• Private home insurers are dropping a growing number of customers in most states, a Senate report found.
• That leaves homeowners at risk, turning to more expensive last-resort options or going uninsured.
• While Florida has managed to reverse the trend somewhat, the risk to homeowners is set to intensify.

As Americans flock to places in the US vulnerable to natural disasters, private home insurance companies are running the other way.

The problem has left a rising number of homeowners with just one option to cover property damage: insurers of last resort.

The scale of homeowners losing their plans became clearer on Wednesday after a Senate Budget Committee investigation found that private insurers' nonrenewals spiked threefold in more than 200 counties between 2018 and 2023.

"What our new data reveal is that the failure to deal with climate change is also affecting whether families can even get homeowners insurance, which threatens their ability to get a mortgage, which spells trouble for property values in climate-exposed communities across the country," Senate Budget Chairman Sheldon Whitehouse said in releasing the report.

A recent study by Harvard University's Joint Center for Housing Studies found that between 2018 and 2023, the number of properties enrolled in California and Florida's insurers of last resort more than doubled. A similar trend is playing out in Louisiana. While Florida has reduced participation this year, it still has the highest enrollment in the country.

The problem isn't isolated to the most predictable states. The Senate Budget Committee found that the rate of homeowners losing their private insurance also rose in Hawaii, North Carolina, and Massachusetts.

Policymakers and insurers are trying to stabilize the private market, by enacting new laws and overhauling regulations. However, with scientists predicting that climate-fueled disasters will become more frequent and severe for the foreseeable future, the risk to America's homeowners is mounting.

Growing insurance risk has some states looking for solutions

In nearly three dozen states, insurers of last resort, known as Fair Access to Insurance Requirements, or FAIR, are available to homeowners and businesses who struggle to find insurance on the private market.

The numbers are rising because private insurers are pulling back coverage and hiking premiums in areas at risk of wildfires, hurricanes, flooding, and other disasters often made worse by climate change.

While state-mandated FAIR plans are designed to be a backstop, insurance regulators and private insurance companies are alarmed by how many homeowners and businesses are enrolling, especially in California and Florida. The plans are often more expensive and provide less coverage. Plus, saddling one insurer with the riskiest policies increases the chances of one major disaster sinking the system and leaving taxpayers and insurance companies with the bill.

Florida and California are trying to reverse the trend, and Florida has seen some progress. The state's insurer of last resort, Citizens Property Insurance Corporation, said on December 4 that its policy count dropped below 1 million for the first time in two years.

Mark Friedlander, a spokesperson for the Insurance Information Institute, said the drop reflects a series of changes in recent years to stabilize the state's private insurance market after more than a dozen companies left the state or stopped writing new policies.

The Florida legislature passed laws to curb rampant litigation and claim fraud that drove up legal costs for private insurers. Friedlander said insurance lawsuits in the first three quarters of 2024 are down 56%, compared with the first three quarters of 2021 — the year before the new laws were enacted. Citizens also started a "depopulation" program that shifts customers to the private market. State regulators in October said they had approved at least nine new property companies to enter the market, and premiums weren't rising nearly as much as last year.

In California, many of the deadliest and most destructive wildfires have occurred within the last five years. As a result, some private insurers are hiking premiums and limiting coverage in risky areas, pushing more homeowners to the insurer of last resort. The Harvard study found that policies in the state's FAIR plan doubled between 2018 and 2023 to more than 300,000. As of September, the California Insurance Commission said policies totaled nearly 452,000.

The commission is working to overhaul regulations to slow the trend, including requiring private insurers to sell in risky areas. In exchange, it should be easier for companies to raise premiums that factor in reinsurance costs and the risks of future disasters. That should help stabilize rates, said Michael Sollen, a spokesman for the commission.

Sollen added that in the past, private insurers could seek approval for higher premiums but weren't required to offer coverage in wildfire-prone areas.

"In a year from now, what's happening with the FAIR plan will be a key measure for us," he said. "We expect to see those numbers start to stabilize and go down."

A mounting home insurance crisis

Still, a reduction in state-backed plans isn't necessarily a sign of progress, Steve Koller, a postdoctoral fellow in climate and housing and author of the Harvard report, told Business Insider.

A growing number of homeowners in places like Florida, Louisiana, and California are purchasing private insurance from nontraditional providers barely regulated by state governments. These so-called "non-admitted" insurers don't contribute to a state fund that guarantees homeowners will have their claims paid even if the insurance provider fails, leaving their customers without access to this backup coverage.

"Someone could be moving to a private insurer from Citizens, and that insurer might have higher insolvency risk," Koller said.

He added that more homeowners are opting out of insurance altogether. The number of US homeowners going without insurance has soared from 5% in 2019 to 12% in 2022, the Insurance Information Institute reported.

Plus, Americans are increasingly moving into parts of the country most vulnerable to extreme weather. Tens of thousands more people moved into the most flood—and fire-prone areas of the US last year rather than out of them, the real estate company Redfin reported earlier this year.

As insurers of last resort try to shift more risk to the private market, home insurance premiums are expected to keep rising. That's especially true in the areas hardest hit by climate-fueled disasters.

If private insurers exit hard-hit regions en masse in the future, Koller said states might need to become the predominant insurance provider in the same way the National Flood Insurance Program took over after the private market for flood insurance collapsed in the 1960s. Most flood insurance plans are still issued by the federal government.

"My guess is states are going to work very, very hard to avoid that and ensure the existence of a robust private market, but that's a parallel that I can't personally unthink about," he said.

