Texas Revs the Growth Machine

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27-05-2025

Happy Tuesday, and welcome to another edition of Rent Free. This week's stories include:
The near death of Texas' Starter Home Act
Colorado's pending ban on rent-recommendation algorithm software
A very Catholic story of eminent domain abuse
But first, our lead item on the success of pro-supply housing bills in Texas.
On May 20, the Texas House passed Senate Bill 840, which allows developers in larger counties to build residential and mixed-use developments on commercially zoned land "by-right." That means local governments can't force builders to go through extensive, expensive, and discretionary processes of requesting rezonings and variances.
The bill "would make converting empty office spaces into housing units much easier," reads an analysis from the Texas Public Policy Foundation.
Similar to Florida's Live Local Act, the bill also limits localities' ability to impose height and density restrictions on new residential developments on commercially zoned land. Cities would have to allow these new developments to be built at least at a density of 36 units per acre and 45 feet tall.
Housing wonks describe the bill as clean and "muscular."
Today, the Texas Senate concurred with the House amendments to S.B. 840. It will now go to Gov. Greg Abbot's desk.
Also headed to the governor's desk is House Bill 24, which places new limits on valid petition rights that property owners can use to halt zoning changes.
H.B. 24, a reform to the so-called "tyrant's veto", raises the percentage of property owners required to challenge a rezoning from 20 percent to 60 percent. It also lowers a city council's vote threshold to override these challenges from a supermajority to a simple majority.
Neighborhood activists in Austin famously used their valid petition rights to thwart upzonings in that city.
With H.B. 24's reforms, that will be a harder thing to pull off.
Still pending approval is Senate Bill 15, a.k.a. the Texas Starter Homes Act. Described as a "smaller homes on smaller lots bill," the legislation would prevent local governments from setting minimum lot sizes of over 1,400 square feet in new subdivisions of five acres or more.
The bill only applies to cities of 150,000 people in counties of 300,000 people or more.
S.B. 15 had already passed the Senate with a 29–2 vote back in March. It was scheduled for a vote in the House of Representatives this weekend, where it nearly died.
As the Texas Tribune reports, House Democrats led by Rep. Ramon Romero Jr. (D–Fort Worth) attempted to kill the bill on a procedural move.
Romero had requested a "point of order" about the bill's exclusion of land around a planned Dallas County police training facility. This, said Romero, violated legislative rules about singling out individual jurisdictions in legislation.
That point of order was accepted, preventing further discussion of the bill.
But, reports the Tribune, the bill's supporters in the House managed to "fast-track" the legislation by removing the offending provision so that it will be considered on the floor again today.
Romero told Tribune reporter Joshua Fetcher that he'd seen no evidence that allowing smaller homes on smaller lots would reduce home prices.
He might want to look a little harder. The Mercatus Center's Emily Hamilton found in a 2024 study that Houston's minimum lot size reforms, on which the Texas Starter Home bill is modeled, facilitated an "unprecedented" increase in the rates of infill housing construction in single-family neighborhoods.
Houston's reforms "had no detectable effect on land values, and she finds some evidence that it reduced land values. This may be because it has facilitated a large amount of housing construction," according to Hamilton's study.
In recent years, software sold by companies like RealPage that recommend to landlords profit-maximizing rent and occupancy levels has come under fire for making housing less affordable.
Critics charge that these products allow landlords to collude on prices in order to raise rents to above-market rates.
The federal government and several states have sued RealPage for antitrust violations. States and cities have also started to crack down with legislation of their own.
Earlier this month, the Colorado Legislature passed H.B. 25-1004, which would "ban the use, sale and distribution of software that uses an algorithm to set rents." (Colorado is one of the states suing RealPage.)
The bill is now on Gov. Jared Polis' desk, who has not said whether he'll sign or veto it.
"We're all for math and algorithms. At the same time, there is the concept of antitrust, which has been abused, but also has a core role in preventing monopolistic pricing practices," Polis told Reason in a Friday interview. "It's a question of: Is this an algorithm that reduces market friction and leads to more efficient pricing or is it a backdoor effort to exert monopolistic control over pricing?"
The limited academic research on rent-recommendation algorithms suggests that they do in fact facilitate more efficient pricing. One study found that landlords who use these products lower rents faster in down markets and raise them faster in hot markets.
RealPage critics would seem to have a hard time explaining why rents in Austin, where lots of landlords use RealPage products, are slashing rents in response to a glut of new supply.
Last week, news broke that the village of Dolton, Illinois, is threatening to seize via eminent domain the childhood home of newly elected Pope Leo XIV from its current owners, who recently bought and renovated the home and are now selling it at auction.
As I wrote last week:
At present, the owners are auctioning off the small, 1949-built home for a reserve price of $250,000.
In a Tuesday letter to the auction house running the sale, Dolton attorney Burton Odelson cautioned buyers against purchasing the house.
"Please inform any prospective buyers that their 'purchase' may only be temporary since the Village intends to begin the eminent domain process very shortly," reads Odelson's letter, per NBC Chicago.
Odelson told Chicago's ABC7 that the village had initially tried to voluntarily purchase the home but had snagged on the sale price.
"We've tried to negotiate with the owner. [He] wants too much money, so we will either negotiate with the auction house or, as the letter stated that I sent to the auction house, we will take it through eminent domain, which is our right as a village," Odelson said.
It's a wonder why the village can't pursue a voluntary sale, given the relatively low reserve price of the home. The potential for the modest, 75-year-old home to serve as a historic site surely couldn't boost the sale price that much.
Seizing the home via eminent domain would seem to contradict the last Pope Leo's defense of private property and, in particular, privately owned family estates, in his famous 1891 encyclical Rerum Novarum.
Wrote Pope Leo XIII, "Every man has by nature the right to possess property as his own."
The plans of contemporary socialists to seize private property, Leo XIII denounced as "emphatically unjust, for they would rob the lawful possessor, distort the functions of the State, and create utter confusion in the community."
Los Angeles Mayor Karen Bass is very pleased that at least one home in Pacific Palisades is under construction following the deadly wildfires that struck the area earlier this year. Los Angeles–area builders are less impressed with the mayor's streamlining efforts.
Politico reports on a brewing split between the California Assembly and Senate on this session's housing bills. The Assembly has been passing a litany of YIMBY ("yes in my backyard") bills to streamline development. They face an uncertain future in the Senate. Senate President Pro Tem Mike McGuire has been less than keen on such efforts. Senate Housing Chair Aisha Wahab (D–Hayward) is even more critical by arguing that lowering building costs doesn't necessarily reduce housing costs.
At The Volokh Conspiracy, George Mason University law professor Ilya Somin lays out some of the legal problems Toms River, New Jersey, might face if it follows through on its plans to use eminent domain to prevent a church from building a homeless shelter.
Bisnow reports on the dire financial state of New York's rent-stabilized housing stock.
If you have a home in Minnesota, you soon might not be able to get inside it, thanks to the state's impending ban on lead content in keys that makes most keys illegal.
The post Texas Revs the Growth Machine appeared first on Reason.com.