Monte Anderson opened a broom closet in his kitchen and pointed to a door handle near a mop and a trash can. Somewhere on the other side lay one small solution to America’s affordable housing crisis.
Mr. Anderson is a developer who rehabs commercial and residential buildings in and around Dallas, including the ranch-style house where he lives, for now, with three kind-of-sort-of roommates. The 2,400-square-foot home has been split into four studio apartments. Each has an outdoor entrance, but also connects to another unit through a door like the one in his kitchen closet.
The connecting doors are locked and hidden because they’re designed to not be used. The main reason for their existence is that they allow Mr. Anderson to claim he lives in a single-family home, in accordance with local zoning codes, when in reality the home contains four apartments in a country that needs more of them.
“This is a suburban retrofit,” Mr. Anderson, 66, said during the tour.
Economists estimate that America needs between four million and eight million more homes. Their prescription is to build a lot of new houses and apartment complexes. It’s a remedy that politicians from both parties agree with in principle, but that is bound to take decades to accomplish.
It takes money to buy land, time to secure permits. In the meantime, construction costs have exploded. That’s why most new homes tend to be luxury rentals or higher-cost houses, rather than something a person with a middle or lower income can afford. Those lower-cost units, however, are the ones in the shortest supply.
This imbalance has turned policymakers and entrepreneurs like Mr. Anderson toward a large and underappreciated market: the 145 million or so homes that already exist.
About two-thirds of America’s housing stock consists of single-family homes. Apartment buildings are essentially banned from large swaths of major metropolitan areas, where most of the land is zoned for low-density neighborhoods. Mr. Anderson is trying to find a loophole by guiding single-family homes toward a new, multifamily life.
There was a time when big houses were what the United States needed. When Mr. Anderson’s house was built in the 1970s, American mothers had more than three children on average, according to the Pew Research Center.
Today that’s shifted: People are marrying at older ages or not at all, having fewer children (an average of two for mothers in 2020, according to Pew) and increasingly living with other adults in their families. The result is a housing mismatch in which older people live in big houses with empty bedrooms while single adults and families with few children are looking for smaller, more affordable places.
“The roommate house” — Mr. Anderson’s name for his chopped-up ranch home — is designed for this new world. A serial rehabber, Mr. Anderson has taken on strip malls, a movie theater and a former wax paper plant that now contains some 70 small businesses, including a microbrewery, a boxing gym and a mishmash of artisans who sell things like jewelry and housewares.
All of his projects are scattered around Dallas and its suburbs, a region where he has spent his entire life. But within that area, Mr. Anderson stays on the move, often taking residence in whatever new thing he has just built. For a while, he lived in a boutique hotel, then moved to an apartment complex he had redeveloped. Now he’s in the chopped-up house.
“Sometimes I have to do it for financial reasons, but mostly I do it to see what I’ve done right and what I’ve done wrong,” Mr. Anderson said. “To do the experiment, I have to live in it.”
The units in the roommate house rent for $1,800, including utilities. At that price, it’s not affordable for low-income tenants. But he is providing a haven for a 27-year-old woman who works in an assisted-living facility, a 70-year-old bookkeeper and Mr. Anderson’s 20-year-old granddaughter, who is a real estate agent. And to his way of thinking, the building itself stands for something: a proof of concept for a way of living.
Change, Without Disruption
Over the past decade, cities and states around the country have tried to encourage ideas like Mr. Anderson’s by making it easier to add rental units to existing structures. Some have passed laws that allow backyard homes and garage and basement units. Others encourage homeowners to subdivide their lots and sell a portion for development.
The goal is to add housing in existing neighborhoods without creating too much disruption — or stirring up residents who don’t like change. In many cases, the efforts have yielded more significant results than attempts to rezone entire cities or add apartment buildings to streets of single-family houses.
Consider California, home of the nation’s biggest affordability crisis. Since 2016, state legislators have proposed a blizzard of housing laws, from forcing suburbs to allow multifamily housing to stripping cities of land-use authority if they don’t approve housing more quickly. Yet when you look at the number of units that have been built since the Legislature started focusing on housing, the humble backyard cottage — an “accessory dwelling unit” in the jargon of city planners — is the main bright spot.
