Dallas should nurture homeownership

Homeownership and stable neighborhoods are the foundation of a successful city. Neighborhoods of owner-occupied homes are also essential for the future of Dallas. And yet, surprisingly, something as simple and beneficial as single-family zoned neighborhoods is under attack. Even the Texas Senate, a group one would think would leave zoning to cities, voted to force municipalities to allow two-story backyard rental houses in every single-family zoned neighborhood.

For more than 50 years, urban planners have made the same arguments for more apartments: All big cities have residential density; apartment density is needed to support fixed-rail transit; apartments are more egalitarian; apartment density lets people live close to their downtown office jobs; high-density apartments make neighborhoods more walkable.

Ten years ago, these urban planners claimed that millennials were different. Unlike their homeowning parents, millennials preferred living in apartments in dense neighborhoods. Millennials, it turned out, loved apartment living.

Until they didn’t. One by one, the arguments of urban planners have crumbled. As millennials approach their late 30s and start having families, they want to move to single-family homes in the suburbs. At the same time, it turns out, fixed-rail transit is failing, increasingly irrelevant as Uber and autonomous vehicles emerge. Office workers are abandoning downtown office hours and working remotely. North Texas and the suburbs are booming in population, while the city of Dallas’ population is stagnant. This reduces the city’s need for new housing units.

Now, density advocates seem to have abandoned the argument that the next generation prefers apartments over single-family homes. In a recent Dallas Morning News column, zoning consultant Dallas Cothrum wrote, “News flash: Younger buyers would love to own a home on a nice big lot in a safe neighborhood. They are not buying one for a good reason: They cannot afford it. … Younger Americans are having to delay ownership much later in life.”

Everyone now seems to agree that most Americans prefer owning a home than renting an apartment. Despite the desire to own a home, first-time buyers represented 50% of the home sales in 2010; now they account for only 26% of home sales.

What urban planners don’t tell you is that it is not surprising first-time homebuyers are having such a tough time of it because of economics and government policies that advantage apartment developers. They are competing against investment groups, which accounted for 30% of single-family home purchases in 2022. Investors are snapping up these properties to use as short-term rentals, rental houses or apartments.

What chance does a first-time homebuyer have against government-subsidized apartment developers and rental house investors who pay cash? In 2019, there should have been a surge of first-time homebuyers, because renting became more expensive than owning. Low-income tax credit apartment developments offered rent at $1,500 a month, when a mortgage payment on an average-priced home of $372,654 was only $1,273. Further, the average cost of a home is much higher than the cost of affordable homes — those suitable for first-time homebuyers — that developers are tearing down.

Regulations that allow short-term rentals and backyard rental houses also work against the availability of affordable homes for first-time homebuyers. A $250,000 home with an added $250,000 backyard rental house raises the price of that home to $500,000, out of the range of many first-time homebuyers.

Density advocates offer a solution to the decline of first-time homebuyers: Just give up. Accept that most people will now never be able to own a home — that homeownership will only be a dream. This seems a defeatist approach. If young and old desire the advantages of single-family neighborhoods — safety, trees, friendly interaction with neighbors, walkable and bike-friendly streets, and wealth creation — Dallas should encourage homeownership and owner-occupied neighborhoods to allow people to realize their dream.

Investors replacing affordable homes with apartments and rentals makes affordable homes more unattainable for first-time homebuyers and makes neighborhoods less attractive for future homebuyers. When it comes time for young renters to buy a home, they will leave the apartment-infused neighborhoods of Dallas and buy a home in the suburbs.

Other cities have banned single-family zoning for apartments. These cities are becoming urban reservations for rich homeowners and renters. Dallas should strive to make Dallas a city of homeowners with good opportunities for renters to eventually own their own homes in stable neighborhoods. Dallas should make the dream of homeownership in the city a reality.

Douglas Newby is a real estate broker who specializes in architecturally significant homes in Dallas. He wrote this column for The Dallas Morning News.

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