Co-living Emerges as a Solution to America's Housing Affordability Crisis

Co-living, once a common and affordable way to live in American cities, is experiencing a resurgence as a potential solution to the nation's housing affordability crisis. This trend, sometimes referred to as house-sharing or adult dorm rooms, involves renting individual furnished bedrooms within single-family homes. Companies like PadSplit, founded in 2017, facilitate this by connecting property owners with renters seeking more affordable options.

Todd Waller, a social worker in the Atlanta metro area, found himself living with six roommates in a PadSplit property in late 2022. With weekly rent at $180, or less than $800 per month, he was able to save money and gain financial breathing room. He later upgraded to a $1,250 per month unit with a private bathroom and kitchen access, still paying significantly less than he would for his own apartment.

Advocates for the homeless also see co-living as a vital tool for preventing people in emergencies from falling into shelter living, particularly models that allow for quick move-in without a security deposit. A PadSplit survey indicated that 83 percent of its renters are employed, with a median income of $32,500.

This revival is occurring against the backdrop of a historical shift. In the decades after World War II, single-room occupancies (SROs), once a staple in American cities, became associated with poverty and vice. Cities began banning new SROs and offering incentives for landlords to convert existing ones, leading to the disappearance of roughly one million affordable units nationwide between the mid-1970s and 1990s. Many communities still enforce zoning codes that define "family" based on blood relation, marriage, or adoption, which can be used to prevent unrelated adults from living together.

However, these barriers are beginning to crumble. Between 2017 and 2022, the number of households sharing space with nonrelatives grew by over 500,000. Lawmakers facing housing shortages are increasingly open to various solutions, and private capital is being invested in the co-living model. A wave of new laws and litigation is challenging the ability of cities to regulate who can live in spare rooms.

Legal Challenges to Occupancy Rules

A lawsuit originating in Shawnee, Kansas, is challenging the legal precedent set by the 1974 Supreme Court case Village of Belle Terre v. Boraas. That ruling upheld a Long Island village's ordinance limiting unrelated adults from sharing a house, effectively allowing local governments to define "family" for zoning purposes. In Shawnee, a home-sharing startup and a homeowner sued after a local ordinance banned "co-living groups," defined as four or more unrelated adults sharing a home. The lawsuit argued that the right to choose household companions is protected under the 14th Amendment. Although a federal judge and the US Court of Appeals for the 10th Circuit dismissed the case, citing Belle Terre, the plaintiffs have petitioned the Supreme Court to revisit the precedent. The Pacific Legal Foundation, representing the plaintiffs, argues that living with unrelated individuals is deeply rooted in American history and tradition, a point they believe is relevant given the Supreme Court's reasoning in overturning Roe v. Wade.

Legislative Momentum

While a Supreme Court decision remains uncertain, state legislatures are enacting changes. Iowa, Oregon, Washington, and Colorado have passed laws barring cities from enforcing relationship-based occupancy limits or restricting the number of unrelated roommates without a clear health or safety reason. These measures are often colloquially referred to as "Golden Girls bills," referencing the sitcom about four unrelated women sharing a home. Similar legislation is being considered or has been introduced in states like Pennsylvania and Texas, with efforts to address concerns about potential disturbances by specifically excluding college students from protections in some proposals.

Beyond occupancy caps, advocates are also pushing for the re-legalization of SROs and easier conversion of commercial spaces, like vacant offices, into apartments. The 21st Century ROAD to Housing Act, a federal law passed in July, includes funding for pilot programs to convert commercial buildings into housing, which could facilitate office-to-apartment conversions.

Addressing Demand and Cultural Perceptions

Despite the growing momentum, the demand for co-living arrangements with nonrelatives has seen a slight decrease since 2019, with most Americans opting to double up with existing family or partners when seeking to save on rent. However, companies like PadSplit are expanding into major rental markets, betting that increasing housing costs will drive greater acceptance of co-living. Founders of co-living initiatives argue that the focus should be on providing dignified, affordable options rather than adhering to outdated notions of what constitutes acceptable housing. The movement is supported by a broad coalition, including property rights advocates, Democrats, YIMBY groups, and organizations like AARP, highlighting a bipartisan interest in addressing the housing crisis through innovative solutions.