The Housing Divergence: Why Texas Builds and California Stalls

Texas and California are similar in many ways. They were the two largest states to emerge from the Mexican-American War. They were both, at least temporarily, their own countries before being incorporated into the United States. At different times, they have both been symbols of a peculiarly American way of life, in a manner that could not be said of any other state in the Union. Yet the two states have in recent years become symbols of the fundamental divide inside America itself. California is the quintessential high-tax, high-regulation, socially liberal blue state; Texas is a quintessential low-tax, low-regulation, law-and-order red state.

Americans have been voting with their feet and leaving California for Texas. There are many reasons for these moves, but foremost is that Texas has a lower cost of living, and by far the most important aspect of cost of living is housing. The obvious reason that California homes are more expensive is that the state makes it harder to build. But the question of why it is so much harder to build in California is not as obvious as some may think. In both Texas and California, land-use regulations are mainly local, and the states’ basic zoning-enabling laws for local government are similar.

There are two major reasons California and Texas diverge on housing. The first reason is California’s peculiar brand of environmentalism. Due to decades of laws and rules aimed at preserving every farm or dale, California cities have had a particularly hard time growing out and sprawling, and developers must ensure their creations, both those growing up and those growing out, have almost no impact on the environment. Texas cities, meanwhile, have been happy to eat up ever more land for single-family homes and subdivisions, with few environmental mandates from state or local governments.

The second reason for the housing divergence is California’s stilted local government system. It is nearly impossible to form new municipalities and new governance bodies for infrastructure in California. Meanwhile, existing municipalities face significant fiscal costs in dealing with new growth and little fiscal upside. In Texas, by contrast, it is almost comically easy for developers or others to form new local governments and create new infrastructure, while cities have strong fiscal reasons to encourage growth.

In both states, the tendencies of either restraint or growth tend to compound over time. California’s expensive housing has created a kind of local “rent,” as economists call it when a good is restricted and has a monopoly price, which has led to ever more mandates that can distribute that rent to interest groups. Texas, meanwhile, has created a growth machine where builders and workers are politically strong enough to encourage ever more development.

In the past decade, pro-housing groups in California have focused on changing state laws to mandate more local development. While much of this effort has been salutary, it misses the fundamental reasons that California’s housing prices differ from states such as Texas. Much of what causes housing to work there, such as minimal environmental rules, innovative local governance, and fiscal decentralization, is not technically about housing. These structures are the underpinnings that allow the state to build. California should work more on reverse engineering what works in states like Texas instead of trying to create its own solution to the housing crisis.

Leading Indicators

The best way to measure housing costs is the price-to-income ratio, which calculates how many years of income it would take a median family to afford a median house in a certain area. According to the research group Demographia, Dallas and Houston, the two largest metros in Texas, have price-to-income ratios of 3.9 and 4.1 respectively; Austin is slightly more expensive at 4.6.

The largest urban areas in California are in a different league entirely. In San Diego, the ratio is 9.0, San Francisco’s is 9.4, Los Angeles’s is 10.7, and San Jose’s is 11.3.¹ With the exception of the island city of Honolulu, which is in between San Francisco and Los Angeles on affordability, no other American city comes close to California’s in terms of housing costs.

The simple reason that home prices are higher in California than in Texas is that the latter builds more. Each year, Texas permits around 200,000 new housing units.² California typically permits about half of that.³ The division is starker when one realizes that California has almost a third more population than Texas.⁴ Even more surprising, on a simple supply-and-demand framework, finished housing in California is far more expensive. That means there is even more incentive for developers to build there, if they could.

California and Texas also diverge in the types of buildings they allow. Since the postwar period, California has been famous for its sprawling highways and supposed endless stretches of single-family homes. The reality is almost the exact opposite. By typical measures, California has the densest big cities in America. If one ranked the largest urban areas by density, Los Angeles would be the densest at about 7,500 people per square mile, San Francisco and San Jose would be next at about 6,500, and New York City would be fourth at about 6,000. Although the ranking may seem counterintuitive, since eastern cities like New York have such dense cores, these cities become more sprawling and diffuse as they spread out. California cities like Los Angeles have a consistently dense population throughout. Even if one used a more granular measure of density, which weights density by neighborhoods, and which would put New York City back at the top, San Francisco and Los Angeles would still be right behind it and well ahead of all other large metropolitan areas in the United States in terms of density.⁵

California cities are denser because their postwar growth has been mainly “up” and not “out.” While most large cities in America have become more spread out and less dense in recent decades, California’s cities have had the opposite tendency.⁶ Although San Francisco is about as dense as it was in 1950, Los Angeles is 60 percent denser, and San Jose is more than twice as dense. Texas has largely continued to sprawl. Dallas is slightly less dense than it was in 1950, and Austin and San Antonio are about half as dense. The one Texas exception, Houston, had a stable density for sixty years but then densified over the past decade, mainly by filling in underused inner-city parcels.

One reason California has kept densifying is that it continues to do a decent job creating more multifamily housing. California last year issued about forty-six thousand new multifamily permits.⁷ That’s actually not too far off from the seventy thousand multifamily permits issued by Texas. The big divide is in single-family housing: Texas had around 140,000 permits last year, which is almost two and a half times California’s level.

If we are looking for a reason Texas is cheaper than California, we have to look first and foremost at why Texas builds more sprawling single-family home neighborhoods and why California doesn’t.

