Low-income households in Texas are being crushed by unaffordable housing costs, corporate landlords that are exhibiting increasingly monopolistic behaviors, poor conditions, and the ongoing legacy of racial and economic segregation and discrimination. And yet, as 2025 comes to a close, we find ourselves in an incredible moment of potential. Everyday people are fed up with placation and lip service from leaders across the political spectrum and are demanding real action to address housing affordability and end the worst abuses of financialized real estate interests.
As we enter 2026, our state leaders will begin laying the tracks for legislative reforms that they will pursue in the next legislative session in early 2027. That means that it is important for us to take stock of the big picture of low-income housing in Texas right now. Before we get to politicking, can we simply begin by taking stock of what low-income people are dealing with and what they need?
What follows are seven key framing questions. We expect that one version or another of these seven themes will shape the Texas housing policy debate in 2026, and set the stage for the 90th Legislature in 2027.
As a part of this discussion, we are happy to announce the release of our wrap up report on this year’s 89th Legislature, Low-Income Housing at the 89th Texas Legislature in Review. The report reviews housing-related bills that passed or made significant progress, as well as major themes and special topics.
Here are the seven questions:
One: How will the legislature respond to federal disinvestment in low-income housing?
In less than one year, the second Trump administration has demolished the systems and expectations of federal housing support and policy. The administration has made clear that they wish to defund housing vouchers, and congressional voucher appropriations–which have never come close to meeting the needs of low-income households–are poised for stagnation at best. HUD tenants face new harmful rules, such as time limits for receiving assistance and punitive family-wide citizenship requirements. In recent weeks, HUD announced Continuum of Care funding changes that deprioritize and limit funding for desperately needed Permanent Supportive Housing to help individuals exit homelessness. That last change alone could result in over 9,500 Texan households being put at immediate risk of falling into street homelessness. HUD’s fair housing enforcement division has been decimated.
For decades, Texas has never put significant funding toward low-income housing programs. If existing federal support crumbles, will Texas pick up the mantle? Will the state respond to this fallout at all? Or will low income people lose what little support they had?
Two: What is the vision at the Texas Legislature for affordable housing beyond YIMBY?
2025 was the year of YIMBY (“Yes in my backyard”) at the lege. Many reforms intended to reduce barriers to market rate housing construction passed successfully, with the hope that these deregulatory efforts will juice housing supply and stabilize costs. Even with these reforms, new housing production in Texas faces other headwinds, such as high construction costs, high borrowing costs, and competition from other non-housing investments competing for equity partners. But if these land use reforms lead to more housing production, they still are not likely to make housing affordable and stable for the lowest income, least stable, most cost-burdened households in Texas in the short term.
Will anyone at the Capitol emerge with a coherent vision and leadership on affordable housing that perhaps includes YIMBY but also directly envisions solutions for the Texans who can least afford their homes?
Three: Can legislators reverse the trend of anti-tenant legislation?
This recent session was very nearly a stalemate for landlord tenant law in the state of Texas. The apartment lobby pushed catastrophic legislation that would have removed the last remaining vestigates of due process in Texas’ eviction process. However, a bipartisan majority of House members pushed back against all of the most harmful provisions in this bill. What passed was a small step backwards for renters, but the truly horrible outcomes were averted. Almost as importantly, legislators from both sides of the aisle showed that they wouldn’t just go along with whatever the landlord lobby tells them to pass.
So what happens next? House Democrats made a loud defense of renters. Will they keep up the pressure? Simultaneously, a block of Republicans acted with independence, reasonableness, common sense, and moderation on this issue. Will they continue to be principled in their approach to the law?
Four: Will the legislature respond to shifting LIHTC dynamics, and if so, how?
Low-income housing tax credits (LIHTCs) are the largest single source for income-restricted housing in Texas, making this a critical tool for low-income housing. Numerous complicated factors impact how much it costs to build affordable housing using this tool. At the moment, the signals are mixed. Housing construction costs and borrowing costs are high, and that directly affects LIHTC viability. The value of LIHTCs is down. Gap funding is often needed. Yet the tax credit program is still competitive and demand for credits is still high. In July, the One Big Beautiful Bill Act increased 9% tax credit allocations to states by 12% and established a more favorable 4% private activity bond threshold.
