The American Dream: Idaho’s New Starter Home Bill and the Deregulation of Construction

by Brookelynn Stone, Associate Member, University of Cincinnati Law Review Vol. 94

I. Introduction

The “American dream” is typically thought of as the promise for greater opportunities and economic freedom for individuals of all classes who work hard and put in the time to succeed.¹ For many, this vision consists of white picket fences, a backyard, and kids playing in the neighborhood.² However, nowadays, this dream is completely out of reach for millions of Americans. Across the nation, rising home prices and cost of living expenses have made entry into the housing market difficult, especially for first time homebuyers, creating a housing crisis.³ A “housing crisis” generally refers to a sustained imbalance between housing and supply and demand that results in rapidly increasing home prices and declining affordability.⁴

This issue is especially evident in the state of Idaho, where so-called “starter homes,” considered the bottom 25 percent of the market, remain out of reach for many residents.⁵ In Idaho, these homes would still cost more than $426,000, a price point that far surpasses what many households can afford given that the state’s median household income falls well below the level required to afford such a purchase.⁶ Idaho’s median household income is $81,166.⁷ By comparison, starter home prices in states such as Ohio and Indiana often remain below $300,000,⁸ and the median household incomes for each state is approximately $72,000.⁹

In response to this growing issue, Idaho recently passed SB 1352 and SB 1354 which seek to increase housing supply by limiting local zoning restrictions and encouraging higher density development.¹⁰ These measures reflect a shift in power between local and state government, as the state has decided to encroach on an area traditionally controlled by local municipalities.¹¹

This article discusses the potential impact of Idaho’s recent housing legislation and argues that targeted state intervention may be necessary where local land use restrictions and market forces alone fail to produce affordable entry level housing. Part II provides background on Idaho’s population growth, wage stagnation, and housing shortages. That section will also provide an overview of the legislation and zoning authority. Part III discusses the benefits and drawbacks of this legislation, emphasizing the need for a balanced approach between state action and local control. Finally, Part IV concludes by considering the broader implications of Idaho’s approach.

II. Background

The housing crisis in Idaho did not arise overnight, but the issue worsened in the years following the Covid-19 pandemic.¹² During the pandemic, shifts in individuals’ lifestyles and flexibility with remote work allowed for more individuals to move freely throughout the country,¹³ specifically from higher cost states to lower cost states that offered outdoor recreational activities and a higher quality of life.¹⁴ From April 1, 2020, to July 1, 2025, Idaho experienced the fastest growth in population, adding a total of 190,610 residents.¹⁵

This influx of new residents in Idaho increased the demand for housing, but the supply remained relatively stagnant, thereby increasing the overall cost of housing and making it more competitive for people to purchase a house.¹⁶ A house would be listed and within days, realtors would receive full price cash offers, often over the asking price.¹⁷

At the same time, supply chains faced disruptions and labor shortages slowed new construction.¹⁸ The cost of building materials increased substantially, further adding to the increase in home prices.¹⁹ As a result, even the newly constructed “starter homes” were hitting the market at prices well above what would be considered obtainable for many Idaho residents.²⁰ Additionally, Idaho’s wage growth has also not been able to keep up with this increase, creating an even wider affordability gap.²¹ From 2015 to 2022, income for Idaho’s workers grew between 25% and 32% but the cost of housing also grew, by more than 150% during that same time period.²²

A. The Trio of Housing Bills

On March 31, 2026, Idaho’s governor signed into law Senate Bills 1352 and 1354;²³ however, SB 1353 was turned down by the House Business Committee.²⁴ These bills represent a comprehensive effort to address the housing issue through deregulation of land use and construction requirements. Senate Bill 1352 limits the ability of local governments to impose zoning restrictions that would prevent smaller, denser housing units, commonly referred to as “starter home subdivisions.”²⁵ Starter home subdivisions are residential developments characterized by smaller lot sizes, increased density, and more modest homes designed to reduce the overall purchase price.²⁶

Senate Bill 1352 directly targets barriers to these developments by prohibiting cities with a population of over 10,000 from enacting or enforcing ordinances that would prevent their construction in residential zoning areas.²⁷ The bill also limits the ability of cities to impose large setback requirements and mandates that smaller lot size be permitted unless infrastructure or environmental concerns make it unfeasible.²⁸

Conversely, SB 1354 focuses on increasing housing flexibility at the individual property level by authorizing accessory dwelling units (ADUs).²⁹ ADUs are smaller housing units, such as a mother-in-law suite, that is located on the same lot as the primary single-family home.³⁰ By allowing these units, the legislation aims to expand housing options without new development.

