Build, Build, and Build – Need for Housing Supply Takes Center Stage in Top Political Discussions

On Tuesday, August 27, Texas Comptroller Glen Hegar’s office issued a 26-page report titled “The Housing Affordability Challenge.” 

The report is the latest in a growing trend of top-level political voices focusing explicit policy on the rising costs of housing and lack of affordability.  The issue has risen to such a level of voter interest that both parties’ presidential candidates have brought focus to this issue. 

Texas’ top leaders have also begun to weigh in. This summer the House and Senate Interim Charges (think of this as summer and fall “homework” for the legislature as directed by the Lt. Governor and Speaker of the House) are taking a harder look at housing affordability.

The pertinent Senate charge in the Local Government Committee says:

“Housing Affordability: Study issues related to housing, including housing supply, homelessness, and methods of providing and financing affordable housing. Make recommendations to reduce regulatory barriers, strengthen property rights, and improve transparency and accountability in public programs for housing.

On the House side, two committees are looking at affordability leading into the 2025 Session:

Land & Resource Management: “Housing Affordability: Examine factors affecting housing affordability in Texas, including state and local laws impacting supply and demand for housing, barriers to construction resulting from zoning practices, and the availability and costs of housing inputs.

Business & Industry – “Housing Affordability: Evaluate the impact on housing prices and rent caused by institutional buyers to determine whether policy changes are needed to ensure families and individuals are not unfairly priced out of homeownership.

The Comptroller’s report is the most recent top state political voice entering the discussion on housing affordability and supply.  This report points out that compared to most states Texas is in better shape and has built more housing than most.  However, the bigger issues of continued and expected growing demand, coupled with current status quo policy, and rising related costs such as insurance and interest rates, are bringing housing affordability to our figurative and literal doorstep in Texas.

“I wouldn't call it a crisis. But if we don't find some more solutions, we're going to be in a crisis.” Hegar said in a recent interview.  

The report points out that Texas housing has reached its most unaffordable level since 1985.  The median sales price for a Texas home peaked at $340,000 in 2022 but has since only come down 1.5 percent.  Between 2019 and 2023 the median Texas home price increased 39 percent, and in 2022 the Austin area’s median home price exceeding $500,000, with the DWF area at $400,000 (these prices have come down some in 2023 to $450,000 and 395,000, respectively).

The Comptroller’s report continues the growing trend of data supported reporting that both nationally and in Texas the primary issue is supply. 

Build, build, and build is what is called for to match the demand and finally try to achieve some flatlining stability, or even modest price decline in some of the areas that saw the most increases in recent years with 40 - 70 percent increases in many Texas areas.

Citing reports from Up for Growth, the Comptroller estimates that Texas needed at least 306,000 more homes in 2023 compared to what was built.  And Texas is in much better shape than most other states where this same trend and supply deficiency is even more pronounced.  But still the report clearly states, “Housing supply is the crux of the affordability issue.”

As for more specific policy ideas, the Housing Affordability Challenge recognizes, as we all do, that there are no easy or clear-cut fixes to the problem.  It also addresses the fact that existing home ownership is just as much an investment and wealth creator as it is a place to live. And homeowners have a direct financial incentive for their property values to increase.  These incentives for existing homeowners can lead to their strong, vocal, and at times litigious opposition to efforts that might threaten that increase (especially policies that might de-value their property values).  Austin and other areas trying to increase housing supply and building flexibility towards density have experienced this type of backlash.

The Comptroller report does lay a few general policy ideas.  From the state level, the reports point to:

• Additional relief from property taxes;
• More funding for low- to moderate income housing programs;
• Incentives to increase the supply of housing at the price range where it is most needed;
• Local governments streamlining the permitting process;
• More public-private partnerships; and
• Larger employers using housing incentives as a perk to attract and retain employees

The report also points to local efforts, since up to this point so much of housing and land use policy is nearly exclusively in the purview of local governments, by:

• Reducing the minimum lot size for housing projects to reduce the cost and increase the supply of homes available; and
• Incentives for those who choose to conserve existing homes and encourages the creation of smaller “starter” homes.

Several of the policy ideas have been tried, unsuccessfully, before at the state level. Others have been tried at various local levels with a combination of political success but several stalled due to subsequent litigation.  There are also policies being passed and implemented across the country to try and address the supply side issues of housing.

In the last Texas Legislative Session of 2023 there were more than 70 bills filed that would have had some impact, mostly through state preemption, over local city zoning constraints.  Among them was the TMHA supported and advanced H.B. 2970, which was our HUD-code “parity with site built” zoning bill modeled after current modular home zoning laws in Texas.  There was also a bill to reduce the minimum lot size that TMHA, and other pro-housing and development advocates, supported, and an “accessory dwelling unit” (ADU) state preemption bill that we all also supported. Unfortunately, none of the zoning related bills passed, though some did get close.

But so goes the political process.  Most of the time significant status quo disruption policy ideas take years and multiple sessions to not only refine the through the crucible of the legislative process and scrutiny, but to educate leaders, allow constituents to become comfortable, and have time to grow the political support, demand, and with it, the eventual political fortitude it takes to get the votes necessary to effectuate real change. 

TMHA has been advancing these efforts directly for years and will continue our Sisyphean efforts to push the very large rock up the political hills to allow for greater inclusion, opportunity, and acceptance of off-site home construction (built to the HUD-code). 

With the growing political attention and public demands that the status quo is not working, and homes are too expensive because there aren’t enough of them, we can see the top of the hill more clearly than we have in recent years.  Perhaps with continued persistence and advocacy we will summit, rock in tow, our hill and manufactured housing can begin to play our role in addressing the simple concept, but difficult to implement politically, of building more housing…a lot more housing of all types to better meet the demand, which is nearly everywhere.