Opinion: Minimum Lot Size Reform Is Gaining Traction in Texas Cities. That’s a Good Thing.

Austin should follow Houston’s lead and embrace this solution to address our housing affordability problem

By Jake Wegmann

Austin Chronicle

Would you like to build your own family-sized house in the 78757 ZIP code in Austin? It'll cost you, of course. In addition to hiring an architect and builder, did you know that the city government has a law that requires you to pay hundreds of thousands of dollars for the land the house will sit on? In fact, the city will force you to pay more just for the dirt under and around your new house than you would have paid for the median house (dirt included) in the 78757 as recently as 2010.

If that sounds odd, let me explain. Certainly it is true that the city of Austin doesn't actually have a municipal ordinance that dictates a dollar amount you must pay to buy land for your new house. But it might as well have such a law. Right now, buildable land parcels in the 78757 are selling for roughly $2 million to $3 million per acre. Since most of the privately owned land in the 78757 is zoned SF-3, and since SF-3 requires a minimum lot size of 5,750 square feet, that means that at the lower end of the price range you're looking at paying $264,000 for the smallest possible parcel you could build on.

Zoning and other laws that regulate what you can build and where are intended to safeguard, in the words of Texas law, "public health, safety, morals, or general welfare." Which of those are being protected by a 5,750-square-foot minimum lot size – or by making someone buy $264,000 worth of land to build a house? Certainly not public health and safety. Houston reduced its minimum lot size from 5,000 to 1,400 square feet starting in the late 1990s, and unless I am missing something, there is no crisis in public health or safety afflicting the tens of thousands of people who now live in small-lot modern townhouses in the Bayou City.

I don't mean to pick on Austin – I just happen to know the 78757 because I live there. Even in more middle-income suburbs, like Round Rock and Pflugerville near Austin and Frisco near Dallas, George Mason University researchers Nolan Gray and Salim Furth found strong evidence that minimum lot sizes are leading homebuilders to build on bigger lots than their customers would otherwise choose. Minimum lot sizes are driving up housing costs throughout Texas, at a time when our state's longstanding housing affordability advantage over other booming states is in serious jeopardy.

And unfortunately a proposal to allow more moderately sized lots in Texas cities was ultimately unsuccessful in the Texas Legislature. This bill – Senate Bill 1787 – was based on Houston's successful minimum lot size reform, which jump-started housing growth in existing neighborhoods rather than in far-flung suburbs. And also like Houston, SB 1787 provided neighborhoods the ability to opt out should they not like the changes.

But it isn't all bad news. In recent weeks, momentum is building toward lowering the minimum lot size requirement in both the city of Austin and the city of Dallas. In Austin, the City Council passed a preliminary resolution recommending reducing lot sizes from 5,750 square feet to 2,500 square feet. Then, within two weeks of the city of Austin's resolution, a member of the Dallas City Council proposed lowering Dallas' minimum lot size standard for residential lots to 1,500 square feet.

Cities can and do and should regulate all sorts of important things on privately owned land for real reasons, such as preserving mature trees, protecting historic buildings, and keeping housing away from polluting industrial facilities. But stopping people who can afford a less expensive place from living near people who can afford more is not a legitimate reason for regulation, and cities should stop doing it.

Jake Wegmann is an associate professor in the UT School of Architecture. His areas of expertise are in housing affordability and development, land use regulation, and urban form housing.

Source: https://www.austinchronicle.com/columns/2023-09-15/opinion-minimum-lot-size-reform-is-gaining-traction-in-texas-cities-thats-a-good-thing/

The Austin City Councilman Podcast with Brad Swail

Nicole Nosek is the chair for Texans for Reasonable Solutions. We discuss their efforts to push for housing reform across Texas.

How this Texas bill can reduce housing costs

Streamlining permits with certified third parties can make homes more affordable

A new state law intends to streamline housing permits and decrease cost. The legislation that will take effect on Sept. 1 allows builders to look for architects or engineers to review their plans 15 days after a municipality has failed to respond.

By Nicole Nosek

Dallas Morning News

On Sept. 1, a new state law, House Bill 14, will go into effect. This bill, which passed the Legislature with bipartisan support, will streamline housing permits and pave the way for reducing home prices. In fact, this legislation will potentially slash final home prices for Texans by 5% to 25% in cities like Austin and Dallas, as suggested by a University of Texas study.

HB 14 is intended to speed up the permitting process for home construction to shave housing costs. The homebuilding process has been burdened with frustrating bureaucratic delays, which add needless costs to building a home. For example, site plan review, a crucial pre-building application process, takes an average of 1 to 2 years in Austin and 5 to 6 months in Dallas.

