The City Of Dallas Needs A Homebuilding Boom To Ensure Economic Success


While the North Texas economy is booming, the core city of Dallas faces challenges bedeviling other cities: a dwindling middle class, bifurcation into neighborhoods of haves and have-nots, and an emerging home affordability problem.

Dallas urgently needs to shift to a more inclusive and sustainable pattern of growth. This demands a homebuilding boom focused on middle- and lower-income families, especially in southern Dallas.

Middle-income families increasingly can't afford to live in the city's thriving neighborhoods and don't want to live in its struggling ones. For lower-income families, rising housing costs are eating up people's income and putting upward mobility out of reach.

These challenges are partly a side effect of the city's boom. But they're also the product of underinvestment in schools, infrastructure and modern amenities, as well as policies preventing housing supply from keeping up with demand.

The median price for a single-family home in Dallas County is up 73 percent since 2007. And the median price is now, based on federal standards, 86 percent above affordable levels for median families. One-third of homeowners and more than half of renters are housing cost-burdened.

The housing price challenge reflects inadequate growth and reinvestment in the housing stock. Construction has lagged far behind the pace of the late 20th century. Virtually all multifamily development since 2016 has been in the luxury segment.

Dallas also remains among America's most economically segregated cities. According to a 2015 study by University of Toronto professor Richard Florida, North Texas is the seventh most economically segregated of the 53 metro areas with more than a million people. And 37 percent of Dallas children live in neighborhoods of concentrated poverty, higher than all but a handful of cities.

The growing separation of Dallas into thriving and struggling neighborhoods has huge economic implications. A city should be an engine of opportunity for its citizens, but vast zones of concentrated poverty block upward mobility for the families who live there.

Harvard University economist Raj Chetty has shown that an individual's prospects depend heavily on where he or she lives. One factor: Social capital varies enormously across neighborhoods. People living in areas with low poverty, high civic engagement, and high home-ownership rates also have better life outcomes.

Also, the nearby quality of life strongly influences where employers locate jobs. Bringing job-creating businesses to areas where few skilled workers wish to live is a near-impossible task.

Dallas also needs to address the rising costs these patterns impose on the regional economy. Growing physical separation between workers and jobs causes severe market inefficiencies, with labor shortages in high-opportunity areas, as businesses in fast-growing cities north of Dallas can attest.

And Dallas must ask itself what it means for social cohesion if most police officers, teachers, chefs, plumbers, and other middle-income professionals live far outside the central city, as is increasingly the case.

What's needed is a massive building boom to redress Dallas' supply-demand imbalance. City hall's new housing policy is a good start, but it's not enough.

The city's policy scope should be broadened to include neighborhoods with abundant land and proximity to downtown and Uptown job markets, such as Fair Park and the Bottom area near the Trinity River, as detailed in a new report by the George W. Bush Institute. In 2018, these neighborhoods didn't qualify as redevelopment areas for city resources aimed at lower-income housing. But the revitalization of the city's central neighborhoods will likely reach them before long because of their location, and the city's housing policy should nudge this process along.

City hall should overhaul its decades-old zoning law for multifamily neighborhoods, as Detroit has done, to permit greater height and density and reduce or scrap minimum parking spot requirements. Accelerating approval times and deregulating over-restrictive provisions should also be a focus. Lighter-touch regulation would induce more developers to build walkable neighborhoods with mixed-use, mixed-income housing, making the city more attractive to families that might otherwise choose the suburbs, while addressing the supply gap.

New voluntary "inclusionary zoning" rules, currently under review, should be passed to offer multifamily developers breaks on density restrictions in exchange for including affordable units in new developments.

Public authorities and nonprofits should partner to create deeper land bank resources, securing cheap land for future construction. Land banks should have greater opportunities to set aside parts of the vast land stocks held by the city and Dallas ISD for new housing development aimed at working-class families. And the city should aggressively incentivize rehab work, as small investments can make all the difference in stabilizing neighborhoods.

While markets generally work well in allocating land to its best use and adapting to fast-changing realities, wise government has an irreplaceable role in promoting more inclusive urban prosperity. Above all, this means getting the basics right - K-12 education, public safety and quality-of-life amenities.

Public policy should also regulate the much-needed inflow of private capital to disadvantaged areas to contain displacement. But Dallas needs smart regulation, creating better incentives for developers. The cure for gentrification might be worse than the disease, if it means continued disinvestment in southern Dallas.

The good news: The city has greater opportunities to address these issues than most big U.S. cities, thanks to its vibrancy and relatively cheap, abundant land. With a better policy mix and concerted action, Dallas just might become a model for inclusive growth in the 2020s and beyond.

This piece originally appeared in the Dallas Morning News.

Cullum Clark is Director of the George W. Bush Institute-SMU Economic Growth Initiative and Adjunct Professor of Economics at SMU in Dallas. As Director, he leads the Bush Institute’s work on domestic economic policy, including programs focused on Opportunity and Ownership and on Fiscal Reform. Cullum worked for 25 years in the investment industry, at two Wall Street firms and then as founder and president of a Dallas family office. He has served on the board or investment committee of numerous non-profits and early-stage businesses. He earned his PhD in Economics at SMU in 2017. His research and policy interests include fiscal policy, monetary policy, economic geography and urban economics, and economic growth. He also earned his undergraduate degree at Yale and a Master’s degree at Harvard. Cullum and his wife Nita live in Dallas and have three daughters.

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