Scarcity of affordable housing puts pressure on Texans, says Dallas Fed report

For Immediate Release: Sept. 29, 2016

Rising costs and insufficient funding present biggest challenges for developers

DALLAS—Skyrocketing home prices and rents in many parts of the state have taken a toll on housing affordability in Texas. In fact, a third of all Texas households now spend a disproportionate share of their income on housing, according to recent Census data.

In a new report, “The Scarcity of Texas Affordable Housing,” the Federal Reserve Bank of Dallas takes an in-depth look at the issues facing developers trying to increase the supply of affordable housing in Texas.

“It’s not only low-income residents who are unable to afford safe housing in their communities—moderate-income people are also increasingly locked out of housing options,” said report author Emily Ryder Perlmeter, community development analyst. “That means teachers, retail or restaurant staff, and others often can’t afford to live in the city in which they work.”

The report uses survey data from 52 affordable-housing developers in more than two dozen counties, as well as qualitative interviews, to analyze the needs, successes and challenges they face. Among survey respondents statewide, rising expenses—including land costs and property taxes—and insufficient funding ranked among the top challenges for developers trying to increase the supply of affordable housing.

The report also takes a look at individual regions of the state to gain a clear picture of how these issues vary geographically. Among the findings:

• In North Texas, respondents cited community opposition and costs as the greatest barriers to affordable housing development.
• The Houston area has one of the highest homeowner cost-burden rates in the state; in fact, more than 10 percent of Harris County homeowners direct over 50 percent of their incomes toward housing costs.
• Austin now ranks as one of the state’s least-affordable cities, according to the Texas A&M University Real Estate Center’s Housing Affordability Index. Top-reported barriers were regulations and costs.
• The crisis of affordable housing has contributed to the proliferation of colonias in El Paso County, where an estimated 90,500 people live in substandard and unsafe conditions.

The report is part of a new Community Outlook Series, which will feature analysis on a rotating set of topics affecting low- and moderate-income families across Texas and the organizations that serve them.

Media contact:
Jennifer Chamberlain
Federal Reserve Bank of Dallas
Phone: (214) 922-6748
E-mail: jennifer.chamberlain@dal.frb.org