Texas real estate developers and homebuilders are announcing a steady stream of new offerings in the $300,000 to $800K,000 range, most on the outskirts of major urban centres.
While this is a reflection of the state’s economic growth, it’s making affordable home ownership a critical issue.
For example, Windy Hill Development is introducing a 583-home community in Crosby on 138 acres northeast of Houston. Homes on the 40-by-120-foot lots start at $290,000, what project financier Trez claims “welcomes young families.” Nevertheless, these are beyond the reach of many families.
Affordable rental housing is also a serious problem. According to data from the National Low Income Housing Coalition (NLIHC), nearly 50 per cent of low income renter households spend more than 30 per cent of their income on rent and utilities. Most of these are working families, many of whom live in the cities.
The affordable housing shortfall in major urban centers is particularly acute in Dallas.
Much of the city’s overall housing deficit and lack of expansion exists in the southern suburbs where many Blacks and Hispanics live and where population growth is highest. In contrast, most residential development is occurring in the northern suburbs, an area dominated by non-Hispanic whites and Asians. This is creating a race-based gap between population growth and housing development that concerns state officials.
In response, faith-based non-profit Builders of Hope, formed in 2009, has grown to become one of Dallas’ biggest developers of affordable housing. The organization recently received $1.5 million in funding support from the city for its 20-unit, single-family project in west Dallas. However, the group’s efforts there and in other areas of the city hardly scratch the surface of the problem.
It’s resulted in calls for change.
Affordable housing developers in Dallas complain about the obstacles they face compared with market-rate builders. They say timelines when acquiring land can be triple those experienced by market-rate builders and suggest the removal of such barriers is critical if the pipeline of affordable projects is to move forward.
Compounding this, Dallas is experiencing the same increases in material and financial cost inputs seen elsewhere across the state.
One builder told local media that over the past four years, square foot building costs had swollen from $85 to around $120. High interest rates and rising demand from the influx of new arrivals, many lured to Texas by well-paying jobs, have widened the affordability gap even further.
According to the NLIHC, Dallas is much worse off than Austin and San Antonio, each of which have affordable housing deficits one-third that of Dallas. One reason may be that San Antonio and Austin have issued Affordable Housing Bonds.
For example, the City of Austin has proposed its fourth such bond, a $350 million issue that awaits the endorsement of voters in a referendum this November. If approved, it would increase property taxes by more than $45 annually for an average Austin home with a taxable value of $358,400.
That’s not been well received by Save Austin Now, a vocal “nonpartisan citizen’s group.” They claim the tax increase would be a burden to homeowners. The group is on record opposing various municipal actions. The main page of their website makes the declaration, “When Austin’s elected officials ignore the voters by deregulating homeless encampments, failing to prosecute criminals, and dramatically raising property taxes, Austinites must stand up and fight back.”
However, an analysis by HousingWorks Austin indicates previous Austin Affordable Housing Bonds issued in 2006, 2013 and 2018 were positive, and resulted in over 6,700 homes being built, 5,400 of which were made available to renters earning less than $88,000 annually. The overall construction impact of the 2013 and 2018 bonds was over $1 billion.
Texas has a number of governmental and non-profit support programs for affordable housing.
The Texas Department of Housing and Community Affairs provides tax credits to housing developers in exchange for building low-income rental housing. The Texas Housing Impact Fund, administered by the Texas State Affordable Housing Corporation, offers financing for the development, acquisition or rehabilitation of affordable rental or homeownership projects. And the non-profit Texas State Affordable Housing Corporation targets the housing needs of low-income families and underserved populations lacking acceptable housing options through conventional financial channels.
More needs to be done. Heading into the current economic recession, there are fears many working class families employed in the state’s major cities will be unable to afford to live in them.