In 2016, before California passed several laws making A.D.U.s easier to build, local governments permitted about 1,000, which in a state of 40 million people is basically zero. In 2023, the state permitted about 23,000, while the number of new single-family homes and apartment buildings remained essentially flat.
The A.D.U. laws created an entrepreneurial boomlet — a literal cottage industry that helps homeowners get permits, build units and use software to identify suitable lots. Phil Levin, a Bay Area technology executive who has become an evangelist for communal living, recently started Live Near Friends, a company that helps people identify plots whose size and regulations are ideal for multiple families to live on.
Ben Bear is the chief executive of BuildCasa, an Oakland company founded in 2022 to take advantage of new California laws that allow homeowners to subdivide their property and sell their backyards for development. The company is a hybrid real estate play that develops some properties but mostly acts as a broker that connects other developers with homeowners who want to add units.
Mr. Bear estimates that the state could add millions of units this way while unlocking billions in value for homeowners. So far, he said, many of his customers are parents who split their lots to build homes for their adult children or are aging homeowners in search of income.
“It’s boomers who bought a long time ago and have paid off their homes and own the biggest lots,” he said.
Mr. Anderson, in Dallas, sometimes rents his rooms through PadSplit, an Atlanta-based company that is essentially a roommate version of Airbnb: Its software platform connects tenants looking for rooms with homeowners looking for renters.
How Households Are Reshaped
Living arrangements have always shifted with culture and the economy. During World War II, another grinding housing shortage prompted Americans to carve up homes and create rooming hotels in major cities. The shortage eased during the postwar building boom, as developers mass-built the modern suburbs, often with modest two- and three-bedroom houses.
At the same time, the composition of households shifted from multigenerational groupings toward a mix of nuclear and single-parent households. That trend has started to reverse.
In a new book, “Doubled Up,” Hope Harvey, a professor of public policy at the University of Kentucky, documents how high rents, the precarious job market and the need to care for older parents or young children has made multigenerational households far more common.
This shift is most prevalent among lower-income households and reflects yawning inequality and a fraying safety net, along with the housing shortage. But the trend has moved steadily up the income ladder as rent and home prices have escalated.
“The housing market is so expensive, the child care market is so expensive, that these families feel that to pursue their goals they have to double up,” Dr. Harvey said in an interview.
These are usually economic decisions: Dr. Harvey said most of the people she had talked to for her book described living in someone else’s home as a temporary arrangement. Most people don’t want to deal with grating annoyances like sharing a living room, or immediately cleaning up dishes because they live with a neat freak. Some don’t like never being alone.
Mr. Anderson said his roommate house was designed with this aversion to togetherness in mind. He bought the house for $300,000 when it was borderline uninhabitable — a wrecked kitchen, drained pool, leaking roof — and spent about $1 million renovating it. He also added a backyard house that looks onto a resurfaced pool. A wooden deck, gravel walkways and cactus landscaping give the grounds a midcentury desert vibe.
“It’s not exactly where I want to live myself,” he said. “Although I kind of like it.”
Including the apartment Mr. Anderson currently lives in, the rents would bring in a little over $9,000 a month, which is just enough to cover the mortgage and expenses.
Why build something with so little financial upside? Mr. Anderson’s hope, he said, is that the project will inspire others and show cities that multifamily living can coexist in single-family neighborhoods. This, he argued, would bring in more tax revenue, raise real estate values and possibly inspire others to hire his company to develop more homes like his.
Plus, while the paltry returns might not entice Wall Street, he said, “it’s a financial winner if you have an elderly parent who can live here instead of assisted living.”
As we walked through a newly vacant unit — a consultant who used to live there moved to North Carolina — Mr. Anderson said his aim is to create a happy medium with lower-cost units and a sense of community. But that community only works because people can keep the doors closed and ignore each other.
