Texas Housing Costsand the Impact of State & Local

Government Policies

By James QuinteroDirector, Center for Local Governance

Policies Matter

Government is not the solution. • Regulations come in many forms and are

imposed by governments at different levels – but all tend to have the same effect: putting the American Dream out of reach.

• NAHB study – “regulations imposed by government at all levels account for 25 percent of the final price of a new single family home built for sale.”

Texas Housing Costs: Overview

What is affordable housing?• Refers to the capacity to purchase a house.

Is there good news for Texas?• YES! Texas has a reputation as an affordable

place to work and live. That reputation remains intact.

Texas Housing Costs: Overview (cont.)

But there’s also some bad news…• Since the 2007 recession, home prices and

household incomes have tracked in different directions, signaling that there might be trouble ahead.

Texas Housing Costs: Overview (cont.)

Influencing Income and Housing Prices is the Great Texas Divide…• State Government: The “Texas Model” of low

taxes and limited government

• Local Government: The “California-zation” of Texas

Texas Housing Costs: The Governing Divide

State Government• Here in Texas, the amalgamation of low-taxes,

controlled state spending, and predictable regulations—oftentimes referred to as the Texas Model—has helped create a dynamic economy, where residents have ready access to good jobs and decent salaries.

Texas Housing: Low Taxes

Texas Housing Costs: The Governing Divide (cont.)

Regulations…• Fighting EPA on the Clean Power Plan.• Victories during the last legislative session—

consumer lending and consumer finance.• Working to make changes to the Endangered

Species Act.

Texas Housing Costs: The Governing Divide (cont.)

Local Government…• The “California-zation” of Texas– High property taxes– Outsized fiscal footprint– Excessive local regulations

Texas Housing Costs: The Governing Divide (cont.)

“Texas is being Californian-ized and you may not even be noticing it. It’s being done at the city level with bag bans, fracking bans, tree-cutting bans. We’re forming a patchwork quilt of bans and rules and regulations that is eroding the Texas model.”

~ Governor Greg Abbott

Texas Housing Costs: Bright Spots

It’s not all bad news at the local level. Some positive outliers…• Houston– No zoning requirements

• Von Ormy– Elimination of the property tax and a complete

transition to the sales tax– Minimal regulations

Texas Housing Costs: Austin

“As housing costs soar, some of our families are being displaced and moving outside of Austin. As the district analyzes housing trends, birth rates, population changes and other factors, it is projected that enrollment will remain flat or decline slightly during the next several years.”

~ AISD Superintendent Paul Cruz

Texas Housing Costs: Austin (cont.)

“We all know that Austin is becoming increasingly unaffordable. We become more affordable by making things cost less and by ensuring families have more to spend.”

~ Austin Mayor Steve Adler

Texas Housing Costs: Austin (cont.)

Austin’s affordability problem• RealtyTrac, May 2014 report -- It took 31.3

percent of the income from a median-income worker to afford a median-priced home, compared to a historical average of about 26.7 percent. Historically, the national percentage is even lower, at 19 percent.

Texas Housing Costs: Austin (cont.)

Affordability problems in the Capitol City• Impact Fees • Onerous Regulations• Delays

Texas Housing Costs: Austin, Impact Fees

Texas Housing Costs: Austin, Onerous Regulations

Visitability ordinance • Requires all new homes built in Austin be

“visitable” for people in wheelchairs. • Cost of installing ramps averages $2,000 per

home.• Eliminates choice in favor of one-size fits all

strategy.

Texas Housing Costs: Austin, Delays

Time is money!• University of Texas researcher Megan Shannon

found a backlog in the city's planning and development review department delayed projects. She calculated those costs to be about $60 a month for renters in Central Austin alone.

• Added housing costs are the result of costs incurred by developers on interest, on carry costs, on their overhead, etc.

Texas Housing Costs: Conclusion

• Policies matter – especially when they increase costs

• In Texas, there’s a governing divide that seems to view the role of regulations very differently

• Still, Texas as a whole remains an affordable place to live and work – for now!