Addressing Housing Affordability in Texas: The Role of Local Regulations
The Issues
The housing affordability crisis in Texas has become a pressing issue, with rising home prices and a declining supply of affordable housing threatening the state’s economic growth. Texas Comptroller Glenn Hegar highlighted the urgency of this challenge during a state Senate panel in November, warning that declining affordability poses one of the greatest risks to Texas' future success.
Key Factors Driving the Housing Crisis
Rising Home Prices: Median home prices in Texas increased by 40% between 2019 and 2023, making home ownership increasingly out of reach for many Texans.
Housing Shortages: In 2023, the state faced a shortage of 306,000 homes, unable to keep pace with population growth as more than 350,000 people moved to Texas in just one year.
Regulatory Barriers: Local zoning laws and extraterritorial jurisdictions (ETJs) are among the biggest obstacles to new housing developments, limiting supply and driving up costs.
The Role of ETJs
ETJs allow municipalities to regulate land use and zoning beyond their borders, often halting development projects. Critics argue that ETJs increase housing costs by restricting new construction, impose regulations without offering property owners voting rights or municipal services, and create unnecessary obstacles for developers, such as requiring features that are out of touch with market demand.
Efforts to address these issues include Senate Bill 2038, passed in 2023, which allows property owners to opt out of ETJs through petitions or elections. While this legislation has leveled the playing field, some cities are resisting its implementation, leading to calls for stronger enforcement or even the elimination of ETJs altogether.
Our Take
The future of Texas' housing market depends on collaboration between policymakers, developers, and local communities. Addressing regulatory barriers and aligning market needs with housing policies will be crucial to maintaining Texas' economic growth and ensuring housing affordability for all.
As Hegar put it, “We’re still more affordable [than other states], but not as much as we used to be. Where are we going to be in four or five years?” The time to act is now.
The need for housing in Texas has never been greater than right now! Schedule a call with us to learn about how you can take advantage of this housing crisis!
Housing Affordability December 10, 2024