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Dallas Is Not Building Enough Housing to Keep Up With Its Booming Neighbors

The Dallas metro is building more homes than almost anywhere else in the country. So why is it growing more expensive to live here?

There is more housing being built in Dallas-Fort Worth than any other large metro region in the country except Houston. That’s according to a rent.com analysis of housing permits issued between March 2020 and February 2021, dates that fall within the first full year of the COVID-19 pandemic. The state’s four biggest metropolitan areas all issued more building permits in that year than they did between March 2019 and February 2020.

So why is housing in Dallas (and Houston and Austin) growing increasingly unaffordable? Says William Fulton, director of the Kinder Institute for Urban Research at Rice University:

The answer is that Texas is booming so much right now that even the most productive housing market in the country can’t keep up with demand. Texas generally—and Houston in particular—has more land for housing and less housing regulation than anywhere else in the country, yet prices are still going up.

Part of the problem may be that most of the new housing is targeted at the high end of the market: Developers are building both single-family homes and apartments for luxury buyers and renters, which is one reason why first-time homebuyers as well as renters are having a harder time.

Of the more than 60,000 permits issued in the Dallas area metro in the year examined here, more than 45,000 were for single-family construction, with more than 16,000 for multi-family homes. That’s a similar ratio to Houston. Austin had a more even split, with 22,000 single-family permits and 19,000 for multi-family. (The New York City metro had about 13,000 single-family permits, and more than 36,000 multi-family.)

Fulton, with the Kinder Institute, suggests that this new housing just isn’t enough. “And all of our research says that Texas is gradually losing its affordability advantage: Home prices are rising faster than incomes, making housing less affordable each year,” he writes.

What the rent.com analysis doesn’t note is that the city of Dallas, excepted from our sprawling metro region, missed out on much of this housing permit action through unforced errors. We’ve written a lot over the last year about how Dallas’ old and busted permitting system has chased home builders to the suburbs. In Dallas, supply is nowhere near meeting demand. Data from the U.S. Department of Housing and Urban Development shows that Dallas, population 1.3 million, issued about 3,600 housing unit permits in 2020. Frisco, population 170,000, issued more than 3,100.

We’ve previously covered how Census data tells a similar story of the region’s growth during the pandemic. Collin County grew by nearly 37,000 people last year. Dallas County barely added 300 residents. Despite the pandemic, Dallas-Fort Worth is booming. The city of Dallas has little to do with it.

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