The Evidence is In: How Upzoning and 'Missing Middle' Reforms are Impacting Housing Costs

Across the United States and Canada, the dream of homeownership has increasingly collided with the reality of a severe housing shortage. For decades, the dominant policy in North American municipalities was single-family zoning, a regulatory framework that effectively banned anything other than one detached house per lot across vast swaths of residential land. As populations grew and construction failed to keep pace, prices soared. In response, a growing coalition of policymakers, economists, and urban planners has championed "upzoning"—the relaxation of density restrictions to allow for duplexes, triplexes, and small apartment buildings.[7]

This category of housing, often referred to as the "missing middle," encompasses structures that blend into traditional neighborhoods but offer higher density than single-family homes. The theory behind legalizing the missing middle is straightforward: by allowing more units on a single plot of land, developers can distribute land costs across multiple households, creating naturally more affordable price points. However, for years, the debate over upzoning was largely theoretical. Now, as early adopting cities reach the five- and ten-year marks post-reform, a robust body of empirical evidence is emerging to answer a critical question: does upzoning actually improve housing affordability?[2][3][6]

The most closely watched experiment in the United States is Minneapolis. In 2018, the city made national headlines by passing the 2040 Plan, becoming the first major U.S. municipality to eliminate single-family-only zoning citywide and allow triplexes on all residential lots. Five years later, researchers are quantifying the results. A 2025 study from Middlebury College utilized a "synthetic control" method—a statistical technique that compares the actual city to a weighted combination of similar cities that did not enact reforms.[1][4]

The findings present strong evidence that the policy successfully suppressed housing costs. According to the analysis, home prices in Minneapolis grew 16% to 34% less than they would have in the counterfactual scenario over the subsequent five years. The rental market saw similar relief, with rents growing 17.5% to 34% less than the synthetic model predicted. By early 2025, the gap between actual Minneapolis rents and the projected non-reform rents had widened to approximately 17%.[1]

Yet, the mechanism driving this affordability is heavily debated, highlighting an area of transparent uncertainty in the evidence. The Middlebury researchers concluded that the price moderation was not primarily driven by a massive surge in new missing-middle construction. In fact, housing permits in Minneapolis declined from roughly 4,800 in 2019 to just 400 in 2024. Instead, the authors suggest the reforms altered market expectations and weakened speculative housing demand, effectively cooling the market without requiring thousands of new triplexes to be built.[1]

Other analysts point to macroeconomic factors to explain the construction drop-off. The Urban Institute notes that upzoning in Minneapolis coincided with a period of intense inflation, supply chain disruptions, and soaring interest rates, all of which severely depressed residential construction nationwide. Furthermore, they argue that upzoning is most effective when applied to vacant or underutilized parcels in high-demand areas. When applied broadly across built-out neighborhoods, the immediate physical transformation is often slow, even if the regulatory change signals a shift in market dynamics.[2]

Where missing middle housing is actively being built, the evidence strongly supports its ability to deliver lower price points. Portland, Oregon, which implemented its own sweeping middle housing reforms, recently released a progress report tracking development through 2024. The data reveals a tangible shift in what the market is producing. Before the reforms, housing in single-unit zones was almost exclusively detached houses. Today, while single detached homes are still being built, they account for just 20% of new homes in those zones.[6]

The financial impact for homebuyers in Portland is stark. By splitting the cost of land, developers have been able to deliver new middle housing units that sell for approximately $600,000. While still expensive, this is $300,000 less than the $900,000 average for new single detached houses built at market rates in the same neighborhoods. The reforms effectively brought back a tier of housing that had completely vanished from the city's new construction pipeline.[6]

Beyond the Pacific Northwest, Austin, Texas, provides compelling evidence of how sustained, comprehensive supply-side reforms can impact a fast-growing market. Beginning in 2015, Austin enacted a package of changes that included rezoning, reducing parking requirements, and streamlining the permitting process. The result was a historic construction boom. From 2015 to 2024, the city added 120,000 new housing units—a 30% increase in its housing stock, which is more than three times the national growth rate.[4]

This massive injection of supply had a direct and measurable impact on rents. From 2023 to 2024, rents in large Austin apartment buildings fell by 7%, marking the steepest decline of any large metropolitan area in the United States. Crucially, the Economic Security Project notes that the sharpest declines were observed in older, non-luxury buildings, where rents fell by roughly 11%. This phenomenon, known as "filtering," demonstrates that building new market-rate supply can relieve pressure across the entire market, delivering meaningful financial relief to lower-income renters.[4]

International evidence corroborates the North American findings. A comprehensive study published in the Journal of the American Planning Association examined the impact of upzoning in Auckland, New Zealand. Utilizing a similar synthetic control approach to the Minneapolis study, researchers found that six years after Auckland's upzoning was fully implemented, rents for three-bedroom, family-sized units were significantly lower than they would have been otherwise. The study concluded that single-family zoning reform can successfully foster more affordable housing through for-profit development.[5]

Despite these successes, housing researchers caution that simply changing the zoning code is not a magic wand. A detailed analysis by the Terner Center for Housing Innovation at UC Berkeley examined the barriers facing developers who specialize in missing middle housing. Their research found that while legalizing duplexes and fourplexes is a necessary first step, it is rarely sufficient on its own to trigger widespread construction.[3]

The Terner Center identified several compounding regulatory hurdles. Design requirements, such as strict setbacks, floor-to-area ratios, and height limits, often make it physically impossible to fit a multi-unit building on a standard residential lot, even if the zoning technically allows it. Additionally, small-scale developers face significant financing challenges, as traditional banks are often hesitant to underwrite missing middle projects compared to standard single-family homes or massive apartment complexes.[3]

The approval process itself remains a major bottleneck. In many municipalities, missing middle projects are subjected to the same lengthy discretionary reviews and public hearings as large-scale developments. To make these projects financially viable, researchers argue that cities must implement "by-right" approvals, where projects that meet the zoning code are approved administratively without the need for subjective political review.[3][7]

The evidence also suggests that scale matters. Piecemeal upzoning—changing the rules for a few blocks or a single neighborhood—often fails to produce meaningful results and can inadvertently drive up land speculation in those specific areas. The Urban Institute notes that larger increases in zoned capacity across wider geographic areas are more likely to produce significant increases in housing supply.[2]

This realization has prompted a shift toward state-level intervention. Recognizing that local municipalities often face intense political pressure to block new housing, states are increasingly preempting local zoning laws. Oregon led the way in 2018 by effectively ending single-family-only zoning in all cities with more than 25,000 residents. In 2025, a new wave of state reforms followed, with Washington enacting transit-oriented upzoning and Montana allowing taller apartment buildings in commercial zones.[4]

The consensus emerging from the data is one of cautious optimism. The empirical evidence from the past five years demonstrates that upzoning and missing middle reforms do work: they suppress rent growth, create lower price points for buyers, and increase overall housing supply. However, the data also makes clear that zoning reform is a long-term strategy, not an overnight fix.[2][7]

For policymakers, the lesson is that legalizing the missing middle requires a comprehensive approach. It is not enough to simply erase the ban on triplexes; cities must actively design their building codes, permitting processes, and financial incentives to make these homes viable to build. As more cities and states adopt these evidence-based strategies, the prospect of restoring housing affordability for the middle class looks increasingly achievable.[3][7]