North Texas real estate market
The metropolis of Dallas has experienced a marked increase in both its population and economic activity over recent years something that reflects on the housing affordability, a trend that also follows the Texas real estate prices. In a previous article, we explored the continual expansion of the city’s economy and the significant growth in its population during the past ten years. While economic development is generally viewed as a favorable development, it is not without its negative consequences and implications for the local residents.
This relentless economic upsurge in Dallas has manifested itself in the form of a robust employment market and escalating real estate values. In recent years, Dallas’ real estate sector has garnered immense interest from prominent property investors and entrepreneurs seeking to transform residential units into short-term accommodations, such as those offered through Airbnb and VRBO.
The burgeoning demand for real estate has resulted in increased competition for available properties, driving up prices and impacting the affordability of housing for long-term residents. That’s why local residents are now trying to force local leaders to balance the interests of Dallas long-term residents with those of real estate investors and entrepreneurs. This might soon result in an ordinance that would prohibit owners to turn their properties into Airbnb-like rentals in residential areas within Dallas’ limits.
It’s not only the Dallas metro area, Texas real estate prices are constantly going up
Undoubtedly, the Dallas-Fort Worth metropolitan region is merely a fragment of the larger conundrum that encompasses the entirety of the Texas real estate market. This burgeoning crisis necessitates the implementation of stringent policies by the state’s governing bodies, as it has far-reaching implications for the long-standing citizens of Texas. Over the past ten years, the state’s allure has expanded significantly, with Texas emerging as one of the most coveted destinations for relocation across the United States.
Historically, the trifecta of relatively low real estate prices in Texas, favorable tax conditions, and an affordable cost of living has served as the foundation of Texas’ enviable reputation. However, these very attributes have also piqued the interest of major corporations, prompting them to shift their headquarters, manufacturing plants, and various operations to the Lone Star State. Consequently, this corporate migration has played a substantial role in the escalation of Texas real estate prices in recent years.
A growing concern among Texas real estate professionals is the gradual transformation of the state’s property market, drawing parallels with the exorbitant prices witnessed in California. This apprehension stems from the relocation of numerous California-based corporations to Texas, a phenomenon that has unfolded over an extended period. As a consequence, an influx of newcomers has entered the Texan real estate market, vying with established residents for property acquisitions throughout the state.
The engine that drives economic growth can be slowed down due to housing affordability crisis
“Well, as housing costs rise, residents and that workforce are going to require to be paid differently. So, that’s going to change the dynamics of what that looks like even from a business attraction standpoint,” Steven Pedigo from the LBJ School of Public Affairs said to KHOU on Monday.
In essence, the erstwhile allure of the Lone Star State for prospective employees stemmed largely from the affordability of housing, a factor that has since shifted dramatically.
Currently, the escalating costs of housing have rendered it increasingly unattainable for numerous potential residents, encompassing both homeowners and tenants across a range of income brackets. This disconcerting reality draws uncomfortable parallels between Texas and states such as California and New York, which are notorious for their exorbitant living expenses.
According to Pedigo, this alarming development is particularly pronounced in major Texan cities such as Austin, Dallas, and Houston, which now rank among the least affordable metropolitan areas nationwide. The underlying causes of this crisis are twofold, reflecting the complex interplay of various economic and social factors.
What is Texas doing to make housing more affordable again
A team of researchers has conducted an in-depth analysis of the challenges and opportunities related to affordable housing in Texas, uncovering five critical areas that require attention. The findings emphasize the need for policy changes and dedicated resources to address the growing housing crisis in the state.
Firstly, the researchers highlighted the necessity to revise local regulations to facilitate swifter construction of new housing units. Many existing regulations have been in place for decades and are no longer pertinent to the current housing landscape. For example, minimum lot sizes in cities like Houston differ significantly from those in Dallas or Austin, which can greatly impact housing supply. Furthermore, compatibility standards, which dictate what can be built in proximity to residential areas, also play a crucial role in the availability of affordable housing.
Secondly, the study points out the inadequacy of funding dedicated to affordable housing projects. The researchers argue that the state should allocate more resources to this pressing issue and leverage government-owned land for affordable and mixed housing developments. This approach can optimize land use by utilizing assets owned by cities, school districts, community colleges, and the General Land Office.
The third challenge pertains to statewide regulations that govern affordable housing programs. The researchers assert that the award criteria for Low-Income Housing Tax Credits often obstruct deserving projects from receiving necessary funding. A review of these regulations is essential to streamline the process for developers to obtain tax credits and accelerate project implementation.
Fourth, the researchers emphasize the difficulties faced by residents in accessing existing housing support. For instance, the Housing Choice Voucher (HCV) program, aimed at assisting low-income tenants with market-rate housing costs, is often difficult to navigate. This highlights the need to improve the accessibility of such programs to better serve the intended beneficiaries.
Lastly, the researchers touch upon property tax exemptions as an area of opportunity. They argue that reduced property taxes could lead to lower sale or rental prices. However, this approach primarily benefits property owners rather than renters, who make up a significant portion of the state’s mobile, young knowledge base class.
Despite these challenges, the researchers believe that lawmakers can take immediate action to make a tangible difference. By addressing issues such as permitting and minimum lot sizes, Texas can prevent its housing crisis from escalating to the levels seen in cities like San Francisco. It is crucial that the state explores and implements effective solutions to ensure affordable housing remains accessible to all Texans.