Have you struggled to get home insurance, moved to an insurer of last resort, or gone uninsured? Contact these reporters at [email protected] or [email protected].

• Three baby boomer homeowners told BI they want to downsize but can't find suitable options.
• Rising home prices have led to a big increase in their home equity over the years.
• But those rising prices also make it harder to find affordable homes for retirement.

As many baby boomer homeowners look to cash in on their home equity and downsize, some are grappling with a shortage of suitable homes.

Older homeowners are increasingly staying put, as mortgage rates and housing costs remain stubbornly elevated and inventory— particularly of affordable and accessible homes — is scarce. Some simply can't find a suitable home that would leave them with enough cash to retire on, while others simply don't feel downsizing is a savvy financial move with housing and borrowing costs so high.

Kim Cayes is one of those boomers who feel stuck. The 67-year-old always banked on selling her four-bedroom house in Parsippany, New Jersey, to help support herself in retirement.

"My plan had kind of been: save everything I can, and then when I retire, move someplace cheap and use the equity in my house to buy a house in cash to reduce my costs," she told Business Insider.

Cayes bought her home for $245,000 in 2000 after her divorce. She added a major addition and has since benefited from New Jersey's soaring home prices — the house was recently appraised at nearly $700,000, according to documents reviewed by Business Insider.

But Cayes, now semi-retired from corporate communications, is no longer interested in leaving northern Jersey for a cheaper part of the country. Two of her three adult children live with her, and she doesn't want to leave her community.

"I would hate to move somewhere and leave one of my kids behind because, not being married, my kids are all I've got," she said. "Especially as you get older, you need a network of people."

Cayes is looking for a single-story home in the $400,000 to $450,000 range. But she hasn't had any luck finding something suitable. She says the homes she's looked at would need a lot of work and aren't in familiar neighborhoods.

"Thinking I'm going to spend the final years of my life in a worse situation than I've ever been in — that's just so depressing," Cayes said. "Especially when my friends are all traveling around the world with their spouses and constantly posting on Facebook which countries they're in."

'A lateral financial move'

Some boomers who can afford to stay in their homes don't want to endure the costs and possible stress associated with downsizing. Even those who are still paying off their homes often have much lower mortgage interest rates than what they could get on the market today, hovering around 6.5%. And leaving a familiar home and neighborhood can be emotionally taxing.

Dorothy Lipovenko, 71, and her husband love the single-family home in a well-connected neighborhood of Montreal where they've lived for nearly 25 years. But the options to downsize in their area seem limited to pricey new condos and old homes that need major repairs. Lipovenko doesn't want to live in a modern condo without green space, but she also doesn't want to take on a home renovation project.

"It becomes a lateral financial move, and that is what has us saying 'no,'" she said. "Downsizing is a huge undertaking, physically and emotionally, and a one-for-one trade makes no sense."

Ideally, Lipovenko and her husband would move to a smaller, single-floor house — she dreams of a Levittown-style suburban starter home, she said.

"It's not just giving up possessions and going into a smaller space; it's shrinking a lot of things to fit a new mindset," she said. "I just can't see my husband and I spending the last decades of our life in a little apartment."

'I'm lucky I have this house'

Andrea S., 60, already lives in a single-story starter home in Sherman Oaks, California, that's well-suited for a retiree. But Andrea, who requested partial anonymity to protect her privacy, isn't sure she can afford to stay in it.

The former agent and producer bought her two-bedroom bungalow with her ex-partner in 1994 for $245,000. She's lived in the home ever since, hasn't made any major improvements, and has a housemate to split the bills with. The Zillow estimate, reviewed by Business Insider, found the house is now worth about $1.3 million.

"I'm lucky I have this house," she told Business Insider. "I just hate the fact that the house is pretty much my pension fund."

Andrea's income is lower than she expected it to be at this point in her life — she's struggled to work since suffering from a head injury in a car crash in 2021. Meanwhile, the pandemic and Hollywood writers' strike killed off some of her projects, she said. At the same time, maintenance and repair costs for her nearly 75-year-old house are daunting: the HVAC system needs to be replaced, and the pool and large yard are expensive and energy-intensive to maintain.

"If I can't get a job that covers me enough to cover my bills, then I have to think about do I sell the house," she said.

But she's concerned that she won't be able to find an affordable home in a neighborhood as pleasant and walkable as hers, especially on a budget that makes sense. After her crash, she gave up driving and wants to keep living in a place with bus access and grocery stores within walking distance. Plus, she's concerned about the capital gains tax she'll need to pay if she sells the home.

"I'm realizing now, at age 60, all the things that you become very vulnerable to, especially when you're a woman and you don't have a life partner," she said.

Andrea and her friends joke about their dream of retiring together in the British seaside town of Port Isaac — the idyllic setting for the early-2000s TV show "Doc Martin."

"You get some nice little cottage in town. They don't have big yards. And you walk out your door, and you see the lovely English coastline," she said. "That sounds good to me."

Are you struggling to downsize or find a suitable home to retire in? Are you otherwise affected by the cost of retirement housing? Reach out to this reporter at [email protected].

• Rom-coms like "When Harry Met Sally" exemplify how the urban built environment can spark romance.
• Two New York City-based urban planners are using that lesson to promote "romantic urbanism."
• Their tongue-in-cheek event in Brooklyn asked: What if we had a City Department of Tenderness?

Netflix's latest holiday rom-com, "Hot Frosty," begins like this: A lonely young widow named Kathy hangs a magical scarf on a snowman in the public square of her idyllic fictional New York town. The snowman comes to life and happens to have a flowing head of hair and a chiseled physique, and is named, you guessed it, Jack. He and Kathy promptly engage in heart-warming hijinks and fall in love.

