From Jefferson to Davidson to Shelby Counties, Tennessee has a housing affordability problem as the demand for new homes has outpaced supply, a new report from the state’s intergovernmental agency details.
Since 2019, Tennessee’s median home price has risen by 44%, surpassing the national average of 34% as tracked by the U.S. Federal Reserve.
The problem isn’t isolated to fast-growing counties and cities, the Tennessee Advisory Commission on Intergovernmental Relations (TACIR) said in its report approved by commission members last week, but across the state, adding more people are seeking to buy a limited supply of homes, driving up prices and putting the cost “out of reach for many.”
TACIR identified zoning, particularly single-family zoning, as one of the driving factors impacting the number of new homes that are built.
Single-family zoning is a type of land regulation that prevents homeowners from building more than one housing unit on a property. This type of regulation makes it harder for developers to build apartments or even split properties into multiple units. It ultimately restricts the number of people who can live in certain neighborhoods and communities, creating intense competition for fewer homes and driving up prices.
Zoning has become a bipartisan issue, with states like Democratic-controlled California and Republican-controlled Montana adopting laws requiring city and county governments to remove many of the regulations around building new homes.
Ron Shultis, a policy researcher with the conservative think tank Beacon Center of Tennessee, said the state’s single-family zoning creates a housing affordability crisis and that rents are increasing slower in cities like Minneapolis, which have abolished the policy.
“You can see the results when you put in best practices and allow for essentially the market to do what it does best, which is to meet a demand,” Shultis said.
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