The recent call to use the Gulfton neighborhood as a poster
child for imposing city-wide zoning (“I'm an urban planning expert from
Houston. It's time we talk about zoning again.” Houston Chronicle 8/1/25) is
the latest verse in a seductive but dangerous song. Words like “planning” and
“zoning” poll well because they offer a vague cure-all for the complexities of
a dynamic city. It’s an understandable impulse, but it’s a trap—a classic case
of the “grass is always greener” fallacy, where a theoretical, perfect version
of zoning is imagined, while the grim reality of its failures elsewhere is
ignored.
Before we consider dismantling the very system that has made
Houston a beacon of opportunity, we must take an honest account of what that
system delivers. Houston’s status as one of America’s most affordable and
dynamic major cities is the direct result of our unique light regulatory touch.
Our ability to build new housing at a rate reportedly up to 14 times that of
our zoned peers is the core of our success. This is why Houston largely avoided
the catastrophic housing bubbles that devastated other regions and why our home
price-to-income ratio remains the envy of the nation.
The contrast with heavily zoned cities is stark. While Texas has
approximately 90 homeless individuals per 100,000 residents, California’s rate
is nearly five times higher, fueled by a regulatory crisis that can push the
cost of a single “affordable” housing unit to over $500,000. Houston
prioritizes building, which results in a higher standard of living for those
with resources and more humane options for those without.
A critical part of our success has been smart, inner-loop
densification, unleashed by pragmatic lot-size reforms. The resulting townhome
boom created tens of thousands of new homes, the very “missing middle” housing
that has effectively become illegal to build in most American cities. On
expensive urban land that, under a restrictive zoning regime, would either
become a massive McMansion or remain blighted, Houston gets thousands of new
homes affordable to middle-income families.
The city-wide zoning now being contemplated, using Gulfton as an
example, is a recipe for exclusion. It would hand a powerful tool to NIMBYs all
over the city to kill development and force stagnation. This isn’t a guess;
it’s the lived reality of every major zoned city, where restrictions choke
supply, drive up prices, and displace the very people they claim to protect.
Furthermore, this push, like the recent attempt to create so-called
“conservation districts,” is an undemocratic end-run around the City Charter
and the will of Houston voters, who have decisively rejected zoning three
separate times.
The choice is not between chaos and zoning. Houston is not
“unplanned”; it is largely privately planned through a robust system of
voluntary deed restrictions. This provides the best of both worlds: neighbors
who want zoning-like protections can have them, while the city as a whole can
grow and adapt. For specific conflicts, we use surgical tools like buffering
ordinances, not a sledgehammer.
Cities across America are now desperately trying to liberalize
their land-use rules to achieve a fraction of the affordability and dynamism we
take for granted. For Houston to voluntarily inflict this self-destructive
disease upon itself would be a historic tragedy. We are the model other cities
are trying to emulate. Let’s not break what works.
Tory Gattis is the editor of the Houston Strategies blog and a Founding Senior Fellow with the Urban Reform Institute.
Texas Just Launched a Four-Pronged Attack on the Housing Crisis
This legislative session has culminated in a landmark victory for property rights and housing affordability in Texas. Thanks to the tireless work of advocacy groups like Texans for Reasonable Solutions, which championed this entire suite of bills, Governor Abbott has now signed four powerful pieces of legislation that represent the most significant pro-housing reform the state has seen in decades. This isn't a single, timid step; it's a coordinated, multi-front assault on the regulatory red tape that has driven up housing costs and limited options for Texas families.
For years, we've watched major Texas metros grapple with an affordability crisis born not of scarcity of land or lack of demand, but of an ever-growing thicket of municipal ordinances. These four new laws—HB 24, SB 840, SB 2477, and the capstone bill, SB 15—take direct aim at the root of the problem: artificial constraints on supply. Let's break down each of these strategic wins.
1. HB 24: Ending the "Tyrant's Veto"
One of the most pernicious, anti-growth mechanisms in Texas zoning has been the "protest-by-a-small-minority" rule, rightly dubbed the "tyrant's veto." Under the old law, if owners of just 20% of the land area near a proposed zoning change objected, it triggered a supermajority vote (three-fourths) of the city council for approval. This gave a handful of NIMBY ("Not In My Back Yard") neighbors disproportionate power to block new housing projects that a simple majority of elected officials, and likely the community at large, supported.