While the film gets originality points for romanticizing a snowman, it follows the classic holiday rom-com movie formula, which includes, as Bloomberg's Linda Poon has written, an adorable, walkable small town. The town center is the picture of a "5-minute city," with daily amenities clustered together, and plays a key role in facilitating Kathy and Jack's romance. Without it, Kathy never would have stumbled upon Jack in snow form.

The crucial role that well-designed urban environments play in rom-coms struck Daphne Lundi and Louise Yeung — New York City urban planners and neighbors — when they spent the early days of the pandemic lockdown watching movies in each other's apartments.

In the wake of the pandemic — that trapped many in their homes and ushered in widespread remote work and skyrocketing housing costs — urbanists like Lundi and Yeung are increasingly urging policymakers to counteract isolation through design.

Sparks flew in "third places" like art galleries and parks in "Rye Lane" and at urban landmarks like the Empire State Building in "Sleepless in Seattle." Paris is a character of its own in "Amelie," and the titular small town is a star of "Fire Island," they noticed.

Harry wouldn't have met Sally without a Manhattan bookstore. In "Notting Hill," the London neighborhood is a central character in the romance between a famous Hollywood actor and a bookshop owner. In some cases — think "Sex and the City" and "Emily in Paris" — the characters are in love with the city itself.

Lundi and Yeung realized that in those romantic fantasies, a walkable urban landscape brings people together who might not otherwise cross paths — and lets them linger. They took that as motivation for how to make real-life cities and towns better for lovers or anyone looking to make new connections.

Lundi and Yeung first wrote about their theory in a 2023 essay called "Romantic Urbanism." But the essay has since transformed into something bigger — a call for submissions including design proposals and public events. As policymakers, they're tasked with building affordable housing, creating safe public spaces and accessible transit, and creating jobs. But despite their centrality to quality of life, love, intimacy, and connection aren't policy goals, Yeung told Business Insider.

So they're asking: "How can cities actually be designed to express care, to foster care? What does that care infrastructure actually look like in practice?" she said.

"We need to make spaces for people to be incentivized and for people to want to go out and hang out with each other," said Clio Andris, a professor of city and regional planning and interactive computing at Georgia Tech who's studied how urban design impacts romantic relationships.

A City 'Department of Tenderness'

On a warm, perfectly sunny day in late October, Lundi and Yeung hosted their first public event showcasing their ideas for a more romance-friendly city — the inaugural meeting of what they're cheekily calling the New York City Department of Tenderness — on a small car-free plaza in Brooklyn.

The event featured several proposals from Schuyler deVos, a creative technologist and web developer, including a presentation on a Brooklyn-Queens train line called the "V line" (Valentine's line) designed to help those in "long-distance" inter-borough relationships.

Henry McKenzie, who stopped by the presentation, said a cross-borough train line spoke to him.

"Every time you're on the train for more than an hour to see someone, that is an expression of love," he said. He'd also like more free or affordable third spaces where he could gather with his Dungeons & Dragons group, whose members are scattered across the city.

Trey Shaffer, a 25-year-old computer programmer from Long Island City who volunteered at the event, said he finds the pedestrian walkways on New York's bridges to be especially romantic places. "We need more Brooklyn Bridges," he said. "We can just make a copy, like, right next to it."

A city built for romance benefits all kinds of other relationships, too. Lively street corners, safe and accessible third spaces, and affordable housing help familial bonds, friendships, and even loose ties between neighbors and coworkers.

McKenzie's friend Sarah Dolan said that she tends to socialize exclusively with people she already knows in part because of a dearth of communal spaces. "There's not that many opportunities to meet new people, unless you really seek it out," she said.

Lundi and Yeung say they were overwhelmed with the response they've gotten to the project, which has received about 80 submissions, including essays and event proposals. One person wrote about their experience developing relationships while riding New York's paratransit service for people with disabilities. Another is exploring corner bodegas as "care infrastructure."

They hope the project will inspire more urban planners and policymakers to consider fostering human connection and relationships as a core part of their work and make real-world cities more like those in the movies.

"There's this trope of city people as being hardened and hard," Lundi said. "As a New Yorker, part of what this has shown me is that we're actually really tender."

• NYC legalized accessory dwelling units in certain neighborhoods as part of broader housing reforms.
• It's part of a bigger movement to boost ADU construction across the US.
• ADUs offer affordable housing options and boost property values for homeowners.

New York City just became the latest local government to join a nationwide push for more backyard tiny homes and converted basements.

As the US grapples with a housing shortage that's sent home prices and rents soaring, a growing number of cities and states are turning to accessory dwelling units to help solve the problem.

The secondary units on lots with primary homes — largely in the form of backyard cottages, basement apartments, or converted garages — offer smaller, cheaper housing options, particularly in expensive neighborhoods dominated by single-family houses. They've also been embraced by homeowners looking to boost their property values and earn income by renting out their extra units.

New York City's legalization of ADUs for thousands of homeowners went into effect this week, so we looked at how ADUs have helped homeowners and renters in other places across the country.

The pros and cons of ADUs

The benefits of ADUs start with affordability.

The median rent for a California ADU costs less than 30% of the median income of two-person households in the greater San Francisco Bay region, according to a 2021 survey. And a significant portion of the state's ADUs were affordable to people making less than 80% of their local median income. Nearly half of California ADU owners said they've rented out their unit to short- or long-term tenants, according to one poll last year.

