Alaska’s largest city just deregulated bonus homes in a big way, a step to right-sizing its housing options to locals’ changing needs.

In-law apartments, backyard cottages, and other types of “bonus housing” known as accessory dwelling units (ADUs) just became easier to build in Anchorage, with a remarkable package of zoning code reforms that took effect last month. The reforms signal a new willingness by elected officials here to reverse housing-unfriendly land use rules that have led to a shortage of attainably priced homes, record-high prices, and a one-style-must-fit-all housing market. They also better serve the needs of the city’s changing population, where in the last 20 years the market share of small households (one- and two-person) has grown, and larger ones (three-person or more) has shrunk.

ADUs, or “bonus homes,” are relatively modest but complete living spaces paired with at least one main unit on the same lot. Anchorage’s amended ADU codes aren’t just significant locally. In aggregate, they put Alaska’s largest city out front nationwide in making it easier to add a home to properties where at least one home already exists. The Anchorage Assembly approved the changes 9–1 in January, with votes on the nominally nonpartisan body coming from both right- and left-leaning members. The mayor’s office also cheered on the removal of regulatory barriers.

Bonus homes are a throwback to a time when America’s housing market was less burdened by regulation and therefore more affordable. They allow multiple generations of a family to live together, increase property values and income for owners, and give renters more options in desirable neighborhoods near trails, schools, restaurants, and other community anchors. They can help retired and working-age people stay in Anchorage rather than leave for cities where their housing dollars go further. In neighborhoods that want more walkability, ADUs complement reforms that encourage upzoning, allow homes and businesses to coexist, and turn walking, biking, and public transit into desirable options.

Bonus homes were trending even before the COVID-19 pandemic drove up demand for more space at home. First-time listings of ADUs across the United States increased an average of 8.6 percent between 2009 and 2019, according to a report from nationwide mortgage finance company Freddie Mac. Dallas, Seattle, and Miami were among the fastest-growing markets. In 2019, Freddie Mac counted 1.4 million single houses in America with permitted ADUs.

Anchorage’s ADU reforms allow a bonus home in all commercial and residential zones and on all kinds of housing, including large, multifamily buildings. Owners can build a bonus home, or buy a home that comes with one, but no longer have to live on the property. Design-based barriers, including square footage, height, and architectural requirements, were eased or eliminated. The ordinance requires the city planning department to help people navigate the permitting process and start tracking the number of ADUs. Anchorage already did away with parking mandates, another design-related impediment to ADUs, in a separate ordinance last year.

“Bonus homes” on all kinds of housing

Most cities limit ADUs to lots with single houses in residential zones. But Anchorage now allows them with multifamily homes, too. The reforms give property owners the option to, say, add a basement apartment to a duplex or a bonus unit in an apartment complex, provided the project meets other zoning requirements. They’re also now allowed on residential property in commercial zones, like parts of downtown and the Fairview neighborhood.

The original draft ordinance called for allowing ADUs on properties with duplexes, not just single houses. But progressive-leaning Assembly Member Meg Zaletel, who represents Anchorage’s Midtown district, proposed allowing them on all housing types in all residential and commercial zones.

Zaletel’s amendment effectively makes at least 8,000 properties, f...