. In cities where it is allowed, co-living remains popular among young professionals, workers in high-cost metropolitan regions, people in transition who might otherwise fall into homelessness, seniors hoping to avoid isolation, and seasonal or high-turnover workforces. It lets the private sector bring new homes online quickly by getting government barriers out of the way, instead of forcing housing solutions to depend on subsidies and paperwork.

Why Co-living Is the Logical Next Step in Zoning Reform

Over the past few years, zoning reform measures in a number of states have begun to open up what planners call the “missing middle” - ADUs, duplexes, triplexes, townhomes, cottage courts, smaller-lot homes, and mixed-use zoning. Those reforms matter, and they deserve real celebration. They are expanding choice, diversifying neighborhoods, and proving that change is possible - while enhancing private property rights. But if the goal is abundant housing that everyone can afford, without requiring billions in new subsidies or decade-long development timelines, then we cannot stop where we are.

Re-legalizing SROs and modern co-living is not a silver bullet, but it is a potentially valuable part of the mix. These homes make extremely efficient use of land and building space, which means more attainable rooms for people who need them, faster and at a lower cost. Underutilized office buildings that would be economically unfeasible to convert to one-bedroom or studio apartments are more easily converted to co-living because shared kitchen and bathroom facilities can make use of the central plumbing, electrical and mechanical riser shaft. SROs complement the rest of the missing-middle reforms rather than compete with them. If ADUs offer a gentle, way to add housing without affecting the appearance of more residential, single-family oriented neighborhoods, co-living is a housing form that can scale quickly where communities want it and where the market supports it.

In other words: we need every tool we have - and SROs are one of the most effective tools we’ve forgotten how to use.

From the perspective of zoning justice, the principle is even simpler. Government should not prohibit peaceful, voluntary, mutually beneficial arrangements between adults; especially when those arrangements are among the most effective tools available to prevent homelessness, relieve rent pressure, and expand opportunity. No city should be allowed to stand in the way of property owners who want to provide safe, affordable rooms, or adults who freely choose to live in them.

Part of the Solution, Not the Whole Strategy

Writing in Reason, Christian Britschgi supports SRO legalization from a property rights standpoint but questions how much it will actually move the needle on the housing crisis, particularly at the bottom end of the housing market:

[T]here’s reason to be skeptical that an “SRO-first” housing policy would make a significant dent in the homeless populations of the most high-cost cities.

… Ultimately, the solution to homelessness isn’t necessarily a targeted effort at reviving SROs but rather a general drive to deregulate home construction. The more new housing is built, the more the price of existing housing falls.

And he concludes:

[T]he path to generally affordable housing is general deregulation. More production and innovation will bring down the costs of all housing, and open up a variety of options for currently cost-burdened, choice-constrained renters and homebuyers.

The drive to lift regulations on SROs is correct, as is the drive to lift regulations on triplexes, starter homes, and apartments near transit stops. But a selective focus on deregulating certain types of housing can, however, miss the forest for the trees.

But I don’t think any housing or property rights activists are proposing a “selective focus”. Acknowledging the potential of co-living does not mean de-emphasizing the need for minimum lot size reduction, missing middle housing, parking minimum reform, single stair apartments, occupancy limit reform or protest petition reform. But our work is incomplete if we do not also seek to re-legalize a form of housing that has the potential to accommodate people of all budgets and stages of life.

I have testified in support of a range of zoning and housing reforms in state legislatures including New Hampshire, Montana, Kansas, Oregon, Washington (where SROs are already re-legalized thanks to last session’s HB 1998 by Rep. Mia Gregerson), Arkansas, and my home state of Texas. Each housing coalition consists of different organizations and individuals that prioritize different bills depending on the particular pressing needs - and political realities - of their state. SROs won’t be top of the priority list in every state, but they should absolutely be part of the policy mix.

Alex Horowitz and Tushar Kansal of Pew Trusts have analyzed the potential for SRO re-legalization in the form of office-to-residential conversion in several cities, including Chicago, Denver, Los Angeles, Phoenix, and Washington D.C., all of which are promising. And intuitively speaking, any state with metro areas that attract large numbers of young professionals and suffer from an acute homelessness crisis would be natural candidates for SRO re-legalization.

Turning Co-Living Momentum Into Policy

Reform energy is growing. Developers who want to build co-living projects - and platforms that connect property owners with spare rooms and potential tenants seeking SRO accommodation - are already mobilizing. Housing researchers and homelessness policy experts are coming around to the view that abolishing SROs was an historic error, and that bringing them back could be an important part of the solution. Free-market advocates, progressive YIMBYs, libertarians, and social-service coalitions are finding rare consensus around the idea that abundant housing must include the bottom rung of the ladder, not just the middle.

And very soon, the Institute for Justice (where I work as Legislative Counsel) will introduce new model legislation to help states restore these options. It is called the ROOM Act - Restoring Options in Occupancy Models. The ROOM Act will re-legalize all forms of SRO and modern co-living statewide, from renting a lockable room in a single-family house all the way through to premium “adult dorms” in large office-to-residential conversions. It removes the most onerous zoning and building code barriers, ensures essential safety, and restores the freedom of property owners and prospective tenants to contract for the housing arrangements that suit them best.

Modern co-living is not just a safety net for those at risk of falling through the cracks. It’s a flexible, contemporary way of living that can serve students, workers, seniors, newcomers, and people who simply want community, convenience, and lower cost. Co-living opens the door to new housing models we may not have even imagined yet because the law has never allowed them to exist. Restoring the freedom to build and to choose how we live is a necessary step toward real housing abundance.

It’s time to make room again.