Championed by Rep. Dustin Burrows and Sen. Bryan Hughes, HB 24 fundamentally restores fairness to the process. The bill targets the most common use of the veto by raising the protest threshold for adjacent property owners to 60% and, crucially, removes the supermajority requirement for those protests.
The result: A small group of opponents can no longer single-handedly kill beneficial projects. This strengthens property rights for landowners who wish to develop housing and empowers city councils to make decisions for the good of the entire city, not just a vocal few.
2. SB 840: Turning Underused Commercial Strips into Homes
Drive through any major Texas city, and you'll see them: aging, half-empty strip malls, vast parking lots, and underutilized commercial corridors. This is what I call "greyfield" land—already developed and served by infrastructure, yet failing to meet its economic potential. SB 840, led by Sen. Bryan Hughes and Rep. Cole Hefner, provides a powerful tool for recycling this land into something far more valuable: housing.
The bill allows residential and mixed-use housing to be built by-right on land zoned for commercial or retail use in Texas's largest cities. This means developers can bypass the lengthy, expensive, and uncertain rezoning process to build multifamily or mixed-use projects. The law builds on the stunning success of similar reforms in Florida, which saw over 15,000 housing units approved in its first year.
The impact is threefold: It unlocks a massive supply of land for infill development, which reduces sprawl and conserves precious farmland. It puts downward pressure on rents by increasing the housing supply where it's needed most. And it revitalizes unproductive commercial areas, turning them into vibrant, walkable neighborhoods.
3. SB 2477: Unlocking Empty Offices for Housing
The post-pandemic world has left Texas cities with millions of square feet of vacant office space. Houston and Dallas have some of the highest office vacancy rates in the nation. This is not a cyclical dip; it's a structural shift. SB 2477, from Sen. Paul Bettencourt and Rep. Jared Patterson, offers a common-sense solution: let people live there.
Much like SB 840, this law legalizes the conversion of vacant office buildings into residential housing by-right. It streamlines the process by waiving costly and often unnecessary requirements like traffic impact analyses and new parking minimums that were designed for a commercial-use building, not a residential one. With polls showing 71% of Texans support this idea, it's a clear policy winner.
This is the definition of sustainable growth—recycling existing structures to meet a critical need without using an inch of open space.
4. SB 15: The Starter Home Revolution
The final and perhaps most crucial piece of the puzzle is SB 15. With an overwhelming 90% of Texans viewing housing costs as a problem, the need for more attainable options is undeniable. For decades, many cities have used large-lot zoning requirements as a tool to mandate low-density, high-cost housing, effectively outlawing the construction of more affordable "starter" homes.
SB 15 takes direct aim at this exclusionary practice. In Texas's largest cities (150K+ population in counties of 300K+), the law now limits a city's ability to impose a minimum lot size greater than 1,400 square feet in new subdivisions. It also reigns in excessive setback, height, and bulk rules for these smaller lots, giving builders the flexibility to provide a wider range of housing products.
We don't have to guess at the results. Houston’s pioneering 1998 reform provides a real-world case study, resulting in a boom in townhomes that in 2021 averaged just $310,000 compared to $545,000 for traditional single-family homes. Analysis shows the potential is enormous: Dallas could add over 120,000 starter homes and Fort Worth could add 26,000 on available land under the new rules. This is the kind of sustainable, market-driven solution that encourages infill development, conserves farmland, and boosts tax revenue per acre.
A New Era for Texas Housing
Individually, each of these bills is a significant victory. Together, they represent a paradigm shift. The Texas Legislature and Governor Abbott have sent a clear message: the state will no longer allow arcane local regulations to stand in the way of housing production. By neutralizing the NIMBY veto, unlocking underutilized properties for residential use, and allowing the market to build the smaller, more affordable homes that Texans clearly want, this legislative session has laid the foundation for a more prosperous and affordable future for our state.