Meanwhile, in Texas specifically, leaders approached LIHTC from many angles. One bill temporarily removed TEA school quality ratings from consideration in the LIHTC competition, and school vouchers may increase pressure to make those changes permanent. A bill that would have allowed for LIHTC properties to be built closer together in higher opportunity areas stalled out. A bipartisan group of NIMBYs in the house dramatically tanked a bill to reform state representative letters, which block low-income housing in wealthy, exclusionary neighborhoods. Finally, in 2026, tax credit developers will be able to start developing in Opportunity Zones even in the absence of a local plan for revitalization, even though mounting evidence shows that OZs have not improved housing affordability and stability.
LIHTC has always struggled to meet the housing needs of the most cost burdened households in Texas. Conditions and accessibility at some properties are deficient and under-monitored. Many LIHTC residents are cost burdened even as they live in subsidized housing. This tool is not a silver bullet.
In the 90th, will legislators respond to these mixed developments and challenges with a coherent perspective on ensuring that the program efficiently and effectively delivers affordable housing to the Texans who need it? Will any leaders center the needs of the residents of this housing–who after all are the beneficiaries of the program–rather than the developers who profit from this public program?
Five: Will stakeholders finally name what tax-exempt private partnerships (TEPPs) are supposed to accomplish, and match that to statute?
In spring 2025, legislators reformed Housing Finance Corporation (HFC) property tax exemptions. “Traveling HFCs,” where properties were being taken off of local tax roles by unrelated entities on the other side of the state, have been ended. Also, HFCs now are required to provide tenant protections and ensure that a certain share of the tax savings are actually going toward lowering rents for low-income residents. Previously in 2023, the Public Facility Corporation (PFC) tax exemption was similarly reformed.
The game of whack-a-mole continues, as Public Housing Authority tax exemptions are coming under scrutiny. For example, press uncovered that the Corpus Christi Housing Authority director was making a salary of almost $800,000 a year all while rubber stamping supposedly affordable housing projects that were in some cases allowed to charge higher than market rates.
After two legislative sessions of reforms to tax exemptions, it is time to bring this home. Will stakeholders take this opportunity once and for all to get on the same page and answer what these projects are actually supposed to accomplish? What should low-income people and taxpayers get in exchange for this tax exemption? How do we measure a good deal from a bad deal?
It is time to put an end to vague and euphemistic language. What are these projects supposed to accomplish, and how can we match legislation to that? The answer to that question will provide legislators with a concrete measuring stick to determine whether legislation that is moving forward is productive or not.
Six: Will the Legislature pick up the mantle of long-term disaster recovery?
This summer we witnessed the devastation and tragedy of the Hill Country floods. In their response, legislators rightly focused on addressing failures of preparation and emergency response. However, less consideration was given to the long term recovery needs of survivors. Simultaneously, federal recovery support is more uncertain than ever. FEMA’s deployment and assistance was troubled and underwhelming in the Hill Country response. And the President himself has threatened to get rid of FEMA altogether. A long term disaster recovery allocation from Congress does not appear to be on the table.
As the federal government continues its push to devolve disaster recovery to the states, Texas has an urgent need to plan for long term recovery. Natural disasters lead to increased mortality and health complications for up to 15 years after the disaster event due to the instability caused by insufficient recovery. Recovery from the Hill Country floods specifically will be profoundly challenged due to low insurance coverage in the area. Texas Appleseed found that only 3% of applicants for FEMA funds possessed flood insurance, and less than 30% possessed homeowners insurance. Disaster recovery is a housing issue. Support for housing recovery for vulnerable Texas is a matter of life or death.
We have been here before. Low-income people in Houston still haven’t recovered from Harvey, let alone Beryl. And we know that disasters will strike in Texas again. If the federal government isn’t coming to save us, will Texas take seriously the idea of standing up a real, effective disaster housing recovery program?
Seven: Who will be the “buck-stops-here” champions for low-income housing and renters at the lege?
In this era of hyper-partisan dysfunction, the one thing everyone seems to agree on is that we need to get a handle on affordability. But what that means is still contested space. This is an incredible opportunity for committed leaders with a vision for actually addressing these issues to speak up and take bold leadership.
Who will be the legislators who have the guts, the grit, and the clarity of values to champion low-income housing at the Texas Legislature? Housing affordability is as great a burden on Texans as it has ever been, and low-income Texans bear the overwhelming brunt of that burden. Who will even stand up and say just that? Who are the legislators who will make it their mission, their calling, to fight to make low-income housing in Texas affordable, stable, dignified, and fair?
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Here is our full report on Low-Income Housing at the 89th Texas Legislature in Review:
