Large Texas municipalities have just been handed an enormous opportunity by the legislature. They should seize it.
For such a large state, Texas is blessed with a rare advantage: relatively affordable housing. But clouds are gathering. In the Dallas-Fort Worth metro, home prices have surged 170% since January 2012, squeezing first-time and move-up buyers alike. Its housing shortage—now estimated at about 84,000 units—is growing. While the market may be cooling temporarily, long-term fundamentals point to the need to accelerate home construction. Without action affordability will likely worsen.
Left unaddressed, Texas risks following California’s path towards increasing housing unaffordability. Or, it can choose a path of growth, opportunity, and rising living standards by allowing a more plentiful housing supply. This would mean a Texas where young people can afford to start families and where grandparents can see their grandchildren more than just on the holidays.
From 2000 to 2024, the Dallas metro built about 640,000 single-family detached homes at a median lot size of 7,400 square feet. Had the median lot been just 25% smaller—5,500 square feet—there would be 200,000 additional homes. That’s more than double the number needed to erase today’s shortage. The lesson is clear: the three most important factors for affordability in the Dallas-Fort Worth metro are smaller lots, smaller lots, and smaller lots. Smaller lots mean more homes on the same land, lower land costs, and more modest—but still family-friendly—homes. They also make townhomes more viable, which cost less to build than comparable detached houses.
The recent passage of SB-15 establishes lot size flexibility in Texas by eliminating city-imposed minimum lot sizes above 3,000 square feet for new subdivisions in larger cities. Because lot size is a major driver of housing costs, this reform shifts decisions about what to build and for whom from government mandates to builders and buyers. While not every home will sit on a 3,000-square-foot lot, we estimate the change will enable an additional 9,000 starter homes per year in the cities affected by SB-15. These additional homes could be over 10% more affordable than the homes under the prior rules. And by adding some townhomes into the mix, starter home prices could drop even further to about $320,000, affordable for teachers, police officers, firefighters, and skilled tradespeople alike—no subsidies required.
Similarly, SB-840 makes it easier to convert underutilized commercial spaces into residential units. This could steadily add housing without expanding city boundaries or straining infrastructure. Yet some cities are already misreading these reforms and looking for ways to undermine them.
Some object that the new laws strip city councils of their say over where and how apartments are built or over their design and aesthetics. That’s precisely the point. Housing decisions belong in the hands of the market, not micromanaging by politicians. Unfortunately, opponents of SB-840 are already trying to block new supply by enacting “poison pills,” such as a minimum height of 10 stories for all multifamily buildings, requiring LEED Platinum energy certification, or mandating a minimum of 35% nonresidential square footage for residential developments in mixed-use districts. This kind of overregulation has contributed to California’s housing crisis. Texas should avoid these pitfalls at all costs.
Others fear that new housing will strain infrastructure. But adding housing in commercial areas—where people already work and shop— or in new residential subdivisions designed with infrastructure needs in mind can actually ease these burdens.
Texas is a growing economic powerhouse, and its cities face a choice: embrace the flexibility SB-15 and SB-840 provide to keep housing affordable, or risk California-style prices and stagnation. These laws offer Dallas–Fort Worth leaders a rare chance to ensure growth and opportunity for residents of all walks of life.
