As Texas gears up for a discussion of housing affordability in the 2025 legislative session, a new report from Comptroller Glenn Hegar’s office has added fuel to the fire.
“Texans continue to suffer from elevated prices and high interest rates that put significant upward pressures on the costs of borrowing and home ownership, and so this report covers an immediate issue,” Hegar said.
Simply put, our state, which is generally well regarded for its low cost of living, is facing the pressures of a decline in housing affordability as our population and demand for housing continue to rise. Since 2008, Texas has been the No. 1 state for new building permits for privately owned housing units. However, the state’s population, particularly in the major metropolitan areas, is growing at a quicker pace than housing is being built.
The report details how government regulation, primarily (though not exclusively) zoning/land use restrictions and byzantine permitting regimes, has diminished the number of units built over the last fifteen years. While Texas has constructed more units than other states, the number still lags behind population growth.
In economic terms, supply has not kept pace with demand. Given this reality, it should surprise no one to see prices rise.
Hegar’s report also discusses how, to a lesser though still meaningful degree, explosive growth in local government spending and property taxes has made the affordability crunch worse.
“Lawmakers have taken critical steps in recent years to lower the overall cost of home ownership by reducing the property tax burden on Texans, and we are making progress as a state toward lowering artificial barriers and removing regulations that limit or inhibit home building,” Hegar continued. “But this issue remains daunting and key to our continued overall economic health. My office will continue to work with legislators to provide support as they work to address this issue and prepare bills for the upcoming legislative session.”
While these challenges are felt in many cities around Texas, one city has begun to move in the opposite direction. Furthermore, it’s a city that conservatives usually view with skepticism.
As Texas Scorecard has previously reported, Austin recently took the lead to relax government restrictions on certain types of construction and mandated parking in 2023. In 2024, Texas’ capitol city followed up by removing lot size requirements. Not coincidentally, the resulting construction surge has led to one of the steepest declines in rental prices in the country.
Meanwhile, the Texas Public Policy Foundation has released a partial set of policy recommendations for both the Texas Legislature and local governments. They address issues related to both spending/taxes and construction restrictions.
The 89th Texas legislature will commence in January 2025. Opportunities to engage with this issue at the local level are ongoing.
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