ADUs create opportunities for multiple generations of a family to live together, as they're often used to house aging parents or grandparents, or adult children. According to the poll of California ADU owners, 61% said they built their ADU to house a family member. ADUs are also often designed to be more accessible for those with limited mobility than other kinds of housing.

ADUs also help homeowners boost their property values and bring in a new source of income. In the biggest cities, the addition of an ADU increases a property's value by an average of 35%, according to a 2021 study by the National Association of Realtors.

Selma Hepp, chief economist at the property information and analytics firm CoreLogic, converted her backyard garage into a 500-square-foot studio apartment that she rents out on Airbnb. Hepp told Business Insider last year that she brought in about $3,000 per month in income from the ADU — enough to cover the monthly mortgage payments on her primary home.

Developers have also taken advantage of ADU legalization to build more density. In Austin, Texas, real-estate developer Scott Turner replaced a single-family home on a large corner lot with two single-family homes and two ADUs.

But ADUs can be costly to build. Construction typically runs between $60,000 and $285,000. On top of that, local regulations can slow down the approval and construction process, further raising costs.

Even as a real-estate industry professional, Hepp struggled to sort out the rules and regulations on ADU construction in LA.

"It was very stressful because every step of the way, I needed to figure out what the next step was, and it was sort of hard to get a straight answer," she said.

States jump on the ADU bandwagon

Fourteen states across the country have legalized ADUs. California led the charge and has passed a series of laws expanding and standardizing ADUs and, in some cases, helping pay for their construction. More than 60,000 ADUs have been permitted across the state since 2016.

Oregon and Washington have similarly seen spikes in ADU construction since liberalizing their laws. New York and Vermont have also offered subsidies for some homeowners to build ADUs. Freddie Mac reported in 2020 that the number of homes with ADUs in the US grew from 1.1 million in 2000 to more than 10 million in 2020.

But since most ADU legalization efforts have happened since 2022, their full effects are not yet evident in many places.

And ADU legalization alone isn't usually enough to prompt lots of new construction. In some cities and towns, local land-use laws, permitting, and other regulations have stood in the way. Owner-occupancy requirements, off-street parking mandates, and discretionary permit reviews are among the most burdensome rules.

In some cases, homeowners have successfully fought the regulations. Malibu homeowners Jason and Elizabeth Riddick fought a multi-year legal battle with their city over their plan to build a 460-square-foot ADU on their property. The couple ultimately prevailed, but Elizabeth Riddick insisted that the city is "not interested in supporting any type of additional housing."

But as ADUs catch on, pro-housing policymakers and experts say the incremental approach to building more homes is a first step towards solving the nation's housing shortage.

Nolan Gray, the research director at California YIMBY, called ADU legalization "the beachhead for broader reform" of housing policy because backyard homes tend to be popular with homeowners who've otherwise resisted new housing in their neighborhoods.

"You start to de-normalize this idea that 75% to 90% of the typical American city is going to be off limits to any form of multifamily," he said.

Have you built an ADU? Reach out to share your experience with this reporter at [email protected].

• Fixer-uppers aren't the bargain they once were.
• Older homes are now nearly as expensive as new builds.
• The housing shortage and high mortgage rates have reduced existing home inventory.

If you're looking for a deal in the homebuying market, you might want to ditch the fixer-upper and spring for a brand-new home.

For the last half-century, newly-built homes in the US have sold for much more, on average, than older homes. But these days, new homes for sale are less expensive per square foot than existing homes. Overall, newly constructed homes are selling for just 3% more than older homes, down from an average of 16% more since 1968, The Wall Street Journal reported.

Prices for existing homes have risen as fewer of them are on the market. The inventory of existing homes being resold has fallen significantly in recent years. As of March 2024, the number of existing homes for sale had fallen to 1.1 million from 1.7 million in 2019, and sales of existing homes hit a near 30-year low last year, a Harvard report found earlier this year.

High mortgage rates could be exacerbating that shortage of existing homes, as many homeowners are putting off a move and waiting for the cost of a home loan and home prices to come down.

But this trend might be turning around. Sales of existing homes are on the rise in the Midwest, South, and West, the National Association of Realtors recently reported. "The worst of the downturn in home sales could be over, with increasing inventory leading to more transactions," NAR chief economist Lawrence Yun said in a statement.

As rates fell slightly this year, more homeowners put their homes up for sale and new home construction rose. The US is on track to build a record number of new multifamily units this year — about 500,000 Still, there's a long way to go to make up for the overall shortage in housing, which Freddie Mac recently reported was 3.7 million homes.

There are a slew of other factors at play, as well. The costs of building materials and construction labor are elevated, which makes repairing or renovating older homes much more expensive. And it doesn't help that US homes are older than ever. The median age of owner-occupied homes in the US has risen to 40 from 32 when the housing market collapsed in 2008.

New homes are getting smaller, too. The typical new build for sale in the first quarter of 2024 was 2,140 square feet, down from 2,256 square feet a year prior, according to Census data. Newly built homes peaked in size in 2015 at 2,689 and have been shrinking quite steadily since then. The share of newly constructed single-family homes with four bedrooms fell to 33% last year, the lowest level since 2012, the National Association of Homebuilders found. Meanwhile, the share of new single-family homes with two bedrooms or fewer grew to its highest level in that same period.

Did you choose between a new and an older home when purchasing? Share your story with this reporter at [email protected].

