Texas made homebuilding easier, cheaper. Let’s keep the momentum going | Opinion
Not long ago, a Texas homebuilder (one of the authors of this column) and his partner bought land with plans to create a modest subdivision of smaller, affordable homes for a growing community. They spent months designing the layout, pouring in thousands of dollars, only for the city to reject their proposal under a new rule requiring larger lots.
As a result, fewer homes could fit on the land, forcing each one to carry a bigger share of the development costs. What started as an affordable housing project would have had to become a luxury subdivision that few locals could afford. After nearly two years of redesigns, sunk cost investments and frustration, the developers finally walked away.
This is precisely why Texas recently enacted Senate Bill 840.
Authored by Sen. Bryan Hughes, an East Texas Republican, the law takes direct aim at the layers of red tape strangling the urban housing supply. The measure overrides local zoning and regulatory hurdles in cities with more than 150,000 residents, if their counties have a population over 300,000. Its goal is straightforward: expand the housing supply and bring down the cost of new construction.
For decades, policymakers have piled rule after rule on builders, inflating the cost of housing. Zoning restrictions, permit requirements and environmental mandates helped push the median home price in Texas up 40% from 2019 to 2023. Add in high inflation and spiking interest rates, and it’s easy to see how tens of thousands of Texans have become locked out of homeownership.
SB 840 aims to reverse this trend, breaking the cycle of regulation and rising prices that has priced out too many Texans.
By allowing multifamily and mixed-use housing in commercially zoned areas without municipal approval, SB 840 makes it easier and faster to build where demand is greatest.
Perhaps the law’s most transformative effect will be in repurposing Texas’s swelling stock of empty offices, hollowed-out malls and forgotten warehouses.
The law exempts some older properties — those more than five years old that are converted to at least 65 percent residential use — from the local rules that usually strangle such projects. That will give owners of offices, malls and warehouses the chance to turn idle properties into valuable housing. For Texans struggling with rising costs, that could mean thousands of new apartments in places that would otherwise sit empty.
In-state builders have seen too many projects die because city planners demanded endless revisions or fees that made them economically impossible. Sometimes, they spend more than a year and more than $100,000 just navigating permit and zoning hurdles for a small multifamily build only to see it shelved when interest rates spike. Under SB 840, that same project could move forward in months instead of years.
Of course, no reform is without tradeoffs. Zoning ordinances provide predictability. More families could strain already crowded schools, congestion may worsen and developers who played by the old rules may resent rivals who now sidestep them. These concerns deserve consideration, but they should not overshadow the benefits of reform aimed at the fundamental cause of the housing shortage: decades of overregulation.
And yet, some lawmakers continue doubling down on policies that paper over symptoms while ignoring the root cause of high housing costs.
For example, some are pushing to ban “rent pricing algorithms.”
Despite critics’ claims, these tools don’t set rental prices — they report them. Banning them is like ripping out your thermostat because you dislike the reading. These tools give landlords and developers critical information about market conditions, including when to cut rents as supply rises and when to expand the housing supply to prevent shortages or rent hikes.
In Texas, landlords and housing planners widely use this technology, yet housing prices are falling faster than anywhere else in the country. Banning it would prevent landlords from adjusting rents to market conditions, which could push prices up while reducing transparency and deterring private investment.
Other Texas decision-makers are seeking to limit how financial institutions invest in housing. Gov. Greg Abbott has unfortunately echoed this counterproductive public policy priority, arguing last year that corporations are “distorting the market and making it harder for the average Texan to purchase a home.”
That’s like claiming people can’t buy groceries because others are buying food. If the goal is lower rents, the remedy is clear: build more housing. Limiting investment will mean fewer homes and reduced property maintenance.
By cutting needless regulation, SB 840 will unlock private investment and serve as a powerful reminder: Prosperity comes from private initiative, not government control. It’s only been in effect for weeks, but builders can already see the difference — landowners calling about conversions, investors re-engaging and projects that once sat idle finally moving forward.
Texans want to work, build, and live here. SB 840 lets us do all three. It’s proof that the first lesson of economics still holds: When supply rises, prices fall.
Now, let’s make sure the next housing reform proposals Texas enacts respect these principles.
Bryan P. Cutsinger is an assistant professor of economics at the Norris-Vincent College of Business at Angelo State University. Jeff Kuhn, the owner-operator of Denali Construction, is a Texas developer and custom homebuilder.
