Lone Star Housing Crunch
State preemption could ease the affordability crisis created by bad local policy.
The local-government stranglehold on land-use policy in Texas is driving up the cost of housing across the state. Homes have begun to rise in price after decades of relatively low levels. A report last year found that Texas was among the six states with the least amount of affordable housing. More recently, one Texas House staffer observed a “shortage of more than 500,000 homes in Texas . . . especially in workforce and senior housing.”
One key reason for the shortage: the complex, costly maze of regulations promulgated by city halls. Quite simply, local governments have made it hard to build and develop. But state lawmakers in the newly convened Texas legislature have a chance to intervene by overriding the worst of these regulatory excesses. They should focus on reforming minimum-lot-size requirements, streamlining the permitting process, legalizing accessory dwelling units (ADUs), and introducing a sunset mechanism to regulations.
Minimum-lot-size requirements determine how small a lot can be subdivided, with no consideration of cost or consumer preference. No legitimate public health or safety reason justifies this type of government intrusion, and some localities in the Lone Star State have relaxed these rules. In 1998, Houston reformed its minimum-lot-size regulation, which had set the size for single-family lots within the Interstate 610 loop at a minimum of 5,000 square feet, and reduced the threshold to 1,400 square feet. In Austin, however, the minimum lot size stands at an astounding 6,750 square feet. Houston is one of the most affordable big cities in America; Austin faces a severe affordability crisis, with the average house costing about $400,000.
State lawmakers could remedy this problem by setting a statewide maximum for minimum lot sizes—3,500 square feet, say. Such a rule would let cities set reasonable limits but not higher than the statewide threshold. (Private contracts among groups of homeowners, like deed restrictions, could supersede such a law, such that the rule bound only local governments.)
State preemption should target other rules, too. Allowing ADUs—separate, smaller dwellings on the same property as a single-family home—as a “by-right” entitlement and prohibiting cities from regulating away their use would help improve affordability while giving people full control over their property. Slow permitting impedes development and can significantly drive up costs. Again, Houston has shown the way: while the Houston Permitting Center still processes most permits, the agency outsources some to a private company to limit delays. Accordingly, state lawmakers should consider making a change that allows state-licensed professionals—plumbers, HVAC technicians, electricians—to sign off on certain building permits, eliminating rules that require the approval of state-licensed professionals and city employees.
Too many cities pass policies and never review them unless problems arise. Are these regulations still necessary? Are they serving their intended purpose? Forcing localities to review existing local building and development codes every ten years could help them identify antiquated or impractical regulations and determine whether they need to be repealed, amended, or kept as they are. New fees placed upon housing ought to be included in the sunset process to evaluate their impact on housing affordability.
Texas’s reputation for low housing prices has drawn many newcomers in recent years. But a thicket of local regulations threatens the state’s economic competitiveness. By preempting bad local policies, state lawmakers can work to ameliorate the affordability crisis.
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