If you own property in Clark, Floyd, Harrison, or any of the surrounding Southern Indiana counties, a new state law is about to change what you — and your neighbors — can build on residential land. And across the river in Kentucky, a separate set of reforms is reshaping the rules around manufactured housing in ways that could ripple through the entire Louisville metro.

Governor Mike Braun signed House Bill 1001 into law this month after weeks of heated debate in the Indiana General Assembly. The bill, titled "Housing Matters," is the state's most significant zoning reform in a generation. Meanwhile, Kentucky's own housing measures — including protections for manufactured homes and proposals for new housing development districts — are moving through Frankfort with bipartisan urgency.

For homeowners in Jeffersonville, New Albany, Clarksville, and the smaller communities across our five-county region, these changes are not abstract policy. They could affect your property value, your neighbor's building plans, and the character of your street.

Indiana's 50,000-Home Problem

The driving force behind HB 1001 is a number that lawmakers repeated throughout the session: Indiana is short approximately 50,000 housing units. The Indianapolis metro alone accounts for a 15,000-unit deficit. Nationally, the gap stands at roughly 4.7 million homes.

Rep. Doug Miller, the Elkhart Republican who authored the bill, framed it in personal terms on the House floor: "For every thousand dollars that a home increases in price in the State of Indiana, 2,292 of our friends and neighbors are priced out of the market."

That math hits close to home in Southern Indiana, where the median sale price in Clark County has climbed steadily over the past two years, driven in part by spillover demand from Louisville and major employers expanding at River Ridge Commerce Center in Jeffersonville. Meta's $800 million data center project and PharmaCord's $56 million expansion have brought hundreds of new jobs to the area — but the housing stock hasn't kept pace.

What HB 1001 Actually Does

The final version of the bill is narrower than what the House originally passed. Republican Senator Sue Glick summed up the Senate's resistance: "I do not like taking away local control." After advancing by a single vote in the Senate, the compromise version includes these key provisions:

By-Right Approvals for More Housing Types

Single-family homes, duplexes, townhomes, and accessory dwelling units (ADUs) within single-family dwellings are now considered permitted uses in residential zones — approved without a public hearing. This is the provision most likely to be felt in neighborhoods across Floyd and Clark counties. If your neighbor wants to convert a basement or add a small apartment above the garage, local zoning boards can no longer require a special hearing to approve it.

Limits on Design and Parking Requirements

Local governments can no longer impose certain design-element regulations on residential structures, and parking mandates for multi-family and single-family developments have been capped. For communities like New Albany, where older neighborhoods have narrow lots and limited off-street parking, this could ease — or complicate — infill development.

Mixed-Use in Commercial Zones

Residential and multi-family development must now be permitted in areas zoned for commercial use. Along corridors like State Street in New Albany or Spring Street in Jeffersonville, this opens the door for apartments above storefronts and mixed-use redevelopment projects that were previously blocked by local zoning.

Impact Fee Reforms

Development fees must now be spent "closer to where that growth happens," rather than pooled into general funds. For fast-growing areas like eastern Clark County near River Ridge, this means infrastructure dollars from new housing should stay in the communities absorbing the growth.

Extended TIF Timelines

Residential Tax Increment Financing districts get more time to operate, giving redevelopment agencies in cities like Jeffersonville and Clarksville additional runway to use rising property values for housing infrastructure improvements.

Local Opt-Out Provisions

The compromise allows municipalities to opt out of certain provisions by meeting specific deadlines and requirements. It remains to be seen how aggressively Southern Indiana cities will use this escape valve.

Across the River: Kentucky's Housing Push

Kentucky is tackling its own housing crisis from a different angle. Louisville faces a deficit of more than 40,000 housing units, and the shortage has become the top issue for the 2026 General Assembly session.

Several measures are advancing in Frankfort:

• House Bill 18 would allow local governments to create "housing development districts" — designated areas where planning and zoning rules are relaxed to accelerate construction.
• House Bill 160, already enacted, prohibits cities and counties from treating qualified manufactured homes differently than site-built single-family homes in zoning decisions. The law takes effect July 1.
• House Bill 333 allows faith-based organizations to develop affordable housing on their property — mirroring a similar provision in Indiana's HB 1001.

Republican Sen. Robby Mills, who co-chaired Kentucky's housing task force, has emphasized a deregulation-first approach: easing building codes, offering tax incentives, and directing state and local governments to "eliminate barriers" to new construction.

For the Louisville metro — which of course includes Jeffersonville, Clarksville, and New Albany on the Indiana side — these parallel reform efforts on both sides of the Ohio River could produce a combined effect that accelerates housing development across the entire region.

What This Means for Local Homeowners

If you own a home in Clark, Floyd, Harrison, Scott, or Washington County, here's the practical takeaway:

• Your neighbor can now build an ADU by right. If your property is in a residential zone, accessory dwelling units inside single-family homes no longer require a zoning hearing. Expect to see more garage apartments, basement conversions, and in-law suites — particularly in established neighborhoods in New Albany and Jeffersonville where lot sizes can accommodate them.
• Infill development gets easier. Vacant lots and underused commercial properties along main corridors are now open to residential development with fewer hurdles. This could bring new housing to areas that have sat empty for years.
• Property values could shift. More housing supply generally moderates price growth, which is the entire point of the legislation. But in high-demand areas near River Ridge and the Ohio River waterfront, values may continue climbing as the region absorbs new employers and residents.
• Watch your local government's response. Cities and towns have opt-out provisions they can exercise. Pay attention to your city council and plan commission agendas over the coming months — particularly in communities like Georgetown, Sellersburg, and Charlestown, where growth pressure from River Ridge is already a hot topic.

The Bigger Picture

Both Indiana and Kentucky are acknowledging what families in our region have felt for years: there simply aren't enough homes. Whether it's a young couple in Floyd County trying to buy their first house, a senior in Harrison County looking to downsize, or a family in Clark County competing with cash offers from out-of-state investors, the shortage is real and it affects people at every income level.

HB 1001 won't solve the problem overnight. Building 50,000 homes takes years of permitting, construction, and infrastructure investment. But the law signals a meaningful shift in how Indiana approaches housing — one that prioritizes getting homes built over preserving every layer of local zoning control.

We'll be tracking how these new rules play out in our five-county area and what they mean for homeowners navigating foreclosure, property sales, and investment decisions. The housing landscape in Southern Indiana is changing, and staying informed is the best thing you can do to protect your interests.

David Thompson

David covers local housing policy, development news, and county-level issues across Southern Indiana and the Louisville metro. He connects legislation to real homeowner impact.