Legalizing Starter Home Subdivisions in Texas

Pro-Housing Bill of the Week: SB 15 (Texas)

Greetings from the newsletter formerly known as “M. Nolan Gray.” Creative, right? Given that I intend to put more work into this blog—and would like to occasionally host up-and-coming guest authors—I figured it deserved a proper name. All the digital marketing people in my life gave the same advice: “Name it exactly what you would like people to associate with you.” Thus, The YIMBY City Planner. Enjoy!

(Source)

As part of my PhD work over the past few years—yes, I’m still doing that—I have been collecting and cataloging YIMBY bills from across the country.¹ This work has changed in two ways:

1. The volume of bills has increased dramatically. It used to be the case that you could count the number of active YIMBY bills on one hand. Not anymore. This year, YIMBY bills are moving through nearly every state legislature. A few states are even running California-tier YIMBY bill packages.

2. The scope of these bills has increased dramatically. Six years ago, I would get excited about bills in high-cost states nudging cities to consider reforms, usually over raucous opposition. Today, even relatively affordable states are passing bills that strike at the heart of exclusionary zoning, often with little serious opposition.

I intend to eventually publish more formal research on this wave of YIMBY state legislation. But given the interest in reform today, and the glacial pace of academic publishing, I’d like to start highlighting exciting bills week-to-week. In each post, I’ll explain the problem the bill attempts to solve, how it proposes to fix it, provide notes on the politics surrounding it, and explain how you can help it pass—assuming it hasn’t already passed!²

Let’s start with SB 15 out of Texas.³ There are three stereotypes about the YIMBY movement: it is essentially a California thing, largely on the left, and almost exclusively focused on apartments. This bill bucks all three stereotypes.

Problem: Texas probably isn’t the first state you think of when you think of who needs pro-housing legislation. The state already builds a ton of housing—7.6 permits per 1,000 residents on average over the past five years. It isn’t all just low-rise sprawl: in the boom year of 2022, nearly half of the units permitted were apartments. As a result, the Lone Star State remains one of the most affordable states in the US, even after a half-decade of rapid population and income growth.

And yet, even in Texas, sustaining a low cost of living will require reform. As in much of the US, local planning departments in Texas often impose large minimum lot size mandates. The idea is simple: if you don’t have 5,000 square feet, 10,000 square feet, or a half acre of land—depending on the jurisdiction and the neighborhood—you are not allowed to build a home. In places where there is no sewer and water, this may serve a health and safety function. (You don’t want drainage fields too close to wells.) But everywhere else, they’re arbitrary, serving only to price many families out of homeownership.

If minimum lot size mandates weren’t binding, we would expect this to look more like a normal distribution. And yet, there is extreme clustering precisely at the zoned minimum lot size of 9,000 square feet. (Source)

Land accounts for roughly a third of the price of a new home. Thus, if a minimum lot size mandate forces new lots to be twice as large as what homebuyers might have preferred—say, from 2,500 to 5,000 square feet—this regulation may needlessly increase housing costs by 15 percent. In a survey of Texas suburbs, Salim Furth and I found clear evidence that minimum lot sizes have a binding effect, forcing lot sizes to be larger than they might otherwise have been—thereby pricing out many prospective homebuyers. If Texas is going to build enough housing for the next generation of homeowners, it will have to reduce minimum lot sizes.

Fun fact: One of the earliest academic papers on exclusionary zoning zeroed in on high minimum lot sizes in New Jersey for this exact reason.

Solution: In 1998, Houston reduced minimum lot sizes within the I-610 loop—broadly covering most urbanized areas of the city—from 5,000 to 1,400 square feet. As Adam Millsap and I found in an early paper on the reform, this single reform helped to drive a building boom of affordable small-lot single-family homes and townhouses, creating homeownership opportunities for over 100,000 Houston families. Subsequent papers have explored other aspects of the reform. It’s safe to say that this has probably been the most successful pro-homeownership zoning reform that a US city has ever adopted.

A quick and dirty history of minimum lot size regulations in Houston. (Source)

Last year, a coalition led by Texans for Reasonable Solutions—a local state-level pro-housing advocacy group with a delightfully unobjectionable name—tried to scale up the Houston reforms, legalizing small-lot homes in all of the state’s major cities. Naturally, it faced a lot of pushback. SB 15—sponsored by Senator Paul Bettencourt—takes a different approach, only requiring major cities—defined as cities with a population of 150,000, in counties with a population of over 300,000—to allow small-lot homes on any new greenfield subdivisions of five acres or more.⁴

A classic spot text amendment: “This subchapter does not apply to a one-mile radius from the perimeter of a campus that includes a law enforcement training center in a county that has a population of 2,600,000 or more but less than 2,700,000.”

According to an FAQ put out by Texans for Reasonable Solutions, this would increase the zoned capacity of undeveloped single-family-zoned lots in Dallas from 26,000 homes to 120,000 homes. In Fort Worth, the zoned capacity of eligible land would increase from 4,700 homes to 26,000 homes. If the experience of Houston is any indication, all of these new starter homes will do a lot to help with affordability, and not just in terms of supply: In recent years, Houston’s newly-legalized townhouses have been 43 percent more affordable than conventional new single-family homes.

It’s free real estate.

The bill usefully writes a definition of a “small lot” into law, and affords it various protections that go beyond lot size. That is to say, cities will not be able to undermine the law with unworkable setbacks, density limits, or lot coverage rules.⁵ The final section of the bill outlines enforcement provisions, establishing a private right of action for parties to sue and collect damages and attorneys fees in cases where cities violate the law. Too many pro-housing bills are silent on this issue, or delegate enforcement to a state agency that may not be incentivized to always enforce the law.

