A decade ago, the typical Texas home value was about $181,000. Today, it’s ballooned to around $302,000. As home prices increase so too does the barrier to entry get higher. A recent study estimates it would take 7 years for a median-income Texas household to save up for a 20% down payment.
But you don’t need me to tell you that housing has gotten more expensive. We all know mortgage rates aren’t what they used to be. The price of land, labor, and construction materials have skyrocketed. Taxes are higher. Insurance is up. Even keeping the lights on costs more. And on top of all that, the state’s population continues to grow, creating unique supply and demand pressures.
This isn’t just a homebuyer’s crisis, though. When people delay purchasing a home, they tend to rent. To the extent that phenomenon is pronounced, other renters feel the downstream effects of increased competition for existing rental units and likely pay more than they otherwise would. That’s just basic economics.
And, to a degree, that scenario is happening here. Which is why we must not only bring down the cost of housing, but also do a better job of protecting renters.
New research by TPPF’s Jacob Nemit notes that half of Texas renters are spending at least 30% of their income on rent. What many renters may not realize is that taxes factor heavily into what they pay their landlord each month. The research highlights that roughly 20% of every rent dollar in Texas goes directly to paying local property taxes.
How these taxes come about is usually through massive bond packages or higher tax rates, both of which are decided by local elected officials. Yet, most renters never make the connection between local decisions and higher rent. Do you think bond proposals would still have an 82% passage rate if voters knew they were pricing them out of their apartments?
“In light of this concern, the 90th Texas Legislature should enact legislation ensuring that renters have timely and accurate information about their property tax circumstances. This detail should be specific to the renter’s address, provide a snapshot of the monthly or annual payment, and be provided with regularity,” says Nemit.
Texas doesn’t need government-mandated price controls or taxpayer-funded subsidies that fuel inflation. Just pull up Zillow listings in California and you’ll see why.
If policymakers are serious about easing the affordability crisis and cultivating a more informed electorate, they can help renters understand that they pay taxes too. Perhaps then, a hugely important voting bloc—many of whom are saving to become homeowners eventually—will be better equipped to knowledgably participate in local policy matters.
In tandem with other reforms, like simplifying zoning and dismantling the local regulatory red tape that holds back builders, voters will be empowered with options to rein in greedy local governments.
If structured properly, unleashing housing supply will naturally match demand, lower costs, and ensure that Texas remains a land of opportunity.
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