Offering incentives to homeowners to construct tiny homes will not resolve New York City’s housing issue.

Encouraging news from the Adams administration, which is supporting the construction of “granny flats” to serve the varied housing needs of New York City.

These small “accessory dwelling units” (ADUs) can be built in backyards, converted basements, or converted garages and provide financial support for homeowners while helping older adults stay in their neighborhoods.

However, New York City seems to complicate a good idea. The city plans to provide a staggering $400,000 incentive to 15 homeowners to build an ADU on their property. This incentive comes with requirements such as income restrictions for future residents and rent control with a $2,600 per month cap.

This approach goes against the zoning reform needed in New York City. Instead of distorting the housing market with subsidies and regulations, the city should allow homeowners to naturally build small, affordable ADUs. The current model proposed by the city envisions units of 750 square feet, which is about the size of a postwar house in Levittown.

Surprisingly, California’s approach to ADUs could serve as a model for New York City. The state has removed limitations on ADUs through legislation such as eliminating minimum lot sizes and impact fees for units 750 square feet or smaller. California also requires authorities to rule on an ADU permit request within 60 days, allowing the market to operate more freely.

California’s approach has shown promising results with an 88% growth in permitted ADUs and a 200% increase in constructed ADUs between 2019 and 2022. These outcomes were achieved without financial subsidies and rent controls.

It is time for New York City and the nation to rediscover housing variety rather than just more housing. The city had made progress with zoning reform until the ADU-bribery idea emerged. It’s essential to focus on natural affordability and allow homeowners to build units that make financial sense without relying on high-cost subsidies.

Howard Husock is an American Enterprise Institute senior fellow and the author of “The Poor Side of Town — And Why We Need It.”