OPINION:
The dream of owning a home is slipping further out of reach for many young families. Rising housing costs are one of several factors contributing to delayed marriage and, thus, declining fertility rates. To reverse this trajectory, states and local municipalities should look to Texas, not Canada, for solutions.
The most recent data from 2023 shows Texas’ total fertility rate at 1.81 — nearly double British Columbia’s 1.00 and far above Ontario’s 1.22. Unsurprisingly, housing in Texas is dramatically more affordable than in British Columbia or Ontario.
Although not the sole driver of fertility rates, overly restrictive housing policies have made homeownership nearly impossible for most young families and pushed rents to record highs in Canada. The average home costs more than 11 times the median household income in Toronto and more than 14 times the median income in Vancouver. Meanwhile, the median home price in Houston and Austin, the largest and fastest-growing cities in Texas, sits around five times the median income.
As Vice President J.D. Vance noted in March, even the city of Austin, despite its liberal politics, has implemented some “pretty smart policies” regarding housing.
Here are three key areas where state and local governments should emulate Texas’ “smart policies” — not Canada’s — when it comes to housing.
Reduce minimum lot size requirements: Reducing minimum lot size requirements would allow for more modest, affordable homes to be constructed and expand access to homeownership for working and middle-class families. In Vancouver, where minimum lot sizes are set at around 3,300 square feet, the median price of a detached single-family home is a staggering $1.4 million. Houston, by contrast, has far more flexible minimum lot size requirements despite being the fourth-largest city in the United States and experiencing rapid population growth.
In 1998, Houston reduced the minimum lot size from 5,000 to 1,400 square feet for parcels meeting certain standards for open space. In 2013, the policy was expanded to cover nearly the entire city. This reform led to the construction of more than 80,000 homes built on small lots. The median price of a single-family home in Houston is around $334,000.
Even Texas’ most liberal city, Austin, has embraced market-based reforms by reducing its minimum lot size requirement to 1,800 square feet in August 2024. Before its implementation, the Austin Board of Realtors estimated that reducing minimum lot sizes to 2,000 square feet or less would significantly lower land costs, considering that land accounts for approximately 15% to 20% of the home’s price. For example, a $540,000 home could fall to $477,313, saving buyers more than $62,000.
Expedite permitting: Once minimum lot-size requirements are decreased, developers still need to navigate the permitting process. If this process is overly burdensome or delayed, it can unnecessarily block or slow down the construction of new housing.
Despite promises from politicians to speed up the process, it took a median of 260 days to obtain a permit for low-density detached homes in Vancouver in 2023. In that year, only 71 building permits were issued for low-density single-family homes. For detached houses with a secondary suite and laneway homes, the median permitting time rose to 282.5 days and 272.5 days, while only 146 and 96 building permits were issued, respectively.
Texas has taken steps to expedite permit approvals. A Texas law, H.B. 14, passed in 2023, required cities to review building permit applications within 45 days. If no decision is reached within the window, a third-party review would be able to approve the permit.
Prohibit inclusionary zoning: In 2021, Toronto adopted an “inclusionary” zoning policy. This policy mandated that 5% to 22% of units in new developments be designated as “affordable.” Texas, on the other hand, started restricting the practice for homeownership units in 2005.
Texas was right to do so. Inclusionary zoning effectively functions as a tax on new market-rate housing by requiring developers to subsidize below-market units, thereby raising the cost of the remaining units to offset the lost revenue. A 2019 study by the Mercatus Center found that “mandatory inclusionary zoning has raised house prices more than 1% per year the program is in place, relative to what jurisdictions could have expected without it” in the Washington-Baltimore metropolitan area.
Canada’s housing policies have led to housing shortages, high costs and stagnant construction. In contrast, Texas shows what’s possible when leaders put families first and remove barriers to homeownership. State legislatures and local governments should follow Texas’ lead: Cut red tape, build more homes and put the American dream back within reach.
• Miles Pollard is a policy analyst in The Heritage Foundation Center for Data Analysis. Ethan Xu is a member of Heritage’s Young Leadership Program.
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