Texas’ high housing costs sparked a movement to bring them down

Posted/updated on: October 28, 2024 at 4:10 pm

AUSTIN (AP) — The scene was a familiar one at Austin City Hall: The City Council once again was seeking reforms to curb the capital city’s sky-high home prices and rents, and opponents had turned out in force to try to block them.

The central idea behind the reforms: Austin needed a lot more homes and it would have to relax certain city rules to see them built.

On a Thursday in May, more than 150 people signed up to denounce the changes. Among them were homeowners who complained the overhaul would wreck the character of their single-family neighborhoods and anti-gentrification activists who feared it would further displace communities of color.

Such critics — often referred to as NIMBYs, which stands for “not in my backyard” — have long held sway in Austin and other cities. But something was different this time.

As Austin grew and its housing costs soared during the COVID-19 pandemic, a diametrically opposed group of advocates who push cities to allow cheaper and denser housing — known as “yes-in-my-backyard” activists, or YIMBYs — had gained new footing at City Hall. That day at City Council, they showed up in numbers that rivaled their opponents and urged council members to pass the reforms.

By that point, they barely needed to convince anyone. Austin YIMBYs had laid the groundwork for the reforms during the last citywide election, when they successfully backed candidates who vowed to tackle the housing crisis head-on. Those efforts resulted in a YIMBY supermajority on the City Council that includes Mayor Kirk Watson. After hours of testimony that stretched past midnight, council members approved the reforms.

The moment was the capstone of a fledgling but precarious political realignment in Austin, where forces steadfastly opposed to more housing had long used their influence to kill ideas aimed at allowing more places for people to live. That philosophy, YIMBY activists have argued, hamstrung the city from adapting to needs brought on by its robust growth and caused real-world harm.

“If you put your neighborhoods in amber, you’re literally saying ‘people can’t live here,’” said Felicity Maxwell, a board member of the Austin YIMBY group AURA. “We can’t stay like that. There’s no way to make your city freeze. And if you do, there’s a lot of dire economic and social outcomes because of that.”

That reckoning now shows signs of spreading beyond Austin as the state finds itself in the grip of a crisis that has forced many would-be first-time homebuyers out of the market and left tenants paying exorbitant rents.

YIMBY activists in Dallas have pushed local leaders, with mixed results, to embrace the idea that the country’s ninth-largest city should make it easier to build homes besides standalone single-family homes on large lots and big apartment buildings. In cities like El Paso, San Antonio and Fort Worth, policymakers are eyeing ways to add more homes and beat back their housing crises.

As the nation grapples with high housing costs, YIMBY ideas have hit the mainstream and caught the attention of some of the state’s top Republican leaders, like Lt. Gov. Dan Patrick and House Speaker Dade Phelan, as well as Democratic leaders who are increasingly nervous the state’s once-celebrated housing affordability is slipping.

“People ask me, ‘What are the things that worry you the most?’ Usually one of the things I mention is affordability of housing and where we’re going to be in another 5, 10, 15, 20 years. That worries me as much as anything else,” said Comptroller Glenn Hegar, a Republican and the state’s chief treasurer whose office published a report in August embracing the notion that Texas needs more homes to bring down costs.

The housing crisis will only get worse if nothing changes, YIMBY activists argue — but reforms to ease it are far from a sure thing.

Housing is deeply personal. Everyone needs shelter. Owning a home, the most widely accepted engine to build generational wealth, represents the biggest investment most people will make in their lives. Many homeowners don’t want to see their neighborhoods dramatically transformed. In many places, resistance to new development holds strong.

In North Dallas, neighborhood groups recently sought to recall their City Council member over her support for ongoing plans to replace a low-lying, waning shopping center called Pepper Square with shops, restaurants and almost 1,000 apartments. She later opted not to seek reelection, though she said the development fight didn’t influence her decision.

