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Opinion

How ‘granny flats’ can help preserve Texas’ middle class

Bans on accessory dwelling units limit property rights and raise housing prices. A Texas bill can change that.

The Texas Legislature is currently considering housing legislation aimed at improving the middle class’ financial security, helping more Texans achieve homeownership and maintaining an affordable cost of living in our biggest cities.

A recent report indicated that Dallas’ housing affordability index dropped from 28% of homes in Dallas being affordable four years ago to only 8% present day — a large shift. One of the state bills introduced, House Bill 2789, would streamline the permitting process for accessory dwelling units, or ADUs, also known as pool houses, granny flats or in-law suites.

Recently, House Bill 2789 was voted out of the House’s Land & Resource Management Committee. So far, eight other states have passed laws allowing more homeowners to add ADUs to their properties, including Utah and New Hampshire. Likewise, Dallas passed some limited reforms (with limited results). A companion bill, Senate Bill 1412 was voted out of the Local Government Committee.

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The House version, sponsored by Rep. Justin Holland, R-Rockwall, would give homeowners across Texas the freedom to build an attached or detached ADU, while allowing homeowners associations and neighborhoods with deed restrictions to opt out of the provision.

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What are the implications of more ADUs in Texas?

Across America, ADUs are frequently banned or made difficult to build at the local level. These bans don’t just limit homeowners’ rights to use their own property. In places like Texas’ increasingly expensive cities, rules preventing the construction of low-cost types of housing — ADUs, apartments or missing middle housing, for example — is driving up prices for the housing that’s already on the ground. As a result, working families may be forced to move not to where their best opportunities are located, but to where they can afford housing.

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One in 5 middle-income Texas renters — think teachers and emergency medical technicians — are “rent burdened,” meaning they spend more than 30% of their income on rent. This outcome harms Texas’ middle class and undermines the state’s continuing status as a leader in economic growth.

More ADUs mean more potential for homeowners to offset a portion of their mortgage payment by renting out part of their space. This can be especially helpful for first-time homeowners or retirees. ADUs also provide housing for the essential workers in our communities who may not be able to afford an entire single-family house.

Because they’re built in backyards or existing structures, ADU builders don’t have to purchase separate land for them. And because they’re small, their construction costs are relatively low. One study of ADU affordability finds that, on average, these units rent for prices affordable for households making just 62% of the area median income.

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ADUs also provide an important opportunity to adapt our housing stock to our changing demographics. They make intergenerational living feasible by giving homeowners the right to build space for a young-adult child or elderly relative. ADUs can be built to meet any accessibility needs. Legalizing housing that makes it practical for family members to care for one another is especially important as one study finds that 72% of middle-income seniors won’t be able to afford assisted living in the coming years.

Some argue that HB 2789 opens up the door to more short-term rentals, but a closer look reveals that the bill contains safeguards that leave the decision on whether or not to allow STRs up to local leaders and local government.

For the past several decades, state policymakers have delegated most land use regulation to localities. However, the effects of too many local restrictions are spilling over from one jurisdiction to the next and increasingly causing statewide affordability problems. That’s why more policymakers in more states are looking at setting limits on zoning and other local rules. Texans need streamlined and consistent rules to unlock more affordable housing options in our cities.

Nathaniel Barrett is the owner of Barrett Urban Development LLC, Emily Hamilton is the senior research fellow and economist at Mercatus Center, and Nicole Nabulsi Nosek is chair of Texans for Reasonable Solutions. They wrote this column for The Dallas Morning News.

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