Abundant Housing Is the Texas Miracle Worker

The State Senate’s Plan to Tackle Affordability

Austin has achieved something of a miracle: after years of aggressively building housing, the Texas capital has seen metro-wide rents drop by 22% from their peak, passing the dubious distinction of Texas’s most expensive rental market to Dallas-Fort Worth. It’s an encouraging trend, but rents across the state remain elevated relative to pre-pandemic levels: the Harvard Joint Center for Housing Studies estimates that more than 50% of Texas renters remain moderately to severely cost-burdened.¹ The problem is that, although the state leads the nation in new home construction, it still faces a shortage of more than 300,000 homes—a number that is constantly challenged as the state absorbs tens of thousands of people each month. Texas’s potent mix of strong job growth and housing affordability—dubbed the “Texas Miracle”—was the secret sauce that kept people coming in recent decades. But now, persistent affordability challenges threaten Texas’s economic edge.

Is the Texas Miracle whipped?

A statewide problem (Source: Up for Growth via Joshua Fechter, Texas Tribune)

Housing affordability has become a bipartisan issue in Texas, a reality you can track by walking the mile between Austin City Hall and the gleaming pink Capitol. The City of Austin has, of course, undertaken significant reforms in the past two years to address its local shortage, allowing three homes by right on single-family lots, reducing minimum lot sizes, and abolishing parking requirements. But other metropolitan areas in Texas are not keeping up—and the state legislature has noticed. Fresh from giving testimony at City Hall last week, on Monday I trotted up to the Capitol for a hearing before the Republican-controlled State Senate’s Local Government Committee, to speak in support of a raft of pro-housing legislation.

Here’s a rundown of what’s on the docket:

Senate Bill (SB) 15 removes municipal barriers that prevent the development of more affordable starter homes by reducing the minimum lot size (i.e., the amount of land) required to build a home and easing other requirements affecting small lots. SB 15 would allow new homes on 1,400-square-foot lots, primarily in new subdivisions, reflecting the standard in Houston, which has seen a proliferation of affordable, small-lot townhomes. The bill also reduces setback, parking, and open space requirements for existing lots under 4,000 square feet, which could encourage more infill housing.

The bill is “bracketed” to apply to municipalities with populations greater than 90,000 in counties with more than 300,000 people, which would include most of the large cities in major metro areas while excluding some large cities in small metros like Midland, College Station, and Amarillo. SB 15 is similar to a bill that didn’t make it onto the floor for a vote before the session ended in 2023, which I wrote about back then for Southern Urbanism.

SB 673 would legalize the construction of accessory dwelling units (ADUs, aka “granny flats” or “casitas”) in single-family zones statewide. It also attempts to block the poison pills that municipalities have used in other states to undermine state ADU laws by removing owner-occupancy requirements on the primary dwelling and preventing the imposition of excessive parking, setback, and design requirements. This bill is not currently bracketed but is likely to be modified.

SB 673 is a resurrection of a bill that narrowly failed (by two votes!) in the legislative session two years ago. The issue then was that “ADU” became conflated with another acronym: STR, short-term rentals like Airbnb or Vrbo. Opponents also claim ADU liberalization is a backdoor means of abolishing single-family zoning. Nevertheless, this is a low-intensity, family-friendly bill that would give property owners the opportunity to build a smaller unit in their own backyards to serve an aging parent, a recent graduate, or an au pair. Some families might choose to rent out their ADUs, helping to pay bills, but local STR regulations would still apply.

SB 840 aims to solve two problems at once by making it legal to build homes in commercially-zoned areas. Importantly, with so many office buildings vacant due to remote work, SB 840 would allow office buildings to convert to housing without a rezoning, saving a huge amount of time and money. It would also enable developers to repurpose underdeveloped office parks, strip malls, and other areas for mixed-use residences. This bill follows successful legislation in Florida and Montana—and mirrors a residential-in-commercial program in Austin…that was struck down in 2023 due to a procedural lawsuit over notice requirements.² SB 840 is bracketed to municipalities with a population greater than 60,000 in counties of more than 420,000, though one supporter sensibly suggested that the bill should include downtowns in cities of any size.

Finally, SB 854, also called “Yes in God’s Backyard” (YIGBY), would enable churches, synagogues, and other religious organizations to build mixed-use, mixed-income, multifamily housing on their own land by right. Faith-based housing already plays a vital role in providing low-cost shelter to vulnerable populations, including the homeless, but religious organizations usually have to go through the same rezoning hurdles as any other developer. This adds unnecessary cost, time, and complexity to projects, making it harder for faith organizations to fulfill their mission. By allowing mixed-income housing, this bill could be a financial boon to churches struggling with declining membership, allowing them to bolster their congregations and better support their communities.