• Rents are dropping in Southern and Sun Belt cities after a surge in new apartment construction.
• Meanwhile rents are still going up in Midwestern and Northeastern cities.
• Rents are still quite elevated over pre-pandemic levels in most places, hurting affordability.

Communities across the country have struggled with soaring rents over the last few years. But recently, that story has begun to change.

While rents are continuing to rise, particularly in the Northeast and Midwest, they're falling in markets across the South and Sun Belt. One likely reason? A ton of new apartments.

The US is on track to build a record number of new multifamily units this year — about 500,000, thanks in large part to Southern and Sunbelt metros like Dallas, Phoenix, Raleigh, Charlotte, Nashville, and Austin. Two-thirds of the 1.8 million apartments built over the last five years were located in the Sun Belt, the real estate analytics firm CoStar recently reported.

The building boom was made possible in part by less restrictive land-use laws and other regulations governing construction, experts say.

The new supply of apartments is expected to keep rents relatively flat in the Southeast and Southwest next year, even as the rate of new multifamily construction is expected to slow significantly, said Jay Lybik, director of multifamily analytics at CoStar.

Rents fell in 15 of 21 Southern markets — falling across the region by 1.4% — over the last year, Harvard's Joint Center for Housing Studies reported this fall. Meanwhile, rents in Midwestern markets have increased by 2.7% and by 2.4% in the Northeast.

But renters in booming Sun Belt and Southern cities still face affordability issues. Rents remain far higher in most places than they were pre-pandemic. Nationwide, the average rent of main residences in cities was up about 27% between October 2019 and October 2024; in the South comparable rents grew 33% over that period.

One factor impacting affordability is that because the cost of land, building materials, and labor are elevated, developers are mostly building luxury apartments rather than mid-priced or affordable units, Lybik said.

"They're building at the top end of the price point, and so you're not getting the full impact of housing at different price levels throughout the entire market," Lybik said. Markets that are seeing more affordable apartments being built "tend to be very, very far out geographically from an urban core."

Multifamily rental housing also disproportionately caters to small households of one or two people. Markets with an abundance of studio and one-bedroom apartments may still suffer from a shortage of other types of housing, like larger for-sale homes suitable for families, Lybik said.

At the same time, rent is expected to continue climbing in the Northeast and Midwest, Lybik said. Cities from Cleveland to Boston aren't building enough new multifamily housing to keep up with a resurgence in demand in walkable, high-density neighborhoods in urban cores. Over the last year, average rent rose the most among submarkets tracked by CoStar in South Cleveland and the East Village in Manhattan.

"Cleveland has not seen very much new construction coming online, and Cleveland has been very aggressive in trying to really make their downtown and the areas adjacent to their downtown very highly amenitized, very livable, and they've definitely become very popular," Lybik said.

• New York City is on the verge of legalizing accessory dwelling units in much of the city.
• One expert estimates the city's housing reform will create 20,000 such secondary units.
• The effort is part of the mayor's "City of Yes" housing plan, designed to boost the supply of homes.

In a city where reasonably priced apartments are difficult to find, a new type of affordable home might soon be legal.

As part of Mayor Eric Adams' "City of Yes" housing package — an effort to create more housing of all kinds by loosening regulations — New York City is on the verge of legalizing accessory dwelling units, or ADUs, in certain neighborhoods across the five boroughs. The policy reform is expected to result in thousands of backyard tiny homes and converted garages, basements, and attics.

Housing policy experts view the shift as a first step in expanding a neighborhood's capacity for additional residents and a way to create more affordable housing, particularly in neighborhoods dominated by single-family homes.

These homes are an increasingly popular way to boost density without building apartment towers, adding new housing options and income opportunities for homeowners who choose to rent out their extra units. More than a dozen states across the country have legalized ADUs in recent years, and New York State greenlit the secondary units in 2022, although New York City has restricted them.

"ADUs are a proven tool in cities across the country to support working families with extra space, additional income, and the opportunity to age in place," Dan Garodnick, director of the New York City Department of City Planning, told Business Insider in a statement.

In a key vote last week, two city council subcommittees agreed to a modified version of the mayor's plan that's expected to pave the way for about 20,000 ADUs over 15 years — about half as many as would have been built under the original plan, according to Marcel Negret, director of land use planning at the Regional Plan Association, a pro-housing nonprofit focused on the tri-state area. City of Yes is expected to pass the full council on December 5.

A nationwide push for ADUs

New York is following in the footsteps of cities like Los Angeles and Seattle that view ADUs — also known as "granny flats" — as low-hanging fruit in the quest for more affordable housing. ADU construction has surged in California, where accessory units made up nearly 20% of new homes built last year, and tend to offer more affordable rental units.

Nolan Gray, research director at California YIMBY, called ADU legalization "the beachhead for broader reform" of housing policy because backyard homes tend to be popular with homeowners who've otherwise resisted new housing in their neighborhoods.

"You start to de-normalize this idea that 75% to 90% of the typical American city is going to be off limits to any form of multifamily," he said.

Last year, New York City rolled out a pilot program that awarded 15 homeowners with up to nearly $400,000 in funding per household to build an extra dwelling in their backyard, basement, or attic. The city has since expanded that program, but it only applies to lots that are already zoned to accommodate another unit.

As part of the policy reforms, the City plans to adjust a slew of zoning laws and building codes to allow for ADUs. It will also create a "one stop shop" website to guide homeowners through the construction process, including a set of pre-approved designs, the city said.

"What we're doing, essentially, is just ensuring that every layer of government that could potentially have some sway over whether you can build an ADU is actually allowing you to do so," Casey Berkovitz, press secretary for the Department of City Planning, told Business Insider.