How do these delays add to the final price tag of a home? The same study demonstrated that the overhead, workers on site, land use consultants and idle capital add up to 5% to the final price of a home for every 3.5 months of delay.

Plainly put, time is money. But now, with HB 14 in place, if a municipal or county permit reviewer fails to issue a permit within the required timeframe to do so, homeowners or builders can seek an answer to site plan review from certified engineers or architects, after 15 days of the city’s failure to respond in a timely fashion to the required deadline. This streamlined approach will allow builders to proceed faster and avoid the costs associated with delays, thereby leading to cost savings for consumers.

Beyond just affordability, this process also prioritizes safety. Texas cities and counties are typically protected through sovereign immunity, meaning they can’t be sued for issuing unsafe decisions in their permitting process. For example, Fort Worth city inspectors are immune from almost all of their mistakes. This is in stark contrast to third-party inspectors in HB 14 because the bill allows legal recourse against third-party architects or engineers if they approve unsafe homebuilding projects.

Texas has been a true champion in attracting top companies from across the U.S., thanks in part to its lower cost of living and lower housing costs compared to states like California. A Hoover Report detailed the top reasons businesses moved away from California to Texas and Florida. Two of the top reasons were, unsurprisingly, housing costs and cost of living. Nearly 50% of Texans are spending more than one-third of their income on housing, which puts the economic success and quality of life advantage of Texas cities like Austin and Dallas at risk if Texas does not act to encourage housing affordability. The importance of housing costs is illustrated by significant business decisions like that of Placid, a company which recently reversed its decision to move to Dallas and instead invested $66 million in Louisiana, citing lower housing costs as a key factor in their decision.

HB 14 presents a unique opportunity for cities and counties in Texas to address the housing affordability challenge head-on by cutting costs through the more efficient permitting of homes. By streamlining permitting processes, Texas paves the way for a brighter future where Texans can live in reasonably priced homes. Texas’ economy will then continue to grow, keeping it as the leading job producer in the country. While there is a lot more Texas can and should do to address housing costs, cities have the opportunity in HB 14 to make housing costs more manageable right now. It is now up to each city to make sure that HB 14 is fully utilized to avoid needless delays in permitting, so that substantial cost savings can be passed on to Texas homebuyers.

Nicole Nosek is the chair of Texans for Reasonable Solutions, a public policy nonprofit. She wrote this column for The Dallas Morning News.

Source: How this Texas bill can reduce housing costs (dallasnews.com)

Austin is copying Houston's playbook for making housing more affordable

Business Insider

by Eliza Relman

• Demand for housing in Austin, Texas has outstripped even its relatively rapid housing production. 

• But the city council recently passed a resolution that would allow more dense housing construction. 

• Pro-housing advocates say it's a big step in the right direction and could be part of a larger shift in Texas.

Austin is suffering from a rapidly worsening housing crisis, but a recent move by the city's government to push for denser building could finally bring relief from skyrocketing costs.

Demand for housing in Austin has surged over the last decade, fueled in large part by the movement of major tech companies, including Apple, Amazon, and Tesla, into the city. Median home prices in Austin more than doubled between 2011 and 2021 and the city is now among the least affordable in the country. 

The capital city has built a significant amount of new housing in recent years, but its restrictive land use laws have prevented it from building enough, said Jenny Schuetz, an expert on urban economics and housing policy at the Brookings Institute.

"They've also had just huge amounts of in-migration in the last couple of years, and so the population growth has overwhelmed the supply response," Schuetz told Insider. 

But the city government is making a new push for building even more housing. The Austin city council last month approved a resolution that cuts the minimum lot size for a single-family home from 5,750 square feet to 2,500 square feet and allows at least three homes on a single lot. 

Austin's upzoning measures are designed to incentivize "gentle density" — also known as infill housing or missing-middle housing. They would allow townhomes, duplexes, and triplexes to be built on single-family lots, offering denser, more diverse housing options. 

Reducing minimum lot sizes has worked elsewhere in Texas to boost housing construction. Houston has significantly increased its housing supply since cutting its minimum home lot size from 5,000 to 1,400 square feet in 1998. The policy change has allowed almost 80,000 new homes to be built on these smaller lots.

"The Austin resolution draws important lessons from the Houston case that small lot single-family is something that's proven to work well for homebuyers and home builders," Emily Hamilton, a housing researcher at the  Mercatus Center at George Mason University, told Insider.

