Texas Lawmakers Took Action To Reduce Housing Costs. California is Following Their Lead. 

Across the nation, the cost of housing is amongst the most pressing issues facing Americans. As the median price of a home has doubled since 2009, many households find the American dream of homeownership to be more distant every day.  

The share of first-time homebuyers is at historic lows. This is driven by the simple fact that supply of housing has not kept up with demand in many states and cities, driving prices higher. After reaching a decades-high of 2.27 million units built in January 2006, new constructions have dramatically crashed and have failed to recover, reaching a paltry 1.82 million in April 2022.  
 
A trend that has gained traction is that of state lawmakers, in both blue and red states, seeking to repeal or ease excessive and onerous regulations that drive up the cost of housing. Regulatory roadblocks can come in many forms; coalitions of activists who block construction on land that is not on their property, excessive zoning regulations that reduces the value of any potential investment, and various government requirements on developers that reduces viable investors into the economy, amongst other actions that the government’s involvement in the market does to increase housing prices.  

In Texas, lawmakers have taken numerous steps to address this problem head-on, with a slate of bills introduced during the regular session earlier this year that were designed to increase the supply of housing in Texas.  Lieutenant Governor Dan Patrick (R), in particular, has led the charge in advancing zoning reforms that protect property rights and facilitate expansion of the housing supply.  be pivotal to ensure that the state remains competitive for years to come.  

One of the first moves the legislature made towards opening more construction was diluting the powers of activist groups that seek to stop the construction of housing. House Bill 24, introduce by Representative Angelia Orr, amended state law to raise the vote threshold required to veto the construction of housing near existing neighborhoods. A Texas law from the 1920s allowed new construction to be shut down if 20% of neighboring residents sign a petition in opposition ; HB 24 raises this threshold to 60% and further allows city councils to bypass this vote by a simple majority. This bill, signed into law by Governor Greg Abbott on June 21, passed out of the Texas Legislature with bipartisan support.  

Texas lawmakers also took action during the regular session to relax zoning laws, allow  more variety to meet different housing needs across the state. SB 840, which was also enacted during the regular session,  allows more construction of multi-family developments, allow commercial real estate to be converted into housing, and permits local governments to formulate rules to accommodate new housing as opposed to relying on the state government.  

California, on the other end of the political spectrum, has also made decisive moves to reduce regulatory burden on housing construction. As part of the annual budget, the legislature added Assembly Bill 130, which exempts a significant amount of new housing construction from the California Environmental Quality Act. This move increases the supply of housing in a state which is strangulated by regulation and also zeroes in on the problem in the state that have been apparent for a long time. With even Democrats calling the bill a “turning point”, the move to bring the free market to housing has never been stronger—marking the first step towards making the American Dream affordable again.