Texas bill seeks more commercial-to-residential conversions to boost housing supply

The move was reported by the Texas Tribune, which noted that owners of commercial properties would be able to construct dwellings without having the land rezoned.

Support in the Senate was overwhelming in a vote of 106-33. Changes made in the Senate will have to be reconciled in the House before the legislation can go to the desk of Gov. Greg Abbott (R) and be signed into law.

The caveat is that the bill would only apply to the state’s largest cities. It limits these projects to localities with a “population greater than 150,000 people that sit in a county with at least 300,000 residents,” the Tribune reported.

More supply has been the default tactic for the Texas Legislature in dealing with the state’s housing shortage — moves that can be easy for Republicans to support since it may involve taking a deregulatory approach to existing building requirements.

One estimate cited by the Tribune said that Texas has a shortage of approximately 320,000 housing units, and the supply constraints have driven home prices higher.

But supply in the state has outpaced demand, according to recent data from Altos.

Bolstering supply through deregulation and the permitting of additional construction is a priority for some political leaders — including Lt Gov. Dan Patrick and House Speaker Dustin Burrows, according to the Tribune. This is part of a package of solutions proposed by the majority in the legislature.

“Lawmakers have advanced bills to allow smaller homes on smaller lots and additional dwelling units in the backyards of single-family homes,” the report explained. “They’ve also pushed legislation to more quickly put city building permits in developers’ hands and make it harder for property owners to stop new homes from being built near them.”

But additional pressure to act is mounting. The legislative session ends in only two weeks, and none of the housing bills that have been advanced have yet to appear on the governor’s desk.

The move also marks a departure from actions taken in Texas in 2022. At that time, lawmakers were more hesitant to impose zoning rules — which were deemed a local matter — at the state level, the Tribune noted.

It also reported on recent polling that shows “broad support” for allowing the construction of more homes in commercial districts, and for converting vacant offices and other commercial buildings into more homes.

“That support also holds for moves to make it possible to build accessory dwelling units and smaller homes on smaller lots,” the Tribune noted.

Similar commercial-to-residential conversions are also being explored more thoroughly in other states, including Washington.