Houston Still #1, And Why Bad Planning Hurts (Elsewhere)
Just a few quick items that have crossed the screen recently, reinforcing some long-held Houston Strategies principles:
Houston: Still Drawing a Crowd
First up, no surprise to those of us living here, but Houston has once again topped Penske's list of America's top moving destinations for 2024. CultureMap highlighted the news, noting this is the fourth consecutive year Houston has held the top spot. People are voting with their feet, and they're choosing Houston. Why? The familiar reasons resonate: job opportunities, a reasonable cost of living (especially compared to those "cool" coastal cities), and the ability to find more space. It seems the fundamentals still matter.
The High Price of "Planning" Utopia
Speaking of that reasonable cost of living, particularly in housing, the just-released 2025 Demographia International Housing Affordability report continues to lay bare the consequences of restrictive land-use planning. Year after year, Wendell Cox over at Demographia points out that a major driver of housing unaffordability globally is policies that try to force density and limit the expansion of housing on the urban fringe. These "smart growth" or "urban containment" strategies, while perhaps well-intentioned in some abstract sense, consistently lead to skyrocketing land costs and, consequently, housing prices that push ordinary families out. They create artificial scarcity. Houston is at a house-price-to-income ratio of 4.3, which is one of the most affordable in the country, especially for a high-growth city.
Pure gold excerpt on Planning and Portland
This brings me to a truly pure gold excerpt I saw recently from Randal O'Toole, The Antiplanner, discussing the failures of Portland's Metro 2040 plan. It's a long piece, but this part cuts to the chase (emphasis mine):
"The 1995 Future Vision called for “housing affordable for all,” “accessible employment centers throughout the region,” “equitable economic progress,” “public safety,” and reductions in poverty. By all of these measures, the region is worse today than it was in 1997, and this decline is almost entirely due to Metro’s 2040 plan. ....
The real problem is that planners can’t accurately foresee the future, so instead of planning for the future they plan for the past. Instead of helping people obtain the future they want, planners become so enamored with their plans that they persuade themselves that coercive tools such as restrictions on things that people want and subsidies for things that people don’t want are all good ideas.
This is why I am an Antiplanner. Planners get so caught up in their fantasies that they completely ignore reality when it is staring them in the face. Even when it is clear that their plans have failed — that “growing up not out” hasn’t made housing affordable, that building more light rail hasn’t gotten people out of their cars — they keep on doing the same thing. Metro, for example, continues to subsidize high-density housing projects and is busy planning at least two more light-rail lines."
Read that again. Decades of top-down planning, restricting what people actually want (like single-family homes with a yard, or the ability to drive their own car efficiently) and subsidizing what they don't, has led to the opposite of its stated goals. Housing is less affordable, and mobility can be worse despite billions spent on transit modes few choose to use for most trips.
Houston, for all its imperfections, has largely avoided this kind of ideological, restrictive planning when it comes to land use. Our "plan" has largely been to allow the market to respond to demand. And what do you know? We're a top destination for people seeking opportunity and a better quality of life, with housing that, while not immune to national trends, remains far more attainable than in heavily regulated, "planner-paradise" metros. Coincidence? I think not.
Whitmire = Bob Lanier, Vision Zero doesn't work, people prefer sprawl over walkability, and more
Clearing more from the smaller items backlog this week:
This Texas Observer piece on Houston's northside is so scattershot and random and socialist/left-wing biased it's hard to know where to start. Houston is bad because... it has gentrification, inequality, racial tensions, and suburbanization/sprawl like every other city in America?? Because it has the most affordable housing among the nation's major metros, but not affordable enough for the very poorest populations??
At the end, he calls for communities to control their own fate vs. developers, but isn't that what every other over-zoned and over-regulated city in the country has done resulting in a massive national housing affordability crisis?? The fact is that we called it right when we said Houston had the right formula for housing supply and affordability, and the rest of country is finally catching up to that. This incoherent, woke, down-with-capitalism/free-markets rant adds nothing helpful to the conversation.
While walkable neighborhoods like Clarendon offer convenience, they can be expensive and lack living space compared to suburban "sprawl."
Despite the benefits of walkable neighborhoods, surveys show that many Americans prefer the spaciousness of suburban sprawl, especially older, less-educated, and Republican-leaning individuals.