Some outer-borough councilmembers are skeptical

Outer-borough members who represent some of the least dense neighborhoods in the city — where ADUs are potentially most feasible — are among the most vocal opponents of City of Yes. Councilmember Vicky Paladino, a Republican who represents Northeast Queens, has called the mayor's plan "a calculated effort to destroy the character of our districts." Another Republican council member opposed to City of Yes derided ADUs as backyard "treehouses" that would depress home values.

While the city's original plan was estimated to create up to 40,000 ADUs over 15 years — as part of a total of more than 100,000 new units — the councilmembers imposed some additional restrictions that will shrink that number, including blocking them in neighborhoods that only allow rowhouses or single-family detached homes.

Despite the council's restrictions, there are many neighborhoods that aren't exclusively zoned for one- and two-family homes, but are still dominated by them. Such areas could be prime targets for backyard units, garage conversions, and other types of accessory units, Negret said.

"There are many other locations that still have single-family parcels that are not zoned under those categories where you could probably see ADUs popping up," Negret said.

Are you a New Yorker interested in building an ADU? Are you a homeowner with an ADU? Reach out to this reporter at [email protected].

• Baby boomer homeowners have benefited from skyrocketing housing prices amid a home shortage.
• But now they're facing a shortage of accessible homes to retire in.
• Many older adults are now stuck in homes they're increasingly struggling to live in and pay for.

Baby boomers have been the big winners in the US housing market, but as the generation retires, its members are facing a new challenge in finding accessible housing.

It's a problem they had a hand in making.

Homeowners in the generation — now between 59 and 78 years old —have seen their home equity surge, particularly over the past decade, as a growing home shortage across the US has pushed home prices sky-high.

But as the generation approaches 80, boomers are beginning to suffer from their own housing woes: a severe shortage of accessible and affordable retirement homes. Compounding the housing issue are the rising costs of healthcare and elder care.

With mortgage rates and housing costs high and inventory scarce, many older people are staying put. Nearly 80% of home-owning baby boomers recently surveyed by Redfin said they're planning to age in their current home. And as of 2022, empty-nest boomers owned twice as many homes with three or more bedrooms as millennials with kids. While some boomers simply don't want to downsize or move, others can't afford it or don't have any feasible options.

"Is it aging in place or is it stuck in place?" said Jennifer Molinsky, the director of Harvard University's Housing an Aging Society Program. "There's a lot of people in the middle, homeowners included, who are stuck."

Molinsky authored a report last year finding that the US didn't have anywhere near enough housing and care services for boomers as they age.

Homeowners who oppose new and denser housing in their neighborhoods are a major reason so many American communities are short on homes. Those who oppose building are disproportionately older homeowners. While boomers didn't create many of these not-in-my-backyard laws that restrict housing construction, in many cases, they've protected such regulations, dominating the attendance at community board meetings and fighting housing projects.

Boomers are struggling to find accessible, affordable homes amid rising costs

As people age, they tend to need more accessible homes with fewer stairs and wider hallways. As they stop driving, many also want to live in more walkable or transit-friendly places to access amenities and combat isolation.

But restrictive land-use laws, including those prohibiting apartment buildings in areas with single-family homes, have made accessible housing options harder to find in many of the communities boomers have called home for decades. Less than 4% of US homes have the three essential factors necessary for those with limited mobility: a single floor, wide hallways and doorways, and no steps to get in, the Harvard report found.

"There's just such a diversity of households that we're not really serving with the traditional single-family house," Molinsky said.

Many older homeowners — particularly the growing number who still have mortgages — are struggling with rising insurance premiums. Nationally, home-insurance premiums rose by an average of 21% from May 2022 to May 2023, Policygenius, an insurance marketplace, found. Insurance companies are increasingly dropping customers and pulling out of entire regions, particularly those hardest hit by climate-related disasters.

The Harvard report noted that places retirees had flocked to in recent decades like South Florida and Arizona also face some of the most severe climate-related impacts, including regular flooding, fires, and extreme heat.

A record number of homeowners 65 and older are cost-burdened, meaning they spend more than 30% of their income on housing and utilities, the report found. This is particularly difficult for those on fixed incomes. As a result, older people are increasingly facing homelessness. Single adults 50 or older are now estimated to account for about half of the US homeless population, up from about 10% three decades ago.

Not all boomers have benefited from the spike in housing prices and home equity. Wealth among boomers is very unevenly distributed, including when it comes to housing. Older renters and homeowners of color tend to have much higher housing costs. Molinsky's report found older Black homeowners had less than half the home equity of older white homeowners.

Molinsky said the shortage of homes appropriate for aging would hurt lower- and middle-income boomers and boomers of color the hardest.

"All of these things become much more pressing over the next few years when baby boomers turn 80," Molinsky said. "There's really no time to waste."

Are you struggling to downsize or find a suitable home to retire in? Are you otherwise affected by the cost of retirement housing? Reach out to this reporter at [email protected].

• Elon Musk says he wants to eliminate the Consumer Financial Protection Bureau.
• The CFPB was created after the 2008 crisis to protect consumers from financial abuses.
• The CFPB has recouped billions for consumers but has long faced political and legal challenges.

In his efforts to cut government costs, Elon Musk has thrown his support behind slashing a federal office created in the wake of the Great Recession to regulate financial services used by Americans.

"Delete CFPB," Musk wrote on X early Wednesday of the Consumer Financial Protection Bureau. "There are too many duplicative regulatory agencies."

