Texas Lawmakers Take Action Against High Housing Costs

As Texas grapples with historically high home prices and rents, state legislators may attempt to alleviate the affordability crisis with proposals based on a simple premise: build more homes, and costs will fall.

In this legislative session, several bills have been introduced in Texas to expedite the construction of new houses and apartments. Some would allow builders to use less land when constructing single-family homes, making it easier for them to obtain local permits and making it more difficult for neighborhood groups to oppose new housing projects.

Dramatic Intervention For A Legislature

These steps would be a dramatic intervention for a Legislature that has historically not prioritized housing affordability — an indication that high housing costs have become increasingly difficult to ignore and that no part of the state has been untouched.

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It remains to be seen how the debate over increasing housing construction will play out in the Legislature. It has the potential to devolve into a nasty fight between proponents of more housing and vehemently opposed neighborhood groups. However, it could be a rare bipartisan cause that garners support from both Democrats and Republicans.

Texas Affordability Crisis

Housing experts believe a nationwide shortage of homes and apartments and high demand have driven up housing prices.

This shortage hits low-income households hardest. Last decade, Texas lost nearly half its low-rent housing units, making it harder for low-income families to find affordable housing. The National Low Income Housing Coalition estimates that the state has one of the most significant gaps between highly low-income households and affordable homes. Twenty-five rentals are available per 100 extremely low-income households.

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Roger Arriaga, executive director of Texas Affiliation of Affordable Housing Providers, said the crisis affects households at nearly every income level.

Texas builds more homes than any other state, but housing advocates, builders, and real estate experts agree it isn’t making enough to meet its population and economic growth. According to one estimate, Texas needed 330,000 more homes in 2019—second only to California.

Texas Legislators Advocate For More Homes To Combat Rising Housing Prices

As hundreds of thousands of new residents moved to the state in the last two years, that needs to be increased. Texas home prices and rents reached record highs due to millennials and corporate buyers competing for a limited housing supply.

If housing construction doesn’t increase, Texas, which is expected to gain nearly 1.6 million new residents by the end of the decade, could end up like New York and California, with even higher home prices, forcing out residents who can’t afford them, and losing its status as an affordable state, one of the main reasons people and corporations move here.

Luke Nosek, PayPal co-founder and chair of Texans for Reasonable Solutions, a nonprofit supporting many Republican initiatives this session, said the state needs more housing to keep up with a job and economic growth.

Political Headwinds

Advocates expect bipartisan agreement on housing supply this session. Democrats support low-income housing initiatives. Republicans concerned about property rights and the state’s economic future may help them.

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State Sen. Sarah Eckhardt, an Austin Democrat and former Travis County judge, is skeptical of a statewide, top-down approach to local housing regulations that don’t include cities’ production-boosting suggestions. She didn’t rule out new standards but suggested the state spend more on housing to address housing affordability.

With more than 29.5 million residents, Texas ranked 49th in housing and community development spending as a share of its budget, just ahead of Nebraska, with less than 2 million. A recent UT-Austin report using U.S. census data found that local governments spend 98% of state housing funds.

“If the state wants to come in and say that the cities have been doing it poorly, well, where the hell has the state been all this time?” Eckhardt said.

Cities may oppose state lawmakers’ proposals. Bennett Sandlin, Texas Municipal League executive director, said smaller cities might fight them to protect their zoning and housing regulations. However, larger cities that have faced neighborhood opposition to housing density and stock may quietly support the legislation.

Proponents of more housing development and “NIMBYs” (an acronym for “Not in My Backyard”), who oppose it because it will lower property values, increase car traffic, and change the character of a neighborhood, will be more divided.

Neighborhood groups’ protests at zoning and city council meetings often block new housing. As the state grows, some are more aggressive. A group of Austin homeowners successfully sued to block an attempted 2018 overhaul of the city’s land development code, which hasn’t been updated since the 1980s and recently sued the city again over housing development policies.

Texas Lawmakers Take Action Against High Housing Costs

“There is a need for change, but there’s also people’s expectations when they’ve bought a house and built a neighborhood,” said attorney Fred Lewis, a homeowner. One bill would make it harder for residents to block new developments from getting city council approval, which would likely anger neighborhood groups.

State law requires property owners to notify neighbors when rezoning. City councils need a three-fourths supermajority if 20% of owners oppose the rezoning. The bill raises the owner threshold to 50%.

Low-income housing advocates worry that allowing more market-rate housing will accelerate gentrification and displacement in poorer neighborhoods if the Legislature doesn’t also build more low-income housing and strengthen tenant protections.

“We can’t build or develop our way out of an affordable-housing crisis,” said Ben Martin, research director for Texas Housers, a research and advocacy group. “It certainly won’t solve decency and conditions, and it really won’t solve the profound fair-housing issues we have in the state of Texas.”

However, market-rate housing construction slows housing cost increases for low-income households. Higher-income households that can’t find housing in a neighborhood compete with lower-income families for the available accommodation, which raises its price.

“If we’re limiting housing, it’s always going to hurt the people at the lower end of the spectrum the most,” said Greg Anderson, director of community affairs for Austin Habitat for Humanity. “So we have to come up with more policies that promote housing creation for everyone.”

Building more market-rate homes would help ease the housing shortage for everyone and provide more housing for lower-income families, according to Arriaga with the Texas Association of Affordable Housing Providers.

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