'This seems to be the basic pattern of vision zero plans across the country: impose a bunch of auto-hostile policies, ignore the fact that they don’t work, and then blame others when fatalities rise. As Lewis & Clark law professor Jack Bogdanski says, “the bureaucrats are great at spending money to make life miserable for people who drive cars, but they don’t bother to see if any of their spending actually makes any difference in improving traffic safety.”'
I got quoted! 'In many ways Whitmire is, in the words of longtime Houston blogger Tory Gattis, “the second incarnation of Bob Lanier: focused on running a good city, not caught up in the urbanist dogma"...Apparently, Bayou City voters aren’t chomping at the bit to see their city become the next Portland.” From "These Mayors Understand How to Run a City" in the City Journal.
Minimum Lot Size Reforms big win for Houston, AI-resistant HTX economy, 'Abundance' and Housing, and Cloud Streets!
Life has been busy and I haven't posted in a while, so the smaller items have gotten backlogged:
Abundance and Housing: Ezra Klein has a new book out called "Abundance," and Evan covered it at Houstonia. The core idea is that we need more of things – housing, clean energy, etc. – and that often means overcoming local opposition and regulatory hurdles. Sounds familiar, right? Houston's approach, particularly on housing, often feels like a practical application of this "abundance" mindset compared to more restrictive cities. Separately, Evan notes the interesting political dynamic where YIMBYism (Yes In My Backyard) focused on housing abundance is finding allies across the traditional political spectrum, driven by the sheer need for more housing.
Minimum Lot Size Reforms: Speaking of housing abundance, the Pew Trusts did an analysis last year highlighting Houston's success with minimum lot size reform. They found it significantly unlocked affordable homeownership opportunities. Key takeaways include that these reforms allowed for thousands of new, more affordable homes closer to job centers without subsidies, providing a market-driven solution to affordability challenges. It's a prime example of how lighter regulations can yield positive results. Some key points:
The reform led to the construction of over 34,000 townhouses from 2007-2020, mostly on commercial, industrial, or multifamily properties.
The resulting townhouses provided more affordable family-sized housing in the urban core compared to other new homes.
The townhouses were larger than the single-family homes they replaced, offering more living space.
The increased housing supply did not lead to displacement of Black and Hispanic residents; instead, Houston saw population growth in these demographics.
An opt-out provision (block votes) helped minimize opposition to the reform but also limited development in some areas.
Houston's experience shows land-use reforms can spur housing, offer affordable options, and limit displacement.
Houston: AI-Resistant, Educated, and Affordable? An interesting academic paper analyzing metropolitan areas based on education levels, exposure to AI disruption, and housing costs puts Houston in a very strong position. According to the analysis (Table 5.1, p.23 of this SSRN paper, also mentioned in the NY Times), Houston stands out. Among large metros with high education, low AI job exposure, and affordable housing, Houston is by far the largest (7.5 million population vs. 1.5 million for the next largest). This suggests Houston may be uniquely positioned for resilience and growth in the coming AI-driven economic shifts.
Cloud Streets! On a final lighter note, Space City Weather was kind enough to post some cool "cloud street" photos I took during some interesting weather patterns. They were pretty cool and like nothing I've seen before.
Redeveloping the old Days Inn downtown, METRO needs to learn from Denver's failures, Texas' boom, and more
A few smaller items this week...
The Chronicle examines what's up with the abandoned shell of the old Days Inn high rise hotel downtown. TL,DR: it's uneconomic to do anything with it, esp. with low ceilings. I’ve hoped to see it redeveloped for a very long time. I always thought the best use was an off-campus student dorm for Rice and UH students, with rail access to both campuses. But I understand what they’re saying about the math not working, especially at these high interest rates, which would need to dramatically come down. Hat tip to Rich.
A simple solution to help Houston traffic, our tax-debt-spend problem, HSR bankrupted Japan, Austin builds towards affordability, METRO comedy!
Just a few small items this week:
Charles Blain in City Journal: Saddled With Taxes and Debt - Houston-area leadership is losing touch with the fiscal restraint and pragmatism that made the city an engine of growth.
"I worried from afar that my hometown would meet the same fate as San Francisco, the poster child of the housing shortage and all its associated woes. I feared that Austin would become known as a playground for the rich, a city where displacement and mind-boggling home prices marred the natural beauty that once made it such a draw. In my hand-wringing, though, I'd overlooked one crucial detail: Texas is better at building homes than almost anywhere else in the country.”