While I don’t have a god in this fight, this might be my favorite of the four bills introduced this week. Unlike most commercially-zoned property, churches often share the same zoning as single-family homes and are present in many residential neighborhoods; indeed, there are churches within two blocks of every direction of my house in East Austin. Spread across an entire city, that can add up to a lot of land: in San Antonio alone, congregations own 3,000 acres of undeveloped land. However, most cities relegate apartment buildings of any size to high-traffic, high-pollution, high-noise corridors—just one of the many ways that our land development codes discriminate against renters. So this bill would allow some Texans who aren’t single-family homeowners to get “nearer my god to thee.” This bill is not currently bracketed—may God bless all of Texas.

Senator Paul Bettencourt, committee chairman, explained that senators introduced this suite of legislation to tackle the affordability problem from multiple angles, admitting that there is no silver bullet. Bettencourt also noted that SB 15 is a priority bill of Lieutenant Governor Dan Patrick, who leads the Senate. Housing affordability is also a priority of Governor Greg Abbott, while new House Speaker Dustin Burrows has prioritized reforms to the zoning protest process—a bill I hope to revisit later in the session.

The Senate Local Government Committee (Photo Credit: Author)

Housing affordability is also clearly a priority for Texans of all stripes.

Supporters at the public hearing outnumbered opponents on the YIGBY and residential-in-commercial bills by a ratio of 2-to-1, while support for the minimum lot size bill came in at 3-to-2. Supporters of this trio of bills included representatives of the Catholic and Baptist churches, builders, realtors, and other members of the real estate community, affordable housing providers like Habitat for Humanity, housing advocates like me, and students from UT-Austin and Texas A&M—showing that even amidst Texas’s deepest rivalry, affordability is a bipartisan issue. The ADU bill had narrower support, at 4-to-3, echoing the closeness of the vote two years ago and the more fraught politics around ADUs.

Of course, the opposition was also bipartisan, including some of Austin’s most notable local anti-development activists as well as Trump supporters from the High Plains. There were also several mayors and city council members, who invoked that housing-scarcity shibboleth, “local control.” These bills would, indeed, preempt some of the authority to locally control zoning that the State of Texas has delegated to its incorporated cities. This is entirely within the state’s constitutional powers—and it has an interest in doing so to address collective action problems that affect the entire state. Indeed, leaders from Georgetown, north of Austin, and Flower Mound, up in the Metroplex, inadvertently exposed the weakness of the local control argument in their testimony when they suggested this legislation would force their cities to bear the “burden” of housing millions of new Texans. Georgetown is very nice, and I’m sure Flower Mound is, too—but let’s be real: millions of new Texans aren’t clamoring to move there.

In reality, the exact opposite is true. Communities with more flexible zoning have already absorbed the bulk of new housing, which has meant that most of Texas’s metro growth is happening in suburban and exurban areas—places like Georgetown and Flower Mound—rather than in urban job centers. Census data shows that Texas’s fastest-growing counties are all outside major urban cores, with much of the growth happening at the metro edges rather than in city centers. These bills would spread new housing across a broad swathe of cities, reducing the burden on any individual one. They would allow more housing in high opportunity areas and job centers, reducing commutes and preserving communities, taking the pressure off of smaller towns and the state’s rapidly diminishing farmland. Local control has enabled larger, more restrictive cities (ahem, Dallas) to pass the buck elsewhere.

This is just the start of the legislative process. Since the Texas Legislature only meets for 140 days every two years, the scramble to turn each bill into law is now underway—with just 81 days left and thousands of bills to sort through. Most will die. These bills, if they survive, are subject to amendments that could change the terms or the bracketing, which may be needed to secure majorities in both houses. And, oh yes, there’s a parallel track for these bills in the frothier Texas House of Representatives, which is more unpredictable than the Senate and where intra-party divisions have killed bills in the past. Anything could happen. Last session, Governor Abbott vetoed more than 70 bills to punish the House and Senate for their failure to pass a property tax relief bill. Every elected official wants their pet issue to get the spotlight in the Lone Star State.

Texans have made it clear: they want more housing options, and the Senate has put forward a strong set of solutions. Hopefully, the fate of these bills—and of housing affordability—won’t fall to partisan politics, score-settling, or personal vendettas. Otherwise, it really would take a Texas miracle to solve this.

1. Up for Growth defines this as: “Moderately (severely) cost-burdened households pay more than 30% up to 50% (more than 50%) of household income for housing. Households with zero or negative income are assumed to be severely burdened, while households paying no cash rent are assumed to be unburdened.”

2. Austin has resurrected a more limited version of residential-in-commercial through a new density bonus program.