Most of the new Texas laws affecting business took effect in September. In addition to the new Zoning Laws detailed in our On The Drawing Board series, Senate Bill 17 is now in effect. It prohibits governments, residents, citizens, and controlled entities of “designated countries” from acquiring interests in Texas real property. The U.S. Director of National Intelligence maintains a list of countries that pose a risk to the national security, and any country on that list within the last three years is automatically added. The initial designated countries include China, Russia, North Korea and Iran. Additionally, the governor of Texas may designate other countries or entities.
The Dallas Central Appraisal District (DCAD) is first to challenge the tax-exempt status of more than 100 affordable housing projects across North Texas, escalating a legal and political fight over House Bill 21. The law changes the Texas Housing Finance Act and limits Housing Finance Corporations to projects within their home jurisdictions. DCAD reacted to the new legislation by sending notices to Housing Finance Corporations that operate outside their home counties. It claims those corporations were never allowed to own property outside their local areas, reversing years of established practice.
The Texas Workforce Housing Coalition argues that for years, DCAD and appraisal districts across Texas issued written predetermination letters confirming both the legality of these ownership structures and their tax-exempt status. And developers relied on those approvals to build thousands of affordable homes for working Texans.
More Housing Related Amendments To Be Decided by Texas Voters
Constitutional amendments up for statewide vote on Nov. 4 include three statewide provisions on property tax relief. Proposition 11 would authorize the legislature to raise the school property tax exemption for elderly and disabled homeowners from $10,000 to $60,000. Proposition 13 would raise the homestead exemption from school district property taxes from $100,000 to $140,000 for all homeowners. Proposition 17 would authorize the legislature to cap the value of land in Texas border counties if it appreciates due to border security improvements.
Another important housing-related item on the ballot are Proposition 4, which would authorize the creation of a dedicated fund for water projects — without raising taxes. The fund would receive $1 billion annually from existing state sales tax revenue for the next 20 years to support projects that address water supply and infrastructure needs. These funds would be used to help repair and replace aging water pipes to reduce water loss from leaks and improve the reliability of water systems across Texas.
Beyond these, the Texas Association of Builders supported:
Proposition 1 giving Texas State Technical College (TSTC) the capacity to train more students to enter the workforce, helping address the labor shortages in our industry.
Proposition 2 prohibiting the imposition of a tax on the realized or unrealized capital gains of an individual, family, estate, or trust.
Proposition 8 prohibiting the legislature from imposing death taxes applicable to a decendent’s property or the transfer of an estate, inheritance, legacy, succession, or gift.
Proposition 9 exempting the ad valorem taxation a portion of the market value of tangible personal property a person owns that is held or used for the production of income.
Proposition 10 providing for a temporary exemption from ad valorem taxation of the appraised value of an improvement to a residence homestead that is completely destroyed by a fire.
Federal Action on Housing Affordability
To reduce multifamily financing costs and help expand the supply of rental housing, the Department of Housing and Urban Development (HUD) announced effective October 1, it would reduce mortgage insurance premiums (MIPs) to 25 basis points for all multifamily programs. To put this reduction into context, multifamily MIPs ranged from 25 basis points up to 95 basis points unless the project was part of a special program.
In October, the Senate also approved the ROAD to Housing Act, aimed at boosting the housing supply by addressing zoning, aging homes, rural and multifamily housing. The Act instructs HUD to collaborate with stakeholders to create strategies for state and local governments to increase housing production, and rewards supportive communities with extra Community Development Block Grant funds. It allows multifamily owners to keep participating in rural rental assistance after their mortgages mature and permits income from accessory dwelling units to qualify for Section 502 loans, relieving liability for transferred loans. The bill also calls for adjusting FHA loan limits to reflect construction costs and support apartment development.
Condos are 54% more affordable than single-family homes in major metros, according to Zillow. But fewer than 7% of condo projects are FHA-certified. A potential Presidential Emergency Housing Declaration would greenlight FHA to insure loans in projects already approved by Fannie Mae and Freddie Mac. By aligning FHA insurance eligibility with existing Fannie Mae and Freddie Mac standards, the measure would remove a duplicative FHA approval barrier. This would streamline financing and provide greater flexibility for buyers, while encouraging developers to bring more units to market.
Casualties of the Federal Government Shutdown
The timely release of data meant to monitor and measure major economic is a significant worry because the delays caused by the federal government shutdown can ripple through the entire housing market. Delays include the anticipated release of September’s housing starts data. And delivery of the latest NAICS retail sales figures. The postponement of such critical data releases and shut-down of essential services like flood insurance or USDA loan underwriting cause buyers and sellers to face uncertainty and unexpected expenses. These interruptions can lead to postponed or canceled home sales, increased financial stress for families, and broader instability in local economies that depend on real estate transactions. In addition, the inability to verify tax returns promptly can especially impact self-employed individuals or those with complex incomes, potentially jeopardizing their loan approvals and home purchases.
NAHB is anticipating that Corps District Offices, which issue Clean Water Act Section 404 permits and jurisdictional determinations, will suspend permitting activities in early November due to a lapse in federal appropriations. The Corps has been using unspent FY 2024 funds to continue permitting and enforcement operations of federal wetland and stream permits since the shutdown began on Oct. 1, but those funds are nearly depleted. Also, affected by the shutdown, homeowners in high-risk flood zones may find themselves dangerously exposed as lenders suspend requirements for flood insurance amid the National Flood Insurance Program lapse, occurring during the peak hurricane event season. (Read more on this in the Financial Matters column)
THIS ARTICLE ORIGINALLY APPEARED IN VOL 5 2025
BUILDING SAVVY MAGAZINE.
SUBSCRIBE TO OUR FREE DIGITAL / PRINT CIRCULATION AND SPECIAL EVENT INVITATION LIST.