The groups argued in part the redevelopment would clash with nearby single-family neighborhoods. That flummoxed Melissa Kingston, a member of a key city panel that voted in August to advance the proposal. If they don’t want more housing in their single-family neighborhoods, Kingston told them at a recent meeting, that housing needs to go somewhere as the region grows.

“What I’ve heard you all say is, ‘We don’t want it in our neighborhood and we don’t want it anywhere near our neighborhood,’” Kingston said. “That’s not reality. Cities change, and they either change for the better or they change for the worse. But they don’t stay the same.”
A shift in Austin

The state’s housing crisis is effectively a new problem for state and local leaders — mainly because, for the longest time, Texas used to be cheap.

The state’s poorest residents have usually struggled to find housing they can afford, but housing used to be inexpensive and plentiful for middle-class families — especially when compared with Texas’ chief rivals, California and New York. Now the crisis has crept up the income ladder. Worries have begun to percolate that if Texas doesn’t contain housing costs, it could eventually wind up in the same boat as those states — with homes completely out of reach for typical families and residents fleeing for cheaper states.

At the heart of the state’s housing affordability woes lies a deep shortage of homes. Homebuilding lagged as the state’s economy boomed over the past 15 years and millions of new residents moved here. That left Texas, which builds more homes than any other state, with a shortage of 306,000 homes, according to an estimate by housing policy organization Up For Growth.

A growing body of research in recent years shows that stringent local restrictions on what kinds of homes can be built and where, known as zoning regulations, ultimately limit the overall number of homes and thus contribute to higher costs. In Texas cities, standalone single-family homes can be built almost anywhere homes are allowed. But it’s largely illegal to build other kinds of housing like townhomes, duplexes and small-scale apartments in those same places, a Texas Tribune analysis found. And cities set aside comparatively little room elsewhere for those kinds of homes as well as large apartment buildings.

Relaxing those regulations, research shows, helps cities add more homes and contain housing costs.

Austin officials have sought for much of the past decade to update those rules, but longtime homeowners opposed to new housing have often frustrated the city’s biggest efforts. Just before the pandemic, some homeowners convinced a judge to kill a major overhaul of the city’s land development code that would have allowed denser housing.

Then came the pandemic. Housing prices in the Austin region skyrocketed amid record-low interest rates, the rise of remote work and sustained population growth. The typical home in Austin went for more than $500,000. Rents took off, too, rising three times faster between 2019 and 2022 than they did in the three years preceding the pandemic, according to Zillow data.

Austin’s housing crisis had become undeniable. How to solve the problem became a dominant theme in the city’s 2022 elections.

“People just kind of got to this point where they had had enough,” Council Member José “Chito” Vela said. “They just were like, ‘okay, what we were doing on housing for the last 20 years is clearly not working.’”

The council members YIMBYs helped elect passed several reforms aimed at juicing the city’s housing stock.

The most contentious new policies aimed to broaden the kinds of homes that can go in the city’s single-family neighborhoods. Late last year, council members voted to allow up to three housing units in many places previously limited to detached single-family homes.

The council then reduced how much land the city requires single-family homes to sit on, known as a minimum lot size requirement. For more than 80 years, that requirement had sat at 5,750 square feet in much of the city. In May, they reduced it to 1,800. The idea was twofold: allow smaller and cheaper homes and make it possible to build more homes overall. At the same time, they enabled the construction of apartment buildings along the city’s planned light-rail line and closer to existing single-family homes.

Within two years, the council made more sweeping changes to the city’s zoning rules than it had since the Reagan administration. Council members recognized they needed to act fast and make up for lost time, Maxwell said.

“Everything came together so that nobody wanted to say ‘no,’” said Maxwell, who now sits on the city’s Planning Commission. “They wanted to say, ‘yes.’”

That was a marked reversal from previous years, when homeowners and neighborhood groups that wield tremendous influence made one thing clear to local politicians: Touch our neighborhoods and pay for it at the ballot box. But in the face of a devitalizing affordability crisis, complaints about how different types of homes like duplexes or triplexes might change the feel of a neighborhood lost some of their bite.