"You can feel the changing tides here," Nicole Nabulsi Nosek, board chair of Texans for Reasonable Solutions, told Insider. "People have come around to the fact that they're either leaving or they know that their own kids aren't going to be able to buy a home if things don't change. And even if you don't care about housing policy, you are feeling this in a very intimate way."

Austin's pro-housing lawmakers have had a few other recent wins, including ending the city's mandates requiring a certain amount of parking spots be built with every new home, and cut back on some limits on taller buildings being constructed next to single-family homes.

"It would have been great if this had happened many years ago, but it's definitely better late than never," Greg Anderson, director of community affairs at Austin Habitat for Humanity, told Insider."This is definitely going to move the needle and allow for a lot more folks to live in high-opportunity areas." 

Still, the work's not over yet. Austin's city manager has to review the resolution's details, including building heights and how much green space there needs to be surrounding homes. And there's always the threat of lawsuits. Last year, an appeals court sided with a group of homeowners that sued the city, arguing that it didn't properly notify landowners about code changes that would have allowed more housing. 

'Spreading like wildfire'

State lawmakers are also starting to consider similar moves, but there's a rocky road ahead. 

In May, the Texas state senate passed bipartisan legislation to limit minimum lot sizes to 1,400 square feet. It later died in the state House, but advocates are hopeful it will pass in a future session. 

"There's an awakening of importance to the issue of housing at the Capitol," Anderson said. "Step one is to realize that there's a problem. Step two is to start looking for solutions. And that conversation is growing pretty fast." 

At the same time, both Democrats and Republicans squashed other pro-housing legislation, including a bill that would have loosened restrictions on the construction of accessory dwelling units, which are secondary units on the lot of a primary home.

Still, Nosek argued that the bipartisan push behind the pro-housing efforts is a promising sign. She says state lawmakers are increasingly seeing the housing crisis as a threat to Texas' economy and ability to continue attracting new businesses and residents, many of whom were drawn to Texas by its affordability. 

"There's a very tangible economic cost — that I think that the legislature is understanding — by not adjusting their land use laws," Nosek said. "If we don't turn this ship around, the very thing that is driving the exodus from California I think will beset Texas." 

Most recently, Dallas city Council member Chad West is leading the charge to consider cutting minimum lot sizes in his city. 

"It feels like good policy is catching on — it's spreading like wildfire here in Texas," Nosek said. 

Source: Austin Housing Market: New Zoning Laws Could Make City More Affordable (businessinsider.com)

Y’all-itics: Is there a solution to the Texas housing crisis?

by Michael McCardel

WFAA

What if saying “yes” more solved the housing crisis in Texas?

A growing movement argues that those three letters can lead to more supply and lower prices.

The idea is to make it much easier to build by removing red tape, from minimum lot size requirements to single-family zoning to easing local land use laws.

“In overly regulated markets compared to moderately regulated markets, 45% less projects will get off the ground,” Nicole Nosek told us on Y’all-itics. “45% less housing supply will not be there if there’s all of these insane regulations that make it so a developer or an affordable housing company goes, you know, I wanted to build in Austin, but we don’t even know whether we’re going to get our permits within three to four years and our capital will be tied up.”

Nicole Nosek is the chair of Texans for Reasonable Solutions.

The group says its goal is find common sense solutions for problems facing Texans every day. And during the 2023 legislative session, it focused on the housing crisis, calling it the greatest challenge of Texas’ time.

Nosek points to Austin as an example of onerous regulations that make it easy for governments to slow roll projects, or for citizens to destroy them altogether.

“20% of the people within 200-feet of where they’re trying to upzone, that’s when you’re trying to add more units, can kill the project,” she said. “So, if you live 200-feet away, you could decide you don’t want to add 20 more units to something blocks away from you that would ultimately be housing for a senior citizen who couldn’t really afford retirement or a firefighter.”

And Nosek argues that if Texas can’t tackle this problem, the state is on a potential path to ruin.

“I really worry that we’re on the path to not only becoming like San Francisco, but possibly even becoming like Michigan, Detroit, Michigan, where it becomes somewhat of a ghost town,” she said. “I don’t think that will happen in the next five years. But if we continue on this trajectory, it could be a 15-20 year thing…”

There were several bills filed during the legislative session attempting to address the housing crisis in Texas. Few survived. Listen to the full episode of Y’all-itics to learn how supporters say they would help… and why they failed, including what Nosek describes as a “misinformation campaign” on the floor of the Texas House. Cheers!

Source: https://youtu.be/i5hoFsHMl-U?si=yK3IX8Ej0IQqnQaE