(b) A municipality may not adopt or enforce an ordinance, rule, or other measure that requires:

(1) a residential lot to be:

(A) larger than 1,400 square feet;

(B) wider than 20 feet; or

(C) deeper than 60 feet; or

(2) if regulating the density of dwelling units on a residential lot, a ratio of dwelling units per acre that results in fewer than 31.1 units per acre.

…

Sec. 211.055. SMALL LOTS. (a) Except as provided by Subsection (c), a municipality may not adopt or enforce an ordinance, rule, or other measure that requires a small lot to have:

(1) a building, waterway, plane, or other setback greater than:

(A) five feet from the front or back of the property; or

(B) five feet from the side of the property;

(2) covered parking;

(3) more than one parking space per unit;

(4) off-site parking;

(5) more than 30 percent open space or permeable surface;

(6) fewer than three full stories not exceeding 10 feet in height measured from the interior floor to ceiling;

(7) a maximum building bulk;

(8) a wall articulation requirement; or

(9) any other zoning restriction that imposes restrictions inconsistent with this subsection, including restrictions through contiguous zoning districts or uses or from the creation of an overlapping zoning district.

Politics: The bill benefits from a strong Republican author who believes in the policy, and Lieutenant Governor Dan Patrick has made the bill a priority. Yet as with nearly every successful state-level YIMBY reform that I’m aware of, the push has been bipartisan: SB 15 has three Democratic co-sponsors, and the Texas Young Democrats have come on in support. The backing of local YIMBY and transit advocacy groups helps to cover the bill’s left flank.

After a couple of bruising losses in 2023—and a really important win—advocates have built out a model red-state YIMBY campaign. Expected industries are there, including the affordable housing groups, builders, architects, realtors, property managers, and materials suppliers.⁶ Major employers are also on board, including retailers, restauranteurs, Amazon, and various chambers of commerce. On the “Baptist” side of the ledger, you have the Texas Conference of Bishops, Habitat for Humanity, and the slew of free market groups that have recently been leading the fight in red states. The state’s local free-market think tank, the Texas Public Policy Foundation, has been a key supporter.

One of the things that stands out to me in this coalition is the prominent role played by the Texas Farm Bureau. Their case in recent testimony on behalf of the bill was simple: the more housing we build in and around existing cities, the less that growth will gobble up Texas farmland. Local advocates tell me that this framing has been effective at getting rural Republicans behind the bill.⁷ When it comes to the intersection between the environment and housing, conservatives don’t want to hear about climate change—they want to hear about protecting natural and working lands.

More broadly, the campaign’s focus on starter homes centers the most compelling aspect of this issue. A wide range of research on pro-housing messaging is clear: normal people really hate planning and economics jargon. If you don’t believe me, walk outside and ask the first person you see about reducing minimum lot sizes. If they don’t immediately walk away, try asking them about starter homes, and expect a much warmer reaction. Starter homes invoke families, opportunity, and apple pie. Who could oppose that?

Get Involved: At the state level, Texans for Reasonable Solutions and Texans for Housing are key advocates for pro-housing reforms. If you’re a Texan who supports housing, I would strongly suggest supporting these groups. If you’re in Austin, get involved with AURA; if you’re in Dallas, get involved with Dallas Neighbors for Housing.

We’re not out of the woods yet on SB 15. If you haven’t already, take five minutes today or tomorrow to brush up on the talking points, call your state senator and representative, and ask them to support the bill. This is a trivially easy thing to do that could make the difference between this bill surviving or dying. If you’re involved in any interest groups—say, a professional or advocacy group—that has not yet taken a position on the bill, you might consider working through internal channels to get them to take a support position.

---

What bill should I highlight next? Nominations are open in the comments. Here’s how I generally plan to select the bills to highlight:

1. I would like to cycle between red, purple, and blue state bills.

2. I would prefer to highlight bills that are actively under consideration, and have some chance of passing.

3. Alternatively, I don’t mind highlighting moonshot bills that are great or charting out a new avenue of reform, even if they probably won’t pass.

4. My hope is to capture the range of pro-housing reforms under consideration, covering topics like zoning, streamlining, building codes, etc.

1. I consider any bill that will increase housing production to be a YIMBY bill. In many cases, the bill I profile may not branded this way, or the author may not identify as a YIMBY per se. But if you’re making it easier to build housing, I’m dragging you into the tent.

2. I will occasionally offer critiques of bills. I do this as the legislative director of the largest state YIMBY advocacy organization in the country, in full appreciation of how hard it is to pass good, clean legislation. To those who worked on passing these bills, know that this is not a critique of you or the tough tradeoff decisions you likely had to make, but a flag for others who might like to pick up on your work and pass an even better bill.

3. I intend to summarize bills in these posts. But I would strongly encourage you to read the bills—especially red state bills, which are often quite simple. Bills are often surprisingly easy to read, and when they aren’t, it’s a muscle you should eagerly work.

4. As best I can tell, the second county proviso only serves to exclude Amarillo and Laredo.

5. A lot of the usual poison pill impositions we struggle with in California, such as unfunded inclusionary zoning mandates or onerous impact fees, are variously either illegal or heavily constrained in Texas.

6. I say “expected,” but to a disappointing degree, these groups are often not engaged in pro-housing advocacy in other states. In some states, these groups can even be hostile to YIMBY efforts. If you’re a member of any of such organizations, and you’re unsure where your state chapter falls, email the legislative director and ask them.

7. This sort of framing was also key to the messaging behind Montana’s pro-housing package.