“We don’t have the luxury of not doing anything,” Watson, Austin’s mayor, told The Texas Tribune.

YIMBYs’ opponents are deeply skeptical of their proposals. They argue that some city efforts to allow more housing will spur builders to further target Austin’s low-income neighborhoods and flood them with expensive new housing that will hasten the displacement of Black and Latino residents. Those fears fueled advocates with Community Powered ATX — a coalition of progressive activists based in East Austin, which underwent rapid gentrification over the last 15 years — to rally against the changes.

“We want more deeply affordable housing to be built,” said Alexia Leclerq, a Community Powered ATX co-organizer. “What they’re proposing is not part of the solution. It’s actually making it worse.”

Zoning reform proponents have long countered that displacement in East Austin came about because city rules hampered the city’s overall housing supply and forced development pressure upon only a few parts of town. They point to research that shows loosening regulations to allow more homes across a city may actually safeguard neighborhoods more vulnerable to displacement.

Austin got a glimpse of the effect building new homes has on housing costs even before the zoning reforms were approved. Though rents remain above pre-pandemic levels, a boom in apartment construction in the Austin region drove rents down last year — in newer high-end apartments and older, cheaper apartments alike.

“You’re seeing significant price drops at the lowest end of the market that are really helping out the neediest people here in Austin,” said Vela, who represents a portion of East Austin.

YIMBYs now face the task of protecting their supermajority in the November elections. And while the reforms in Austin represent unprecedented victories for YIMBYs in Texas, their ideas face a steep climb elsewhere.
Can Dallas move forward?

Some 200 miles north on Interstate 35, an attempt to mirror Austin’s moves imploded before it had a chance to get off the ground.

Housing in Dallas, too, grew much more expensive amid the Dallas-Fort Worth metropolitan region’s vast growth.

“If our city doesn’t do something now, it’s just going to continue to get worse,” said Dallas City Council Member Chad West, who represents the northern part of the city’s Oak Cliff neighborhood. “I want a city where my kids, when they’re old enough to want to move here after college … that they can afford to rent in the city if they want to, or eventually buy a home in the city if they want to, as opposed to having to live in a suburb of Dallas and drive in.”

West took inspiration from Austin’s efforts. Late last year, he and four council colleagues called on the city to explore similar ideas, like allowing new homes to sit on less land and up to four homes where now only one or two may go.

Opponents on the City Council moved fast to squelch the ideas.

“People who bought a home deserve to have the predictability that their neighborhood will stay intact and not turn into something that … is now single-family with multifamily mixed in,” Council Member Cara Mendelsohn, who represents Far North Dallas, said during a February discussion. “People don’t want that. I don’t want that for Dallas.”

West’s effort fizzled. Then came ForwardDallas, an update to an 18-year-old document that guides how the city should use its land. The plan seeks to encourage more kinds of housing — like townhomes, duplexes and small apartment buildings — in existing single-family neighborhoods.

A budding group of Dallas YIMBYs backed those ideas. About 40 people — a mix of homeowners and renters largely organized by the Dallas Housing Coalition, a group of housing developers and pro-housing organizations — testified in support of ForwardDallas before it landed in front of City Council.

“If we think of our city as one large single family, not only is the size of that family growing, but the members of that family are also growing and their needs and their wants and desires and priorities are changing with it,” said Hexel Colorado, a Dallas urbanist, at a council meeting.

In practice, ForwardDallas is little more than a list of recommendations, not a firm policy change. But it was enough to trigger opposition from existing homeowners and neighborhood groups who feared the plan would imperil their single-family neighborhoods.

Yard signs that said “SAVE Single-Family NEIGHBORHOODS from FORWARD DALLAS” and “HANDS OFF! SINGLE-FAMILY NEIGHBORHOODS” proliferated in some neighborhoods. Irate residents packed community centers to blast the plan. A group of homeowners trekked down to City Hall more than once to testify against it.

