Are Texas' Housing Constraints Threatening the Future of 'The Texas Miracle'?

Texas is job growth exploding, increasing the demand for housing – here's how cities can help housing supply keep up with demand

By David Goswick

AUSTIN, Texas (Texas Insider Report) — There’s a workforce housing crisis in Texas, and it is threatening Texas businesses and families. Housing that our middle class workforce – teachers, nurses, first responders – can afford is hard to find in almost every single one of our state’s metros. With the exception of Houston, these cities aren’t producing housing on par with population growth.

With many predicting a recession on the horizon, families will find it more difficult to afford a home or apartment and our major metropolitan areas – which are thriving – will become undesirable for future economic development.

Let me explain why.

Job growth in Texas has exploded over the past decade. Governor Abbott recently tweeted that Texas has more job growth than anywhere else in the United States. This has increased the demand for housing, but our state’s housing supply isn’t keeping up with demand.

Across the U.S., 3.8 million more housing units need to be built to keep up with population growth. In Texas, that number is 322,000, and this housing underproduction crisis is driving up costs. A recent study found that in Austin, 48.4% of homeowners’ median income is spent on homeownership costs and in Dallas, 41.9% of Dallasites’ income goes toward homeownership costs.

What’s more: 40% of Texans said their opportunities for home ownership are “poor” or “terrible,” with 45% believing their economic situation is worse than last year.
So what happens when teachers, nurses, firefighters and the rest of our hardworking middle can’t afford to live near their work?
  • They end up moving further away to less expensive communities – sometimes out of state entirely – or take on two or three jobs.
  • They spend hours commuting and losing time with their families.
  • They spend more money on gasoline and maintenance of their vehicles.
  • They increase local traffic.
  • More emissions are released which impacts local air quality.
  • Or, they give up and move out of state to find a new career somewhere else entirely.
How do we support Texas’s burgeoning economy by building more attainable free market workforce housing for our middle class efficiently, safely and affordably?

A look at Houston shows we can turn this workforce housing crisis around by reducing minimum lot size, while also returning property rights to Texans, and adding third-party inspectors to shorten time delays and reduce costs.

The secret sauce of Houston’s affordability prominence was that the city prioritized and reduced the permitting process to weeks rather than months. One study of a 135 unit apartment complex in an overly regulated market showed that a 2 month delay added $4,000 to the final price tag of each unit. Why? The overhead, consultant fees, capital investment and additional worker time gets passed on to the consumer.

And, since Houston has reduced minimum lot sizes, Houston “...has facilitated the urban infill development of more than 25,000 new units over the past 20 years.” From 2005-2018 nearly 75,000 new units were added to Houston’s housing stock.

Of Texas’ 5 major metro areas, Houston and San Antonio have the lowest cost of living, and the smallest minimum lot sizes of 1,400 square feet and 1,250 square feet respectively- this is no coincidence.

How can Texas as a whole achieve this same success of building more workforce housing efficiently, safely and affordably, like Houston has been able to do?

Third-party reviews of permits and plans can help ensure that local permitting struggles are not a bottleneck to housing growth – saving thousands of dollars of time and money.

Revisiting overly restrictive minimum lot size laws to make way for property rights approaches for Texans will help solve Texas’ housing shortage crisis by allowing more housing units en masse.

If we don’t make housing attainable for our workforce, Texas will lose its competitive edge.

Our state’s explosive economic development – which is good for communities and families – will slow and stagnate. Communities that treat workforce housing as a #1 priority will outperform those that don’t.

David Goswick is Senior Advisor & Founder to HOUSE X LAB, a network of licensed real estate brokerages focused on new home sales..