Although Senate Bill 1353, which would have allowed for twin homes and duplexes to be built in residential areas, was not enacted, its introduction reflects the broader trend of encouraging diverse and higher density housing options throughout the state.³¹

B. Zoning Powers

The authority to create land use restrictions and zoning laws originates from states’ police powers, which allow governments to enact regulations to promote public health, safety and welfare.³² In turn, states typically delegate their zoning and land use powers to local governments, allowing municipalities control to tailor zoning regulations to their specific community needs and preferences.³³ This system has historically gone largely without state oversight.³⁴

However, critics of municipal zoning authority argue they are contributing to the critical housing issue by imposing restrictive requirements on construction, such as minimum lot size, setback requirements, parking mandates, and single-family zoning rules.³⁵ Arguably, the most critical aspect is the minimum lot size, and Senate Bill 1352 seeks to decrease the minimum lot size requirement.³⁶

Minimum lot size requirements, in particular, have drawn substantial criticism. By requiring larger parcels of land for each home, these regulations reduce density and limit the numbers of units available in each area.³⁷ This artificial constraint on supply drives up land costs, home prices, and effectively excludes lower and middle-income buyers from certain neighborhoods, contributing to economic segregation.³⁸

Idaho’s legislative approach to zoning, which is typically a local municipality’s power, reflects a growing trend among states to preempt local zoning authority in order to address the housing shortage.³⁹ For example, both Oregon and California have enacted legislation that requires municipalities to allow higher-density housing in areas previously zoned for single family homes.⁴⁰ While these policies aim to increase housing supply, they have also sparked debates about local control, community character, and infrastructure capacity concerns.⁴¹

Idaho’s new legislation must be understood within the broader context where states are increasingly intervening where local zoning boards have fallen short and are using their powers to address housing affordability.⁴² The following section will discuss the arguments for state action as well as against the encroachment.

III. Discussion

The passage of SB 1352, the starter home bill, presents a significant opportunity to increase housing supply and improve affordability, but it also carries some notable risks.⁴³ First, the bill aims to confront the root cause of the housing crisis: a shortage of supply.⁴⁴ By lowering the barriers to entry for construction and allowing higher density developments, the bill relies on free market principles to adjust the prices. This means that as more housing enters the market, competition among sellers should place downward pressure on prices.⁴⁵

Another key advantage to this legislation is its potential to create a streamlined process for developers who are often faced with drawn out approval processes and costly regulatory requirements. While this legislation does not do away with all of that, it does limit the ability of local governments to impose restrictions on setbacks, lot size, and other housing standards.⁴⁶ By reducing these barriers, the legislation could encourage developers to build more entry level and affordable homes, making home ownership more attainable for first time home buyers and middle-income families.

Additionally, this legislation highlights the fact that local zoning boards have not taken effective steps towards addressing the housing issue.⁴⁷ Idaho Representative Megan Egbert stated:

“[I] know that they are urging your red light on this, but I will suggest to you, they had 130 years to demonstrate that their city is a place where anybody can start a home and if they have not done it yet they’re not going to.”⁴⁸

In many cases, local communities are resistant to higher density housing developments, arguing it will impact the character of their neighborhood, citing environmental and infrastructure concerns.⁴⁹ While those concerns are certainly not unfounded, the lack of meaningful reform from local zoning boards may very well warrant the need for state intervention.

Regarding SB 1354, allowing ADUs on single family properties can also alleviate the housing deficit. It may provide homeowners with supplemental income, allow for family members to live in a home on the same property, and increase the housing options in neighborhoods that are already established.⁵⁰ While this may not directly allow for home ownership, it is one action that states can take towards addressing the housing issue.⁵¹ In fact, many states, such as Washington, Oregon, and Utah have preempted municipal zoning laws around ADUs to at least some degree, demonstrating that state-level zoning preemption is occurring in this area.⁵²

Critics of this housing reform legislation are citing encroachment on local zoning powers.⁵³ The Idaho State Legislature has positioned itself as a local planning and zoning commission even though it is not at the forefront of these communities. As mentioned previously, municipalities are often better suited to create zoning regulations because they know their communities, including the existing infrastructure, character of the community, and the environmental considerations. This state action overrides this local autonomy, and the state risks a one size fits all approach on the various communities throughout Idaho.

Another concern to consider is whether the existing infrastructure can accommodate higher density developments or whether there will need to be heavy investments in new infrastructure, and who bears the cost of that. Higher density areas could have an impact on roads, schools, sanitary systems, and more. This could strain the existing systems in place. But the starter home bill provides municipalities with an escape hatch.⁵⁴

SB 1352 includes provisions allowing municipalities to deny developments based on existing environmental or infrastructure limits and it includes language that it does not override state and local laws that protect the health, safety and welfare of communities, such as building codes or utility services necessary to support the required density.⁵⁵ In theory, municipalities could point to infrastructure limits or public safety to block proposed developments if this is truly a concern.

Despite the concerns critics of this legislation have, it represents a step towards addresses the housing crisis where local zoning boards failed to act. But the need to balance state level goals with local needs is and should be a top priority to ensure that state intervention does not reach too far.

IV. Conclusion

Idaho’s housing issue is far from over, and it consistently highlights the difficulty of ever achieving the American dream of owning a home. As housing prices outpace wage growth and the population continues growing in Idaho, traditional routes to home ownership are less accessible for many individuals and families. The state’s recent legislative efforts represent a necessary and proactive response to these challenges. By limiting regulatory barriers for construction and encouraging higher density developments, Idaho is taking meaningful steps towards improving affordability.⁵⁶

While concerns about local control and infrastructure remain valid, they do not outweigh the need to address a systemic and persistent housing shortage which local municipalities have contributed to for far too long. State intervention, when carefully structured and implemented, remains essential to overcoming the barriers that local governments have been unable to unwilling to resolve.

Brookelynn Stone

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