Single-family housing is “essential and critical to the overall mix of housing options for people who currently live in Dallas and want to move to Dallas,” said Melanie Vanlandingham, an East Dallas neighborhood advocate. “ForwardDallas doesn’t recognize that.”

More than 100 people showed up to City Hall over several months this spring to testify about the plan. More than half were homeowners opposed to allowing other housing types in their neighborhoods, most of whom bought their homes in the decades before the state’s current crisis began to kick in.

In other words, they were exactly the kind of residents local elected officials have traditionally listened to for a key reason: They’re more likely to exact vengeance in low-turnout municipal elections. Most policy decisions about what kind of housing can be built and where happen at the city level, but younger people who want more housing options are less likely to vote in local elections — and older homeowners who may oppose more housing in their neighborhoods are more likely to show up.

That’s a political reality some City Council members openly acknowledged.

“I know how I got here,” Council Member Carolyn King Arnold, who voted against the plan, said at an Aug. 6 meeting. “I know who I came to the dance with.”

For Dallas YIMBYs, that dynamic poses a significant hurdle to enacting reform.

“The most involved people are the ones who are going to oppose housing,” said Adam Lamont, a middle school teacher who leads the group Dallas Neighbors for Housing. “That small swath of the city has really, really gotten riled up and most of the city doesn’t really know what’s going on.”

Amid the backlash, ForwardDallas’ crafters scaled back some recommendations to encourage more housing types. Council members mused about ripping out any mention of housing to get the plan through — and avoid angry homeowners’ ire during the next election cycle.

Council Member Paul Ridley, who opposes allowing denser housing types in existing single-family neighborhoods, broached compromise language seeking to direct “incompatible multiplex, townhome, duplex, triplex, and apartment development” away from those neighborhoods, among other tweaks designed to ease opponents’ concerns.

“Consistently, we have heard our residents’ pleas for more housing options and also for protection of their existing neighborhoods and single-family zoning,” said Ridley, who represents East Dallas, a focal point of opposition to the plan, during a Sept. 3 meeting. “Through the input of so many stakeholders, it has become clear to me that those objectives are not incompatible.”

The City Council approved ForwardDallas with Ridley’s amendments last month — but no one seemed completely satisfied. Opponents felt the plan didn’t go far enough in enshrining the city’s commitment to single-family neighborhoods. YIMBYs weren’t thrilled about Ridley’s compromise language, though they considered the document a step in the right direction — even if it was unenforceable.

Some confusion remains. Despite Ridley’s amendments, parts of the document still encourage multifamily developments in single-family neighborhoods.

Nathaniel Barrett, a Dallas developer who helped shape the plan, said ForwardDallas will hopefully set the tone for a broader discussion on housing, but acknowledged the final document is “in conflict with itself.”

“I don’t expect any more housing to be built because of this,” he said. “That work comes elsewhere.”

Among Dallas YIMBYs, worries abound that City Hall won’t take bold action until the city’s housing crisis looks like Austin’s. Dallas rents aren’t far behind where they stand in the state’s capital. Home prices aren’t as bad in Dallas as in Austin but hover well above where they stood five years ago.

If Dallas doesn’t take more steps to address its affordability hurdles, it’s likely the Texas Legislature will do it for them, West said.

State lawmakers “love to come in and tell us what to do in Dallas,” West said. “We’re going to be handing off the decision (to them) on how to run our city because we can’t get past this gridlock.”
Who should fix the crisis?

How Texas lawmakers might address the housing crisis when they return to Austin next year isn’t clear. But the state’s top Republican officials have signaled growing unease about the issue. And polls show strong bipartisan agreement that housing costs are a problem.

Lawmakers tried to alter some city zoning rules last year but failed. Meanwhile, home prices and rents haven’t abated — and voters have become increasingly vocal about the problem, said Nicole Nosek with Texans for Reasonable Solutions, a group that pushed those proposals.

