How is the Houston housing market being impacted by policy and what can we do to manage the demand for solutions?
As inner city neighborhoods become attractive to investors and developers looking to profit from rising property values, Black communities like Third Ward are feeling the stress of gentrification. There has been an influx of private dollars pushed into the real estate market by proximity to economic opportunity, tax incentives like opportunity zones and 1031 exchanges, and a shortage of housing inventory. While there are many positive outcomes from this investment, if left unmanaged it could result in massive displacement, a disconnect from cultural ties, and unsustainable development practices. While the City of Houston has been deliberate in its attempt to safeguard communities on the verge of gentrification, solutions to manage the growth and demand for the city’s resources have not been easy to handle for leadership. Without tools like zoning or ordinances that speak to the form and function of areas as a whole, communities like Third Ward have been left vulnerable to market pressures.
Consequently, current and future residents are without affordable options to live, work, and/or play in the area. Realtors Property Resource reports over a 100% increase in property value over a 2 year span, a faster rate than we’ve seen in over 10 years. As evidence of the impact this is having, Rice Kinder Institute for Research cited a 15% decline in indigenous population in the Third Ward community in less than a 10 year span. The result is a community where the historical median income has been under $20k, but the homes being built or returned to the market are priced at levels even those making 60-80% of the median income can qualify for or afford. Luckily, Houston is still not experiencing the pressure other markets like Chicago, Portland, or Atlanta are having so there is still time to deploy solutions that provide more housing and commercial options to leverage. The perfect storm of changing policy, transfer of wealth, and shortage of inventory have garnered a multitude of groups presenting solutions for development and property ownership that yield social and economic impact. When you introduce COVID into the mix, you end up with a complex situation that will require long term education on new trends, the adoption of creative financing solutions, training of laborers and skilled workers, as well as practicing more responsible development practices.
Where Houston has begun to show a commitment to density and people centric places via their Walkable Places initiative, Transit Oriented Development ordinances, and discussions on multi generational development, there is still a ways to go. Processes for minimum lot sizes, building lines, or other tools residents can use to protect their neighborhoods are antiquated and inequitable. Additionally, there is no relief from market pressure via policy or resources even in areas designated as Complete Communities by the mayor of Houston. These areas had been targeted as regions in need of additional resources and investment that would be supported by the city, but has yet to deliver in a way residents can appreciate. Scenarios like this across the country warrant the need for organizations like the Third Ward Real Estate Council that are focused on sustainable development practices that are incremental and relatable to local residents. Read about their Project Griffin lot activation to learn more about how this organization is building a community of local developers to challenge policy and manage demand from the market for affordable options, labor and inventory.
