Last week, Texas Comptroller Glenn Hegar announced the release of a new report from his agency titled The Housing Affordability Challenge. The report summary and some news coverage focus on state-level zoning deregulation as an approach to improving housing affordability in the state, but the report itself conversely presents a more nuanced and complete picture of the challenges of housing affordability and solutions.
The Comptroller’s report correctly identifies that the greatest affordability challenges exist among the Texans with the lowest incomes and that the most straightforward tool available to the state to address this problem is state-level funding for low-income housing. In his own words, the Comptroller states that to alleviate the affordability crisis in Texas, we need “more funding for low- to moderate income housing programs or incentives to increase the supply of housing at the price range where it is most needed” [emphasis added] (p. 16).
Throughout the report, Comptroller Hegar clearly defines the income range where affordable housing is the most needed as households in Texas with the lowest incomes. A household is “cost burdened” if they pay more than 30% of their income toward housing costs. The report shows that in Texas, housing cost burden is the most severe for households with the lowest incomes:
“In 2022, about 39 percent of Texas households were cost burdened. Cost burdens are particularly acute in lower-income households – 88 percent of households with annual incomes less than $20,000 were cost burdened, compared to 8 percent of households with incomes of $75,000 or more” (p. 8).
The report notes that Texas has fared better in overall market rate affordability that many other states, but that Texas is almost dead last when it comes to housing supply that is affordable to households with extremely low incomes:
“According to a study by the National Low Income Housing Coalition (NLIHC), no state in the U.S. has an adequate supply of rental units for families who have extremely low incomes (ELI). ELIs are characterized by having an income at or below the poverty line or below 30 percent of their area median income (AMI). Texas ranks 46 out of 51 on the national scale (including the District of Columbia) with only 25 affordable and available rental homes per 100 ELI renter households, which is lower than the national average of 33 per 100” (p. 13).
The Comptroller further elaborates on the fact that the greatest need exists for renters with the lowest incomes, who make up an enormous share of households in the state:
“There is a significant disparity in affordable rental units available to households in different income brackets. One quarter of the rental population, or 11 million households, earn below 30 percent of the AMI. Based on the current housing supply, only 7 million units are attainable for the households falling into this category, representing a shortage of approximately 4 million units” (p. 13).
With notable clarity, the Comptroller illustrates that, “Households defined as ELI [extremely low income, 30% or below of median income] are the only group facing an absolute shortage of available units” (p. 13-14).
With more space to add nuance and accuracy than the press release and associated coverage, the Comptroller’s report illustrates that we need more housing supply, but more specifically, we need more housing supply that is affordable to the Texans who cannot afford their housing, which is almost exclusively Texans with very low and extremely low incomes.
In contrast to what has been touted by some policymakers as a solution for Texas’ housing woes, the Comptroller is careful not to promise that zoning deregulation efforts will make housing affordable to the low-income Texans for whom it is least affordable. In fact, when discussing solutions, the comptroller identifies the correct solution: “more funding for low- to moderate income housing programs or incentives to increase the supply of housing at the price range where it is most needed” (p. 16).
The State of Texas has historically underfunded housing. While the Texas Department of Housing and Community Affairs (TDHCA), our state housing agency, manages federal funds to meet housing needs for Texans with the lowest incomes, including Housing Tax Credits and Housing Choice Vouchers, our state government typically provides virtually zero dollars of Texas money into meeting low-income housing needs.
Our state leaders have an opportunity to follow the Comptroller’s advice and contribute more state funds to supporting the effort to alleviate low-income housing unaffordability. The mechanism to do this already exists. Texas has a Housing Trust Fund, which is currently used for two valuable programs, the Bootstrap program to support moderate income homeownership and the Amy Young Barrier Removal Program to increase disability access in housing. These are great programs and should remain. But if the Housing Trust Fund were properly funded by our state leaders, it could accomplish so much more to achieve housing affordability for low-income Texans.
Ideally, the purpose of a Housing Trust Fund is to establish a flexible, robust fund to meet the broad housing needs of low-income households. For instance, according to the Housing Trust Fund Project, the uses of a housing trust fund could include: “new construction, rehabilitation, adaptive reuse, acquisition, rental assistance, land trusts, cooperative housing, transitional or emergency housing, preservation of assisted housing, weatherization, emergency repairs, housing-related services and more.” The important point is to reserve the funds to help households with the greatest need, in this case the most cost burdened households with the lowest incomes, as identified by the Comptroller.
Our state housing agency has a proven track record of success at administering funds for affordable housing for Texans with low incomes. They are ready for the job of administering an expanded Housing Trust Fund. In the Housing Tax Credit program, they have shown an ongoing commitment to producing units efficiently at a level that will be affordable to Texans with the lowest incomes, and with care for decent, quality units and increasing access to opportunity. As another example, during the pandemic TDHCA administered one of the most efficient and successful programs in the country at administering federal Emergency Rental Assistance funds.
Our state leaders should listen to the Texas Comptroller’s findings and dramatically expand state level funding to support the most severely cost-burdened households, the Texans with the lowest incomes.