There are differences between Austin (and Texas) and San Francisco that, if not changed will continue to make it possible to build in Austin (and Texas) and nearly impossible in San Francisco (and California). Unincorporated county territory in Texas is unzoned. That means that, barring environmental difficulties, developers and builders can build. By contrast, in the San Francisco metro, and virtually all of California, draconian state and local regulations make it very difficult to build on greenfield sites, where land prices would be much lower if the market were permitted to operate."
Caught my eye from Y-Combinator Demo day: XTraffic
What it does: Reduces congestion and accidents with smart traffic lights
Why it’s a fave: Controlling traffic lights with AI sounds like the perfect application of this technology. XTraffic says that it’s already doing it in several cities in Texas. I hope they make it to my town in California, too, because I sure am tired of waiting for the light to turn green when there are no other cars around.
"I would be the first to argue that if an economist claims to know of a cure-all policy — a reliable way to relieve a long list of social ills in one fell swoop — common sense tells you to stop listening.
So it is awkward for me to declare that I know of something close to a panacea policy: one big reform that would raise living standards, reduce wealth inequality, increase productivity, raise social mobility, help struggling men without college degrees, clean the planet and raise birth rates. It’s a sweeping reform that Democrats and Republicans, progressives and conservatives could all proudly support.
The panacea policy I have in mind is housing deregulation. Research confirms that there are large benefits in saying yes to tall buildings, yes to multifamily structures, yes to dense single-family development and yes to speedy permitting. The growing YIMBY (Yes In My Backyard) movement already has high-profile wins in Minnesota, Oregon, California and beyond, but even YIMBY devotees rarely appreciate the scope of the merits of loosening rules on housing.
The economic argument for housing deregulation rests on basic supply and demand principles: allowing more construction leads to lower prices. This is evident in historical data, showing that housing prices were relatively stable before stricter regulations in the 1970s, while rising significantly afterwards.
Housing deregulation would directly improve the standard of living by significantly lowering housing costs, which currently represent a significant portion of the average American's budget.
The distributional effects of deregulation would be impactful in reducing wealth inequality, as rising home values have been a key driver of the growing disparity between the rich and the poor.
Deregulation would enhance social mobility by removing barriers to moving to higher-wage areas. Current strict regulations often make the cost of living in such regions outweigh any potential wage gains, discouraging relocation for many.
Deregulation would create numerous job opportunities in the construction sector, a large and well-paying industry, particularly benefiting men without college degrees, who have faced challenges in the job market.
Environmental protection is a common rationale for restricting construction, but deregulation can actually lead to more sustainable practices by encouraging denser housing in urban areas, resulting in lower carbon emissions.
While concerns exist about homeowner resistance, the bigger obstacle to deregulation is public misunderstanding of basic economic principles, with many believing that increased housing supply will not lead to lower prices.
Neither Democrats nor Republicans have embraced housing deregulation yet. YIMBY activists lean left, but they are only one voice in the progressive coalition. Republican states usually have less housing regulation, but more from tradition than from principle. Yet, given housing deregulation’s many demonstrated benefits, this policy agenda deserves bipartisan support. Democrats should cheer the effects on equality, social mobility and the environment. Republicans should be delighted to see free markets spreading broad prosperity, creating new working-class opportunities and fostering family formation. In a rational world, the panacea policy of housing deregulation would be a done deal. Hopefully whoever wins the next election will agree."
New Zealand learns from Houston, why airport rail doesn't make sense, Tokyo vs HTX High Lines, crazy housing reforms, and more
Some more smaller items this week:
The 2024 Demographia International Housing Affordability reportThe 2024 Demographia International Housing Affordability report is out (Antiplanner discussion here). Houston is surprisingly high at a median price-to-income ratio of 4.4, but still better than other Texas Triangle metros and one of the most affordable growing metros in America (vs. the stagnant ones mainly in the Rust Belt). The more interesting note is that New Zealand's affordability is rapidly improving after adopting supply-side reforms that they learned on a visit to Houston!
