Real estate market value in Texas could fall after new proposal

New zoning regulations proposed by Texas Democrats last month could help the Lone Star State increase its housing supply and lower costs as residents continue to suffer from still-high interest rates and skyrocketing insurance premiums.

During its annual convention on June 8, the Texas Democratic Party unveiled its plan to loosen local zoning regulations that dictate what type of housing can be built where. This type of reform, it says, will lower housing prices and rents, thereby combating the state’s affordability crisis.

The Texas Democrats’ program also sees the change in the state’s zoning regulations as an opportunity to counteract racial discrimination in the housing market. This includes “ending racially motivated, exclusionary forms of zoning that limit the supply of affordable housing” and “removing land use restrictions from the era of racial segregation that divide communities, drive displacement, and continue to drive up rising housing costs today.”

According to local news reports, the state’s Republicans are in favor of loosening zoning regulations, but for different reasons. According to an earlier report by The Texas TribuneThe state’s Republicans are keen on the idea of ​​reducing state regulations on the Texas market and strengthening individual property rights.

Newsweek emailed Texas Democrats and the Texas Republican Party for comment Monday morning.

What both parties agree on is that housing costs have become unaffordable for many Texas residents. Although Texas has built more new homes than almost any other state in the country (except Florida), there is still a shortage of affordable options, especially in the largest cities.

According to a recent study by Harvard University’s Joint Center for Housing Studies, the Texas real estate market is still suffering from the aftermath of the pandemic’s boom years.

Although prices have declined slightly since their pandemic-induced peak, when an influx of people from other states increased competition for homes, homeownership remains an unattainable dream for a growing number of families. That’s because home price growth during the pandemic far outpaced income growth in the state, especially in major cities.

In Austin, a family must earn more than $140,000 to be able to afford a house at the median sales price, according to the center – and this despite the fact that real estate prices in the Texas capital have been falling for months. In the metropolitan areas of Dallas-Fort Worth and Houston, a family must earn more than $100,000.

Home insurance premiums have also risen in Texas as climate change increases the risk of extreme weather events like hurricanes. The state saw the fifth-largest cumulative increase in the country between 2019 and 2024, according to a study by online lending platform LendingTree. A strong hurricane season this year could further drive up insurance premiums in the state.