There are signs Texans are open to the proposals YIMBYs espouse. Most Texans support allowing townhouses, accessory dwelling units and small apartment buildings on any residential lot, a recent Pew Trusts poll found. Reducing cities’ minimum lot-size requirements found favor with some 45% of Texans they polled.

“It’s a clear lesson to legislators that this is something that really hits home, no pun intended,” Nosek said.

Neighborhood groups opposed to allowing different kinds of housing where they live will likely mobilize against attempts by the Legislature to alter the rules.

“It is the single largest investment for most people when they buy their home in a single-family neighborhood,” said David Schwarte, who heads the Texas Neighborhood Coalition. “How are they going to respond when they find out that the Legislature just enabled the developer to come into their neighborhood and put up five houses on a lot that was once only one home?”

How much power cities should have to decide what kinds of homes can be built and where will likely be a major dividing line. The Texas Municipal League, cities’ chief lobbying outfit, has vowed to oppose attempts to curtail cities’ authority to enact residential zoning regulations.

The Texas Public Policy Foundation, an influential conservative think tank, came out earlier this year in favor of completely getting rid of cities’ lot-size requirements along with limits on how many homes can go on a given piece of land.

But such a far-reaching measure may not be palatable to lawmakers, said John Bonura, a TPPF policy analyst focused on housing affordability. One alternate route for state lawmakers might be to create a statewide template to loosen cities’ zoning rules and allow cities to opt in, he said. The idea would be for cities to eventually join in once they see how the reform works in other places.

“If we can’t win big, let’s at least get something through the door,” Bonura said.

For Republicans, allowing more homes means an opportunity to slash government regulations, bolster property rights and unleash the free market. For Democrats, zoning reform holds the potential to reduce racial segregation and help fight climate change.

But there are those on both sides of the aisle who are fiercely protective of single-family neighborhoods and will push back vociferously against moves they see as harming those areas.

Weighing in on cities’ residential zoning laws is awkward territory for Democratic state legislators, who have spent much of the last decade trying — and failing — to fend off Republican efforts to sap authority from the state’s bluer urban areas. At the same time, Democrats generally support affordable housing, and defending cities’ right to uphold some of those laws might work against that cause given those rules play a key role in exacerbating housing costs.

Tackling the housing crisis will likely produce strange bedfellows. The Texas Municipal League and TPPF, usually at odds over efforts to diminish cities’ rulemaking authority, agree they want lawmakers to tweak an obscure state law that effectively gives veto power to property owners to kill new housing projects near them. A group of San Antonio residents recently wielded the law to stop a proposed affordable housing development nearby — even though most city council members voted in favor of the project.

That law “makes it hard for a council to do the right thing” and add much-needed affordable housing stock, TML executive director Bennett Sandlin said.

There also appears to be some agreement on both sides that cities should make it easier to build residences in places that allow commercial development— something many of the state’s largest cities don’t allow.

The state also spends very little on housing explicitly targeted at low-income families. State Sen. Nathan Johnson, a Dallas Democrat, said he plans to introduce legislation to start a $2 billion fund to essentially pay developers to provide housing for low-income families by buying down rents in apartments on the market.

Johnson said he’s also open to legislation capping cities’ lot-size requirements and allowing homes in commercial areas — though he hopes local officials would have a say in any statewide revision to cities’ zoning restrictions.

But the state Legislature needs to do something to rein in housing costs, Johnson said.

“Texas is growing and continues to grow very, very rapidly, and companies continue to locate here,” he said. “If we don’t have affordable housing, that can’t continue.”

Texas still adds more jobs than any other state and remains an attractive place for companies to relocate. But quietly, some circles are fretting that Texas is losing its competitive advantage on housing.

“Nobody moves to Texas for the skiing. They come here because the jobs are plentiful and the houses are cheap,” said Emily Brizzolara-Dove, a policy analyst with Texas 2036 who focuses on housing affordability. “But it is something that could easily shift somewhere else. The stakes are very, very high.”

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