Chronicle: Why isn't there a train to Houston's airports? I've made similar points on my blog: it always makes more sense to invest in work transit over airport transit. It's a ridership disaster in DFW. There used to be a fast, frequent nonstop express bus from the downtown transit center to IAH but they shut it down from low demand. ~1-2 riders per bus, which is why even slower multi-billion$ LRT there is a massively bad investment.
"Now count how many times you go to the airport versus how many times you drive or take a bus to the office.
“Even if they use the train for every airport trip they take, that might be eight trips a year,” Spieler said.
Business travelers, some of the most frequent fliers, meanwhile have different considerations.
“They are on expense accounts and not price-sensitive,” Spieler said."
...
Three recent rail projects to airports are illustrative, Spieler said, for how a train's service, location and the layout of the airport make a difference. In Washington, the train to Dulles Airport, which opened in 2022, gets around 2,500 boardings per day, less than half that of the train to Reagan National Airport, which is closer to the metro core but also a smaller airport. In Dallas, fewer than 1,100 riders daily hop on the train to Dallas-Fort Worth International Airport.
Here’s (NOT) the Real Reason Houston Is Going Broke
Strong Towns posted "Here’s the Real Reason Houston Is Going Broke" earlier this month, ironically on April 1st because a lot of what they said was absolutely foolish. The core of their argument is the same argument Strong Towns always makes: that sprawl is somehow fiscally unsustainable, despite it being the default form of development since Ford made the Model T for the masses with incredibly few municipal bankruptcies over that century+.
It includes this excerpt:
"That’s 37 feet of street per person, on average. I don’t know the going rate for a foot of street in Houston, but when utilities are included, it must be well into the thousands. That means that part of the wealth of each Houston resident, as collected through taxes and fees by the municipal corporation, is expected to maintain six figures worth of infrastructure. Every single person. A family of four has a generational liability of at least a half million dollars just to maintain essential infrastructure."
This is exactly the kind of hand-waving that makes me lose respect for Strong Towns: somehow 49 yards of asphalt plus a bit of water and sewer pipe is a "half-million dollar liability" for each homeowner instead of easily paid for by 30-50 years of normal property taxes for lifetime replacement?? Somehow it costs more than replacing their entire ~$300k house?? 🤔🙄
And if the suburbs packed full of homes are so uneconomic, then how is every rural county in the country not bankrupt?? They have *way* more infrastructure per person at much lower property values per acre!
The core fiscal problem is not sprawl - it's that it's too tempting for politicians to take money that should be going to infrastructure renewal and siphon it off for other programs, including police and fire raises. Kick the can to the next guy...
All I'm saying is that a bit of asphalt and pipe is a very small expense relative to the cost of building an entire house, and it is definitely affordable to replace it every 30-50 years. Whether politicians manage the taxes properly to do so is another issue...
Houston tops affordability and innovation, big US homes, Houston's winning secret sauce, and more
A few smaller items this week:
US vs European homes graphic below: "A good visual showing how huge US living spaces are compared to European. The average person below the poverty line in the US lives in more square feet of living space than the average European." (HT Michael). This is an often unsung advantage of Texas and especially Houston: not just lower home prices but how much home you get, plus the amenities of master-planned communities. But wow, those Mormons in Utah build some big homes for some big families! (click the graphic to enlarge it)
A great tweet from John Arnold: "Houston has bad weather, no natural beauty, and little history. But that’s a feature, not a bug. It means government has to be responsive to the people to create a place people and businesses want to locate. It must be efficient with taxpayer money and consider tradeoffs. It must create an ecosystem that leads to a high quality of life for its residents. Lose this focus and the city fails. There is no presumption that residents must acquiesce to the city; the city must work for the residents. Turns out there’s great demand for this concept: the city has gone from the from the 45th largest in the US to the 4th largest in 100 years. It's a simple concept but one I find wanting in many legacy cities with more natural advantages."
Houston needs this - more private operators covering suburb-to-work center routes that METRO doesn't.
Houston's affordability may not have eroded as much as you think
There has been a lot of buzz recently about Houston's decline in affordability. In addition to a sudden pandemic-induced surge of demand meeting limited supply, a lot of that decline can be attributed to mortgage interest rates moving up so much during the late pandemic, but prices have increased as well (see charts, HT Patrick). But I think there are some factors distorting that data to make our affordability decrease look larger than it actually is...