Musk, along with Vivek Ramaswamy, has been tasked with heading up the Trump-created Department of Government Efficiency, or DOGE, and finding ways to reduce spending and streamline bureaucracy within the federal government. The unofficial advisors have floated "deleting" entire agencies, laying off staff, and enforcing return-to-office mandates.

When reached for comment, a spokesperson for Trump's transition team said she had nothing to add to Musk's statement.

While it's unclear how DOGE and the incoming Trump Administration would abolish agencies, if it does, the CFPB could be on the chopping block. Here's a look at its purpose, employee makeup, and political controversies.

Why it was created

The CFPB was created by Congress as part of the 2010 Dodd-Frank Act. The law aimed to strengthen oversight of Wall Street after its risky mortgage lending practices caused the global financial crisis. The CFPB has a broad mandate to protect Americans from deceptive or abusive practices by US financial firms. The agency investigates consumer complaints related to credit cards, loans, bank accounts, and debt collection and enforces consumer protection laws.

Democratic Sen. Elizabeth Warren, a professor at Harvard Law School, originally proposed the agency in 2007. In 2010, President Barack Obama appointed Warren to head the CFPB's steering committee to help establish it.

"The time for hiding tricks and traps in the fine print is over," Warren said during a White House ceremony that year. "This new bureau is based on the simple idea that if the playing field is level and families can see what's going on, they will have better tools to make better choices."

How many people it employs

As of March 2024, the CFPB employed just under 1,700 people, earning an average of about $184,000 a year, according to the Office of Personnel Management. The Bureau's 2024 financial report broke that workforce into six groups; about 43% of CFPB's employees work in the supervision and enforcement of financial institutions, 18% in operations supporting the Bureau's other initiatives, and 14% in research, monitoring, and regulations.

What it has accomplished

Since its founding, the CFPB has recouped $19.6 billion for consumers through direct compensation, canceled debt, and reduced loan principals.

The agency has also issued $5 billion in civil penalties against banks, credit unions, debt collectors, payday lenders, for-profit colleges, and other financial services companies. That money is deposited into a victims' relief fund, with nearly 200 million people eligible for relief.

Some of CFPB's most high-profile enforcement actions have been against Bank of America and Wells Fargo. The agency in 2023 accused Bank of America of harming hundreds of thousands of customers by charging illegal fees, withholding credit card cash and reward points, and enrolling them in credit card accounts without their knowledge. Bank of America agreed to pay $250 million. In 2022, Wells Fargo agreed to pay $3.7 billion — a record sum — after a CFPB investigation alleged the bank mismanaged auto loans, mortgages, and deposit accounts, causing some customers to lose their vehicles and homes.

Last week, the agency finalized a rule expanding its oversight to big tech companies like Apple, Google, and Venmo, which offer digital wallets and payment apps and process some 13 billion transactions a year. Earlier this year, the CFPB also limited credit card late fees to $8 a month, compared to the average $32 fee charged by issuers in 2022.

Political controversy

Democrats designed the CFPB to have political independence by funding it through the Federal Reserve rather than While Democrats argue that the CFPB's independence is crucial to its efficacy, Republicans say the agency's funding source and governing structure make it unaccountable to the public and encourage regulatory overreach.

Since its founding, the CFPB has faced legal challenges from Republicans and the banking industry, who've taken issue with a slew of agency policies, including those regulating credit card late fees and those making it easier for consumers to switch between banks.

In May 2024, the Supreme Court rejected a constitutional challenge to the agency's funding structure, reversing a lower court decision in a 7-2 ruling. The high court's decision — authored by Justice Clarence Thomas, a conservative — has bolstered the agency but likely won't shield it from ongoing criticism and legal attacks.

Not everything the agency does has courted controversy. Recently, the agency won praise from Republicans for a new rule that would allow consumers to have more control over how their financial data is used by banks and other financial firms.

• Trump's Interior Secretary pick illustrates bipartisan support for housing deregulation.
• North Dakota Gov. Doug Burgum has won praise from YIMBYs and progressive urbanists.
• Bipartisan consensus on deregulation aims to boost housing supply and reduce costs.

It's hard to find a policy issue these days that doesn't deeply polarize Americans and their elected representatives. But housing — and building more of it — is a rare exception.

One of President-elect Donald Trump's cabinet appointees exemplifies this trend. North Dakota Gov. Doug Burgum, Trump's nominee for Secretary of the Interior and "energy czar," won praise from pro-housing advocates from both parties earlier this year when he made the case for denser, more walkable, mixed-use communities. As a state leader, Burgum has for years pushed for more housing construction, walkability, and density in cities like Fargo and Bismarck.

"He's been a champion of zoning reform and parking reform and transportation reform," Chuck Marohn, the founder of the urbanism nonprofit Strong Towns, told Business Insider. "He reflects a growing percentage of even Republican governors who don't think a war with cities is a good idea."

There's a growing belief across the political spectrum that skyrocketing home prices and rents are driven by a shortage of housing — and that government regulation is making it harder to address that shortage. The pro-development "Yes In My Backyard" — or "YIMBY" — movement has helped popularize this view, and it's attracted enthusiastic followers among free-market conservatives and progressive Democrats alike.

If Burgum is confirmed, he'll likely focus largely on maximizing US oil and gas production and stripping away regulations many progressives support, but he might also have a role to play in Trump's promise to deregulate and open up federal land for homebuilding.

A bipartisan consensus around making it easier to build

While builders and those in the construction industry have long complained about regulatory hurdles, their concerns weren't reflected among policymakers and the media until housing became unaffordable even for the elite, Marohn argued.

