A conservative fix for the housing crisis is making homes cheaper and more abundant in Texas

• Houston has pioneered a key land-use policy reform that has helped create abundant starter homes.
• The Texas city shrunk the required lot size for a single-family home.

Houston, Texas is known for its Space Center and bayous — and, more recently, its abundant starter homes. Houston's newer townhomes built in the last couple of decades join the brownstones of New York City, the rowhouses of DC, and the Victorians of San Francisco as a form of relatively dense housing.

But unlike its coastal counterparts, Houston's homes are much cheaper and more abundant. The city is building lots of what most of the country desperately needs: affordable housing.

Key to this is Houston's approach to an influential, but little-known land-use policy: minimum lot sizes. Since the early to mid-20th century, virtually all American cities have imposed rules that require single-family homes to sit on at least 5,000 to 10,000 square feet of land.

In rural areas with limited water and sewer infrastructure, low-density living makes sense as a health and practical matter. But in urban areas, requiring large lots only makes neighborhoods more exclusive and expensive.

"It's really a way to limit housing construction," said Emily Hamilton, a housing researcher at the Mercatus Center at George Mason University. She added that minimum lot sizes maintain "a homogenous type of housing construction with often a high floor on how expensive it has to be."

Restricting construction encourages sprawl, which makes walking anywhere difficult and driving necessary. Minimum lot sizes make homes an average of about $30,000 more expensive than those in similar, less regulated areas, and reduce density by 11%, housing researchers Joseph Gyourko and Sean McCulloch found last year.

With urban housing in demand in the 1990s, city leaders decided to do something about it. In 1998, Houston shrunk its single-family lot size requirement from 5,000 square feet to 1,400 square feet in most of the city. In 2013, the city expanded that policy to all land that receives its wastewater collection services.

The effects have been dramatic. The policy change has spurred the construction of almost 80,000 new homes, many of them townhouses and other kinds of small-lot single-family homes.

And unlike some other upzoning measures, Houston's 2013 reforms didn't push land values up, Hamilton found in a study published earlier this month. She and other researchers believe this is because the land-use change applies to such a large geographic area. When development capacity increases on so many lots and spurs lots of new construction across the city, the expected income from any one piece of land is diminished.

Hamilton said her findings were "somewhat surprising," because some other upzoning efforts have been shown to increase land values, counteracting some of the affordability benefits of allowing for more housing. But what sets Houston apart is that the policy change spurred lots of new construction.

"It's probably the most radical land-use reform adopted by any US city over the last 30 years, and it's certainly the most successful by unit count," said Nolan Gray, a city planner and research director for California YIMBY who's done research on Houston's policy.

A 'free lunch opportunity'

Shrinking or eliminating minimum lot sizes may be radical, but it's the kind of market-based approach that pro-housing advocates across the political spectrum support. Many conservatives are joining progressives in pushing to get rid of many regulations that limit housing density.

Houston's lot size reform would make sense all over the country. While some Americans still want picket fences and far-flung subdivisions, dense and walkable neighborhoods are more desirable these days. An analysis published last year found that homebuyers in the 35 biggest American metropolitan areas paid 34% more to live in walkable neighborhoods, while renters paid 41% more. Minimum lot sizes — on top of other restrictive land-use policies like single-family zoning — make these walkable communities illegal to build.

"We're essentially mandating the most environmentally unfriendly pattern of living and in a context where many millions of Americans, if prices are any indication, want to live a different way," Gray said.

Houston's reform has also limited gentrification and, instead, encouraged new construction in higher-income neighborhoods, which are exactly the kinds of places that tend to welcome the fewest new residents in most cities. And the more affordable homes that come online, the more possible it is for Black, brown, and other marginalized communities to own homes and shrink the racial wealth gap.

Because Houston has very few zoning laws in place at all, homes can be built on property that used to house commercial or industrial buildings. "Those new townhouses outside of I-610 are often replacing dead strip malls or self-storage or other relatively low-value commercial uses, rather than single-family houses," Hamilton said.

Gray thinks Houston's success with smaller lot sizes has to do with the city's "pro-growth culture." That culture of deregulation also has downsides. The city has paved over many of its critical wetlands, and built far too much parking. Residents disenchanted with townhome density have created sprawling exurbs.

But the massive success of Houston's minimum lot size reform is getting noticed across Texas and around the country. Last summer, the city council of Austin, Texas, passed a measure to cut its minimum lot size for a single-family home from 5,750 square feet to 2,500 square feet. Auburn, Maine, and Helena, Montana, both got rid of minimum lot sizes in some parts of their cities, and a slew of state legislatures, including Arizona, Massachusetts, and New York, are considering smaller lot requirements, Mercatus researcher Salim Furth found.

"Houston kind of has revealed a potential free lunch opportunity for cities that are struggling with getting more affordable homeownership opportunities built," Gray said. "If you're a policymaker in a city that's not having enough homeownership opportunities come online, like, hello, this costs you nothing."