Here are the three pre vs. post-pandemic factors that I think are distorting the data:
Different types of houses being purchased: the pandemic normalized remote work and drove lots of people out of the city to far suburbs and exurbs, where they may have bought larger houses on larger plots of land than the normal pre-pandemic house profile (and fewer in-city townhomes).
Wealthier buyers: I’d guess the pandemic buyers skewed wealthier, more upper middle class, remote-friendly professions moving to larger homes in the farther suburbs and exurbs. Different buyer demographics changes the profiles of the homes being bought, which would skew the price of the median sale upwards.
Fewer first-time buyers: Much higher mortgage interest rates knock out a lot of potential first-time buyers from buying less-expensive starter homes, which skews the median home sale price higher.
As you can see, these variables can make the median home sale price an unreliable indicator of what home values are really doing in the metro. What would be more interesting would be if we could find out what those existing homes that were selling for ~$200k ten years ago are selling for now? (a more true measure of inflation in house prices) I’d bet those homes aren’t going for $320k now – probably more like mid to upper 200s. But that's data we don't have. So just take it with a grain of salt next time you see a headline about Houston's decline in home affordability...
Houston as an affordability model for other cities
Affordable housing has become a hot topic in Houston, so this might be a good time to share this excellent piece in Market Urbanism: Houston as an affordability model (Planetizen coverage). It does a great job framing Houston vs. other major metros. Key excerpts with my highlights:
"When market-oriented housing researchers point to Houston’s relatively light-touch land use regulations as a model for other U.S. localities to learn from, its declining affordability may cause skepticism. Houston, however, has fared better than many other cities in housing affordability for both renters and homebuyers.
While Houston is the only major U.S. city without use zoning, it does have land use regulations that appear in zoning ordinances elsewhere, including minimum lot size, setback, and parking requirements. These rules drive up the minimum cost of building housing in Houston. However, Houston has been a nationwide leader in reforming these exclusionary rules over the past 25 years. Houston policymakers have enacted rule changes to enable small-lot development and, in parts of the city, they have eliminated parking requirements. In part as a result, Houston’s affordability is impressive compared to peer regions....
At the least-well-off end of the income spectrum, Houston has the lowest rate of homelessness among major U.S. cities, due in part to its relative abundance of housing and in part to well-administered public and nonprofit services for formerly homeless residents.
"Houston has the lowest share of cost-burdened renter households among comparable Sun Belt markets for households earning 81% to 100% of the area median income."
"Houston's homeownership is also more attainable to residents earning the region's median income compared to the same group of Sun Belt metros shown in the chart."
"More than 25,000 establishments relocated to Texas from 2010 to 2019, bringing more than 281,000 jobs with them and resulting in a gain of nearly 103,000 jobs for the state, data compiled by the Federal Reserve Bank shows.
The report said Texas appeals to relocating businesses for a variety of reasons, including its central location in the continental U.S., access to multiple large cities and business-friendly environment...
However, research from the Federal Reserve Bank of Dallas found that attractive economic fundamentals — like low taxes, low regulations, a growing population, a relatively lower cost of living and less union activity — are far more important than incentive packages when businesses make location and expansion decisions."
Salim Furth at Mercatus: "How much are #Houston's different lot sizes in different eras showing up in real houses for real people? Here are single family houses built in the 22 years before reform, and the 22 years after - same scale." When minimum lot sizes shrank, a whole lot more small-lot houses got built because that's what the market wanted.
"Founded in Houston, Cart moved its headquarters to Austin in 2021, only to return to Houston in November.
The company moved to Austin to hire software developers, says co-founder Remington Tonar. But Cart is a logistics company as well as an e-commerce services provider, and its leaders found the company’s rapid growth required a bigger city with a larger and more diverse talent pool, including skills that go beyond just software development.
“If I’m looking for front-end software devs who can build beautiful tools to perform one task, a place like San Fran or Austin may be better,” says Tonar. “But if I need people who can integrate digital and physical systems, Houston is a lot more attractive, because people are coming out of logistics and energy.”
