Recent data from the Real Estate Center at Texas A&M University paints a pretty bleak picture for housing affordability in the Dallas-Fort Worth area. More than 100,000 new jobs regionwide netted just 30,000 new homes by the end of last year, according to stats from Meyers Research and the Dallas Builders Association. The median home price, thanks to the scarcity of new builds, jumped from $149,900 in 2011 to $232,000 in 2016.
The end of the affordable new home is nigh, it seems.
The DBA attributes a shortage of land and labor as major influencing factors behind a widening affordability gap for home buyers, but increasing lumber costs and misguided local regulation haven’t helped, either.
In fact, new Canadian lumber duties of up to 24 percent proposed by the Trump administration could increase the affordability gap further. According to the DBA, the escalation of the trade dispute could increase lumber costs for new builds in the Dallas-Fort Worth area by up to 30 percent.
Unaffordable by Design
“Local regulation is probably the biggest factor at play now that we seemingly should have better control over,” said Dallas-area builder Alan Hoffmann. “Many cities have this mindset that homes need to cost nearly a half million dollars in order to pay their own way. Many of these practices are illegal, but fighting them takes years and hundreds of thousands dollars. Something many property owners don’t have.”
Property owners prevailed in the Texas Supreme Court last year against illegal fees in Lakewood Village v. Bizios. In that case, the municipality was charging fees for new construction outside its city limits.
“Unfortunately in that case, the city knew it was in the wrong, but decided to use taxpayer funds to drag it all the way to the Supreme Court,” said DBA executive officer Phil Crone. “To make matters worse, the same practice continues in places such as McKinney, which has resulted in more costly and unnecessary lawsuits.”
New Homes Remain Out of Reach
In March, the new home affordability ratio reached 46.7 percent, meaning that less than half of those living in the region can afford a new home, the DBA says.
According to the National Association of Home Builders, the cost of regulation has increased more than 30 percent over the last five years, and now, on average, accounts for more than $84,000 per home. More than one-third of DBA builder members cited code changes and increased fees and dedication requirements as a substantial reason for added delays and increased costs. Some of these increases come in traditional forms such as impact fees, but others include onerous tree mitigation fees that approach the value of the land itself and installation of infrastructure traditionally left to utility companies without reimbursement.
“Especially in smaller cities poised for significant growth, discussion often centers around limiting multifamily construction and what can be done to ensure homes cost a certain amount in order to attract only those of a certain income level,” said Crone. “These nefarious social objectives deserve much more scrutiny than they are currently receiving.”