There was a turning point when college-educated millennials began struggling with the high cost of housing, while similar Americans "in prior generations, at this point in their life, would have been in homes, had some equity, not stretched so thin, starting to build some wealth," Marohn said. At the same time, the housing shortage has begun to impact communities across the country rather than just large coastal metros.

It's led to a rare cross-party alliance. "You have the intellectual elite of the progressive side of the ledger kind of merging with what I would describe as the lunch pail builder, developer on the conservative side of the equation," Marohn said.

These days, there's widespread agreement among pro-development conservatives and progressives alike that "government is the problem" and "if industry was allowed to build they would build a lot more, and that would make prices go down," said Bryan Caplan, an economics professor at George Mason University.

While Republicans use language about private property rights, free markets, and deregulation to make a case for YIMBY policies, Democrats talk about racial equity and environmental sustainability, Nolan Gray, research director for California YIMBY said.

"It's a funny situation now because you have Republicans and Democrats basically pushing for broadly the same policies but using radically different rhetoric," Gray said.

Popular deregulatory policies include legalizing accessory dwelling units, eliminating minimum lot size requirements, and rezoning to allow for mixed-use development and more housing near transit.

"In very blue places, upzoning or streamlining permit approvals may not even be called deregulation, whereas in redder places, people are more likely to lean into cutting red tape and property rights and letting the market work," Emily Hamilton, a housing researcher at the libertarian-leaning Mercatus Center at George Mason University, told Business Insider.

Burgum is an example of how a Republican governor can pursue YIMBY policy through a conservative lens, framing his support for denser housing and more walkable communities as good economic policy.

The billionaire, former software entrepreneur, oil executive, and real estate developer has championed rebuilding North Dakota's urban cores while in office. "If you want to recruit people here, you need attractive cities," Burgum said when he was first running for governor in 2016. This month, he proposed nearly $100 million in funding to encourage housing development in the state.

• US home prices and rents have soared in part because of a shortage of housing.
• There are four key obstacles to building more housing, according to one industry leader.
• These are the cost of land, a shortage of construction workers, regulations, and NIMBYism.

The US is suffering from a deep shortage of homes, and it's driving sky-high home prices and rents.

The laws of supply and demand explain it: the supply shortage — estimates of which range from 2.8 million homes to more than 7 million homes — coupled with an uptick in demand in recent years has sent prices soaring.

The leader of the top trade association and lobby for the home construction industry thinks there are a few key obstacles to fixing that shortage. Jim Tobin, CEO of the National Association of Home Builders, blamed the high cost of land, a shortage of skilled construction workers, burdensome government regulations, and the anti-development "Not in My Backyard" sentiment for the home shortage.

Cost of land

The cost of land — a significant portion of the cost of a home —has risen significantly in many places in recent years as its availability has plummeted, exacerbated by high demand for housing and restrictive land-use laws that prohibit dense development.

At least 75% of residential neighborhoods in many major US cities like Los Angeles, Seattle, and Chicago are zoned exclusively for detached single-family homes. This means that as demand for housing increases, these communities can't accommodate many additional homes. As demand overwhelms the supply of land, prices rise.

"We just hear more and more that it's harder to find affordable pieces of land to develop for housing," Tobin said.

A worker shortage

A national shortage of construction workers — estimated at around 500,000 workers this year — has also driven up the cost of building new housing and renovating existing homes, Tobin said, noting that skilled workers in residential construction are in particularly short supply.

Fewer construction workers means less — and slower — residential construction and higher wages for workers, which in turn leads to higher home prices. The worker shortage has mounted as policymakers have emphasized college over the trades, and a wave of experienced workers retired during the pandemic, industry experts said.

Lots of regulations

Tobin also pointed out that builders face a significant regulatory burden. Rising demand for housing in recent years has run headlong into a web of local, state, and federal regulations — from restrictive single-family zoning to energy code requirements — that slow down or kill residential construction in communities across the country, he said. When it comes to housing, state and local governments control the majority of regulations that most inflate housing costs by limiting or slowing down construction, but federal regulations also play a role.

"Those delays all add up to more costs and less availability," Tobin said. "We need all options on the table when it comes to increasing housing supply, which means allowing more density in suburbs or cities."

'NIMBY' opposition

Many of these restrictive regulations are bolstered by local opposition to new housing — epitomized by "NIMBY," or "Not in my backyard," sentiment, Tobin said. Many local homeowners oppose new construction for the simple reason that additional housing in their community would depress their home values, he argued.

"One of the challenges we have in localities across the country are people that already have theirs, and they don't want anybody to have theirs," Tobin said. "We have local government officials that won't back more housing development because they're afraid of the backlash from local constituents."

The future of housing

Tobin said the strength of the overall economy and interest rates will also play a major role in determining housing costs over the next few years. He expects mortgage rates to settle into a "new normal" of about 5 to 5.5% by 2026, lower than the current 30-year fixed rate of 6.79% but above the pre-pandemic average.

Looking to next year, Tobin said he expects President-elect Donald Trump to have a mixed impact on housing costs. He's optimistic Trump will roll back some federal regulations and open up some federal land for new housing, but he's concerned about mass deportations potentially shrinking the already scarce supply of workers, and new tariffs inflating the cost of building materials.

Tobin said he plans on working with Trump's transition team, the new administration, and Congress to advocate for tariff policies that don't send building costs surging. "I would certainly welcome an increase in domestic industry when it comes to building materials," Tobin said, "but tariffs only work if that is the outcome."