Legalizing micro-units and micro-suites is key to making life in cities like New York and San Francisco relatively affordable.

Rent in coastal city centers like New York and San Francisco has skyrocketed in recent years, as more and more young people move in and fewer people want to leave. Yet the number of apartments stays put, with local officials failing to authorize enough building to meet the new demand. With politically limited options, some are starting to look at how to make better use of what space they already have: In other words, legalizing micro-units and micro-suites.

In cities with exponential rent growth, all sorts of people are becoming willing to downsize for the sake of affordability and convenience.

"Onerous" might be too charitable a word for zoning codes in these coastal cities. They restrict not only the number of housing units, but also the average and minimum size of housing units, the number of allowable roommates and the sharing of kitchen facilities. The New York Times reported that some 40 percent of existing buildings in Manhattan alone would be illegal to rebuild today under current zoning for being too tall or too dense.

In areas where cities restrict building larger new developments, the bare minimum policymakers can do is let people safely make use of the space alloted. How can the supply side respond when growth is illegal?

In a healthy housing market, micro-units (tiny studios) and micro-suites (multi-bedroom apartments designed with sharing in mind) can form niche market for students, recent graduates and the elderly. This market has historically included people in high-prestige but low-paying creative work like writing, painting and fashion, in addition to people who just like having roommates – think of shows like "Friends" or "New Girl." It's a way of allowing housing markets to provide naturally affordable living spaces.

In unhealthy, restrictive markets like New York and San Francisco, the "micro" market has grown far beyond the old, young and creative. In cities with exponential rent growth, all sorts of people are becoming willing to downsize for the sake of affordability and convenience. If the law isn't flexible enough to accommodate this natural shift, residents will illegally (and sometimes unsafely) subdivide apartments themselves, presenting a vast enforcement challenge. Needless to say, it would be a political and humanitarian nightmare to evict the hundreds of thousands of people living in illegally subdivided and shared apartments in NYC. Far better to accept the reality of the housing market and allow small and/or shared living spaces that conform to fire code.

Micro-units are one of the keys to keeping life in cities like New York and San Francisco relatively affordable.

The very existence of "tiny living" as a useful housing solution highlights the trade-offs involved in land use restrictions. Limiting construction in locations with convenient access to high-wage central business districts doesn't magically make people stop wanting easy commutes and high wages: It simply encourages people to squeeze into smaller spaces – and forces out those less able to pay.

Micro-units are one of the keys to keeping life in cities like New York and San Francisco relatively affordable. By relaxing requirements in high-rent cities that refuse to build enough housing to accommodate demand, we can nonetheless allow renters to respond to rising rents by fitting into smaller places. Cities should reduce the required average and minimum unit-size regulations to the extent politically possible, especially in areas with rare, historically important architecture policymakers would rather not allow to be marred with massive new skyscrapers.

When combined with upzoning – allowing more density near transit corridors and other hubs where prices reflect desirability – these deregulatory actions will help stem the affordable urban housing shortage.

This piece originally appeared in U.S. News & World Report

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Alex Armlovich is a policy analyst at the Manhattan Institute. Follow him on Twitter here.