Affordability for Texas Renters Declining Faster than the National Average — Threatening Economic Growth and Opportunity for the State
(Austin, TX) – RealEstateRama – Last week, the Texas Affiliation of Affordable Housing Providers (TAAHP), held its annual Market Outlook for Affordable Housing at the AT&T Conference Center in Austin. The event included several presentations that began with Texas A&M Real Estate Center’s Dr. Jorge Barro, PhD, who discussed the demand for affordable housing in Texas. His presentation was followed by a panel of national lenders discussing the outlook for equity investments and a panel of housing authorities and housing finance corporations discussing the state of financing for affordable housing and the impacts of legislation on tax exemptions as a tool for housing affordability in Texas.
According to Dr. Barro, Texas is currently experiencing a significant decline in rental affordability, worsening faster than the national average, and threatening the economic viability and opportunities for its residents.
As area housing costs continue to rise, demand for affordable housing is surging alongside Texas’s booming population, which has grown by approximately 9 percent since 2018—more than double the U.S. average of just over 4 percent. This growth is concentrated mainly in the suburban areas of Dallas, Houston, and the Austin-San Antonio corridor.
Meanwhile, the supply of both unsubsidized, naturally occurring affordable housing and aging income-restricted properties are being replaced by high-cost market-rate properties. Additionally, development of new affordable housing is slowing due to market forces and an increasingly difficult regulatory environment. The share of low-income renters in Texas facing a rent-to-income ratio that exceeds one-third of their income has increased by 5 percentage points since 2017, surpassing national averages. This crisis is especially pronounced in North Dallas, Travis, Williamson, and Fort Bend counties, where affordability has become a pressing issue.
Market and Regulatory forces are contributing to the slowdown in delivering additional affordable housing:
- Development and Financing Costs: The market for Housing Tax Credits (a significant source of equity for affordable housing finance) is currently pricing at an average of 83 cents on the dollar, down nearly 13% from a peak average of 95 cents in 2022. Although the Big Beautiful Bill provided an increase in the number of housing tax credits allocated to each state, market demand has declined due to high interest rates, rising construction costs, regulatory barriers, and market uncertainty, thereby putting more downward pressure on housing tax credit pricing.
- Investor Caution: Investors are becoming increasingly selective in choosing developments, focusing on liquidity and the track record of developers. This cautious approach makes it harder for developers to secure financing that allows them to keep rental prices below the target of 30% of a household’s income.
- Regulatory Challenges: Recent Texas legislation aimed at tax exemptions for affordable housing (one of the few ways to fund affordable housing in the state) has reduced access to a vital funding tool. These tax exemptions provide essential liquidity for investors amid rising construction costs and declining housing tax credit pricing. House Bill 21, authored by Representative Gary Gates, has led to uncertainty for Housing Finance Corporations, halting their development pipelines and ability to serve the growing population in need. Industry leaders stress the need for predictable, reasonable regulations and the importance of honoring contracts to uphold Texas’s reputation as a business-friendly state.
As the state continues to grow and attract new industries, addressing the affordable housing crisis is a crucial component to Texas’ ability retain jobs. Lawmakers must collaborate with the private sector to develop policies that incentivize the construction of affordable housing, particularly for seniors, veterans and essential workers such as teachers, healthcare professionals, childcare workers, and retail employees among others, ensuring they have a quality, safe place to live as they contribute to the state’s economic prosperity.
Key Takeaways:
- Texas has experienced about 9% population growth since 2018, more than double the US average of just over 4%, mainly concentrated in suburbs of Dallas, Houston, and the Austin-San Antonio corridor.
- The share of housing cost-burdened households with rent exceeding one-third of income rose by 5 percentage points since 2017, surpassing national averages and concentrating in North Dallas, Travis, Williamson, and Fort Bend counties.
- Texas faces a troubling rent-to-income ratio that is significantly worse than the national average, particularly for those households earning less than $35,000 per year.
- Texas lawmakers’ focus on providing tax relief for homeowners as a method of addressing housing affordability has not included nearly half of state residents who currently rent and live paycheck-to-paycheck with no real pathway to homeownership.
- Recent Texas legislation slows the development of essential affordable rental housing that helps to stabilize rent growth in order to rebuild the natural pipeline of future homeowners.
Effective Policy Solutions
- Increase funding for Texas’ new State Housing Tax Credit.
- Protect the use of tax exemptions as an important tool for local governments to deliver the affordable housing necessary to maintain and improve the vitality of their communities.
- Reduce regulatory burdens that decrease investor appetite and add unnecessary time and money to the cost of affordable housing development and management.
For more information and access to subject matter experts for interviews, contact Naomi Bludworth, TAAHP Deputy Executive and Communications Director, at ">
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About the Texas Affiliation of Affordable Housing Providers (TAAHP)
The Texas Affiliation of Affordable Housing Providers (TAAHP) is a non-profit trade association serving affordable housing industry providers. TAAHP works to increase the supply and quality of affordable housing for Texans with limited incomes and special needs. Founded in 1997, TAAHP is considered the “Voice of Affordable Housing in Texas,” and represents housing industry professionals involved in the financing, design, development, and management of affordable housing communities in Texas through public/private partnerships. TAAHP members produce tens of thousands of award-winning affordable housing communities with state-of-the-art designs, amenities, and resident services. For more information, visit www.taahp.org.