The social and political ramifications of unaffordable housing
Due to over-zealous NIMBY housing regulations all around the world, housing is becoming increasingly unaffordable to younger generations (graph below, hat tip to Jay). That is leading to more and more young adults living with their parents rather than moving out on their own (2nd graph below, also hat tip to Jay). The NYT has a story today: "‘The Social Contract Has Been Completely Ruptured’: Ireland’s Housing Crisis - Soaring rents have left many struggling to afford homes in Dublin and have created a generational divide. Two-thirds of younger adults in the city live with their parents." (no-paywall link)
More anecdotally I've seen the same situation on my visits to California: houses with a half-dozen vehicles parked out front as adult children live with their parents.
A lot of this is well known, but what hasn't been discussed are the third-order impacts. First is a flaky workforce, since they don't have to pay rent. Stories abound in California of young people quitting on a dime or even just not showing up to work or a new job when they don't feel like it (and just wait until people get free universal basic incomes!). It also creates this new political constituency for socialism: if they don't see a path to affording their own home, then their only option is getting the government to give them one. The irony is that it was government in the first place that made the housing unaffordable! It's just a complete cultural disaster unfolding in slow motion with the younger generations. And it could be avoided if we would just allow builders to build the housing the market is asking for!
"Techstars isn’t the only entity scaling back in Austin, either. In November, unicorn Cart announced that it was moving its headquarters back to Houston after relocating to Austin in late 2021. The company, which describes itself as an e-commerce-as-a-service business, reached a $1.2 billion valuation in June after raising a $60 million Series C round of funding.
Mitch Goulding, director of communications at Cart, told TechCrunch via email that the company had originally relocated its headquarters to Austin “with the explicit goal of attracting more software talent.” But as the company continues to scale (it claims to have seen its revenue climb by 9x since the end of 2021), it decided it needs to “augment other areas of the company,” including HR, finance, accounting and legal.
“We feel the move to Houston will unlock a deeper talent pool in these areas based on its position as a hub for major business,” Goulding said.
It’s also a matter of cost and convenience.
“Costs in Austin are high relative to Houston’s affordability, [and] Houston is also more accessible,” Goulding said. “It is typically easier and cheaper for employees flying in. It also tends to be easier for employees who drive in from across the state.”
"In Houston, Black-owned businesses have been thriving, with the city now rivaling Atlanta as a destination for Black families and young people.
“Everyone is coming to Houston,” said Victoria Walsh, 30, who moved from New Orleans for a restaurant job in 2018. “There’s a whole lot of jobs, a whole lot of new concepts, a new pop-up each week.”...
The city of Houston has long had thriving Black communities, but in recent years, the new arrivals have driven a kind of renaissance that is fueled, in large part, by who they are: middle-class Black people from other states with good jobs and business ideas. ...
“When you look at other cities, they’re not as diverse as Houston,” he said. “They don’t have as many opportunities.”
"Now, Houston’s transformation to an international hub for a growing number of multinational corporations — backed by one of the nation’s busiest international airports and global shipping ports — has helped propel the city to the top of the second annual FT-Nikkei Investing in America rankings. ...
That reputation has drawn in businesses both big and small. The Houston area is home to 26 Fortune 500 companies, making it the third-ranking metro area in the country. ...
The transition to green energy is helped by the knowhow that made it a centre for oil and gas. Houston boasts unrivalled technical expertise in energy, including manufacturing, engineering, trading markets, and complex industrial project management. It also has a robust energy infrastructure and the nation’s biggest port by tonnage. ...
“Increasingly, people working in the energy transition space are saying, you know, actually where the action is, is here,” says Tudor. “It’s not really San Francisco. It’s not really Boston. It’s Houston, Texas.”
Pros 👍: pleasantly surprised by Houston; plays up affordability, inner loop density, diversity, and the amazing food scene ("strong candidate for best food city in the US")
Cons 👎: bike and anti-car snob, toured Houston on bike in wonderful late October - maybe try coming in August sometime and see how bike-over-A/C'd-car you are then?... 🥵🙄 I've said it before and I'll say it again: Houston was built around the car because it's the only way to bring an air conditioner with you everywhere you go!
An open dialogue on serious strategies for making Houston a better city, as well as a coalition-builder to make them happen. All comments, email, and support welcome.
