Housing affordability has become such a crisis in Texas that it could be the one development that clogs up the engine.
DALLAS — It is known as the “Texas Miracle,” the economic engine driving the Lone Star state that never seems to slow down.
Policy experts say the entire business model is built on the idea of a “cost advantage” and that advantage in Texas, both in terms of attracting companies and workers, has always been the state’s low cost of living.
But housing affordability has become such a crisis in Texas, it could be the one development that clogs up the engine.
“Well, as housing costs rise, residents and that workforce are going to require to be paid differently. So, that’s going to change the dynamics of what that looks like even from a business attraction standpoint,” Stephen Pedigo from the LBJ School of Public Affairs told us on Y’all-itics.
Put another way, before now, businesses had no problem enticing employees to the Lone Star State because most folks could easily afford a home.
Now, though, that same home has become too expensive for many would be workers: homeowners, and renters alike, regardless of income level.
And that’s made us more like California and New York than many Texans would like to admit.
Pedigo says Austin, Dallas and Houston are now among the least affordable metropolitan areas in the entire country and the problem is twofold.
“One is that we’re attracting a lot of people to Texas, and we’re saying come enjoy the ‘Lone Star miracle,’ so to speak,” he said. “But in a sense of that, we haven’t done enough to really think about how to accommodate all of the growth.”
The housing crisis is now such a threat that some of the brightest minds in the state sent a brief to lawmakers for the 88th Texas Legislature identifying ways to address the affordability crisis.
Those researchers and policy experts say state and local governments allot less than 1% of their expenditures to housing and community development.
And across the U.S., Texas ranks 49th in state spending on housing, ahead of only Nebraska.
“I think providing context was a big goal that we had with this policy brief because we knew that it would be a big issue of the session and one that transcends parts of the state, transcends party lines, urban, suburban, exurban, rural, this is no longer just an issue in the urban areas,” said Sherri Greenberg, an assistant Dean at the LBJ School of Public Affairs.
In their brief, the researchers identified five key challenges and opportunities for affordable housing in Texas.
The first involves easing local regulations, so cities make it easier to build new housing, faster.
The researchers pointed out some local regulations have been the books for decades and no longer even address relevant issues.
“So, for instance, minimum lot size, the size that you have to have of a lot to build a house on. And this can have a big effect. Houston has a much smaller minimum lot size, for instance, than Dallas or Austin,” Greenberg explained. “Also, there are things that we call compatibility standards. What can you build next to housing, for instance. And this can have a big effect on the supply that you can create in housing.”
Next, the researchers identified a lack of sufficient funding for affordable housing.
They argue the state can dedicate more of its dollars to help and government can use some of the land it already owns for affordable and mixed housing.
“The land is really, really important. Cities have land. School districts have land. Community colleges have land. The state, the General Land Office, right, has a lot of state land that it manages. So, these are really important assets if we could, you know, deploy them,” Greenberg argued.
The third area involves issues with statewide regulation of affordable housing programs.
Specifically, the researchers say it’s often difficult for worthy projects to receive funding because of the award criteria for Low-Income Housing Tax Credits. Researchers say the state should review these regulations to make it easier for developers to receive those tax credits and get more projects off the ground.
Next, policy experts say existing housing support is also hard to access.
One example of this is the Housing Choice Voucher (HCV) program, which provides low-income tenants with funding to help cover the costs of market-rate housing.
Greenberg says it’s not only very hard for people to get those vouchers, but landlords also don’t have to accept them, and it is a “use it or lose it” deal.
“If I get a housing voucher, I have to use it within a certain amount of time,” Greenberg told us. “And there have been really heartbreaking situations where people waited for many years. They were on waiting lists. They got a housing voucher and then they lost it because they couldn’t find a landlord that would accept it.”
The last area of opportunity involves property tax exemptions, with the idea being that paying less means a property owner can also sell or lease for less.
But the researchers are quick to point out that lowering property taxes only provides a benefit for some Texans, property owners, not renters.
And Pedigo explained why that could be a big deal for the future workforce.
“When we think about urban development, economic development issues, a lot of your sort of economic engine, your mobile, young knowledge base class, they tend to be renters frankly, right?” he said. “They don’t tend to be homeowners. And so, the thing I think that we have to think about here in Texas is around what can we do for renters as well to help with these issues.”
Regardless, Greenberg said lawmakers could take action now on some issues that could make an impact.
“I can see San Francisco in the headlights,” Greenberg said. “I mean, I can see where we are headed, and it’s not a good situation and it is important that we have some wins whether it’s permitting or for instance minimum lot size. There are some things that we could do right now that would make a big difference.”
There are other problems facing Texas as it tries to tackle its affordability problem, including the hidden cost of transportation. To hear more about that, or to hear the researchers go more in depth while explaining the five core problems, listen to the entire episode of Y’all-itics. Cheers!