With one of the worst housing supply shortages in the country, Dallas could be one permit crisis away from a development deficit disaster.
The City of Dallas has a disproportionate housing shortage compared to the rest of the U.S., according to a recent analysis by the Bank of America Institute.
Moreover, this has been amplified by the large influx of people and businesses moving to the region for its attractive business environment, resilient labor market, and countless entertainment options, as reported by The Dallas Express.
By contrast, one of Dallas’ less-appealing aspects is its difficult-to-navigate and delay-prone development process, which often results in long permit cycles and frustration from the building community.
For homebuilders to keep up with the city’s considerable housing demand, Dallas’ Development Services Department (DSD) would need to prevent any long-term permit delays or approval setbacks while issuing a constant stream of single-family and multifamily construction permits. As it stands now, supply cannot keep up with demand in Dallas.
Statewide, Texas had a deficit of more than 320,000 housing units in 2022, according to data from Up For Growth, a national nonprofit focused on solving the housing shortage. When narrowing the reference frame to just Dallas, data from Child Poverty Action Lab (CPAL) show a supply gap of more than 70,000 units.
“The city of Dallas is facing a shortage of attainable homes and rental units, and this shortage is only expected to worsen as the city continues to grow,” said Ashley Brundage, executive director of housing stability at United Way of Metropolitan Dallas, according to KERA News.
In a spring 2023 report by CPAL, the local nonprofit determined that Dallas’ supply shortage was 44,280 units for households earning 30% or less of the area’s median income (AMI) and 33,660 units for households earning 50% of AMI.
The supply gap for middle-income earners is expected to rise to 83,503 units by 2030, the report shows. Among higher-income earners making up to 80% of AMI, CPAL analysts forecast a 23,300-unit deficit by 2030.
“We have a large gap in housing supply available to all income levels and there isn’t enough diversity in what product types are available,” said Bryan Tony, managing director at BGT Strategies LLC and consultant for the Dallas Housing Coalition (DHC), according to real estate news site Candy’s Dirt.
“We want single-family homes. We want missing-middle housing, and we want people who can afford to rent. We’re a majority rental city right now, at 55%. Many of those are housing-cost burdened,” he said.
The DHC is calling for Dallas City Council to allot $200 million for housing in the upcoming 2024 bond election. With that amount, Dallas would be able to build roughly 100,000 new housing units over the next 10 years, the coalition surmises.
“We know people are still moving to the Dallas region. We don’t want to play second fiddle to the suburbs. We need to plan for Dallas’ growth,” continued Tony.
“Housing staff has said we need to develop 100,000 new or refurbished affordable homes by 2033 to meet our housing demand. We’ve all come together to basically advocate for this $200 million in the upcoming bond to give people a place to live,” he added.
Solving the housing shortage in Dallas will be essential if the city wishes to attract new residents and businesses to the area. However, the City won’t be able to capture that growth if development activity for new housing stalls or returns to pandemic-era levels.
During the COVID-19 pandemic, DSD was forced to switch to a new online permitting software to accommodate builders and facilitate development during the lockdowns. In doing so, DSD produced bottlenecks in the development process, which incidentally led to one of the most extensive permit backlogs in the city’s history.
At the peak of the Dallas’ permit conundrum, DSD was averaging over two months to approve a single-family permit — an unprecedented height compared to the three-to-five-day turnaround times seen before the pandemic, historical data show.
DSD received 204 permit applications in July, the second-busiest month for new single-family development in 2023, according to data from the City’s residential permit activity dashboard.
If Dallas finds itself in another permit crisis similar to or worse than the one seen during the pandemic, it will only exasperate the city’s already-frustrating housing shortage, thus pushing up demand on existing homes and sending property values ballooning higher.