The Laws of Geography

Although it is not a sole explanation, California is unlucky in its geography relative to Texas. Texas’s massive cattle ranches, their size determined in part by the light rain and sparse grass that required more room per cow for grazing, have made it easier for developers to buy up big plots and develop them into completely new towns. Due to its more verdant environment, California’s farms and ranches were always more numerous and smaller. As Michael Heller pointed out in “The Tragedy of the Anticommons,” an abundance of small parcels can make transaction costs too high to complete projects.⁸

Even more detrimental for long-term growth, California’s major metros are surrounded by hills and mountains, which evidence shows are some of the most significant barriers to outward development. For instance, one study showed that about half of the land within about a thirty-mile radius of the Los Angeles city center was in steep-sloped areas. Flat, low-lying Texas, by contrast, allows easy engineering for new roads, sewer, and water lines, as well as new housing.⁹

Yet the geographic explanation of housing differences has limits. California’s climate is Mediterranean, not subtropical. It has less than half the annual rainfall of fast-growing states such as Georgia or Tennessee, which historically had even smaller farms.¹⁰ As indicated by numerous place names, California was once famous for its large ranches as well. Hills do clearly inhibit development in California, but the city of San Francisco—famously built, and built compactly, on a series of steep hills—shows they are not a sufficient barrier to development on their own.

As in many aspects of housing, California has taken an early disadvantage and exacerbated it. Most importantly, the environmental impulse to preserve its peculiar geography has made expansion exceedingly difficult.

California’s tax system has been used to protect much of its farm and ranchlands. Although most states, including Texas, provide a reduced property tax assessment if land is used for agricultural purposes, California’s agricultural assessment system was designed to slow development.¹¹ Farmers and ranchers who want to receive a property tax reduction under California’s 1965 Williamson Act have to contract with the county to keep their land undeveloped for a minimum of ten years. To get the full reduction, they need to contract for a minimum of twenty years.¹² The contract is legally binding and automatically renews each year unless the farmer or rancher quits the program.

If, say, a California rancher wanted to develop his land, he would have to end the exemption nine or nineteen years ahead of the planned development, and during that period his property tax assessment would continually go up until it reached its full nonagricultural level.¹³ Approximately 15 percent of all land in California is protected under the Williamson Act, and the benefit is greatest in locations closest to urban areas. In one survey of California Central Valley ranchers, over 20 percent said they would sell off all their land if the program ended.¹⁴ As the California Supreme Court said, the legislation was aimed at stopping urban growth, including the conversion of “agricultural land to residential” uses and “the disorderly patterns of suburban development.”¹⁵

California has created other mechanisms to protect land around cities. In 1990, state voters established a Habitat Conservation Fund, which provides tens of millions annually to buy up land. The fund was originally expected to expire by 2020, but the legislature has extended it until 2035.¹⁶ Although the intent was to protect species’ habitat, one of its main effects has been to buy up any land, no matter how barren, in the path of development. Four years ago, the fund contributed millions of dollars to acquire and preserve the six-thousand-acre Temescal Ranch, which has been described as the “largest piece of undeveloped land in LA County,” which itself is the most populous county in the nation.¹⁷

Although hills provide their own barriers to development, California has put numerous legal barriers to building on them. In many places, “slope density ordinances” make it impossible to build more than a few homes per acre. In Redlands, California, in areas with a 15 percent slope, a maximum of one home per 2.5 acres is allowed; if the slope is over 30 percent, it’s only one home per ten acres.¹⁸ In the mountain ranges of Monterey County, an area with a 20 percent slope allows only one house per two acres, and with a 30 percent slope there is no building allowed at all.¹⁹

One may think no one wants to live in areas with such a high slope, but San Francisco shows that with even older technology high-density development is possible on hills. Los Angeles, too, was once eager to build on its hillsides. By the late 1950s, about two-thirds of new Los Angeles homes were being built on hillside lots.²⁰ A 1958 House and Home magazine article noted that “with less and less flat land left close to our cities, more and more builders are taking to the hills.”²¹ The magazine interviewed people involved in residential projects in San Francisco and Los Angeles describing how to create hillside lots and how these lots tended to appeal to an upper-crust set, who enjoyed the more expansive views. Slope ordinances and other restrictions ended this development.

One typical justification for slope ordinances is that they are necessary to prevent landslides. But the diversity of different ordinances shows there is little scientific basis for these regimes. More important for protecting against landslides are proper grading and cut-and-fill ordinances, which have been in place since the 1950s in California after a series of landslides forced reform. Slope density ordinances and other protections against any development on hills only became common later, in the 1970s and ’80s, after most of the earlier landslide ordinances had already served their purpose.²² Internationally, places such as Hong Kong, Monaco, and Japan show that dense development is possible on hillsides.

There are other ways in which the state restricts outward development. One of the most damaging is the California Environmental Quality Act, or CEQA. Although it was supposed to mimic a federal-level law requiring studies for new government projects, the California Supreme Court read it to require extensive and expensive studies whenever a government permitted a new project, meaning most of California’s private development has to go through the CEQA process.²³ The CEQA process is especially strict for any greenfield or sprawling development.

In recent years, the state has tightened the CEQA constraints on outward growth. The state told local governments that to pass CEQA muster, new developments should have a per person “Vehicle Miles Traveled” (or VMT, an estimate of how much driving new development will create) 15 percent lower than the area average. If the new development cannot meet that standard or mitigate any “harm” caused by driving, it must pay fees that can amount to hundreds of thousands of dollars per new home.²⁴ Since any development on the fringes will tend to have a higher VMT than infill growth, the effect of the standard is to squelch outward growth.

Even more devastating for development, many California areas simply forbid any growth outside of strict boundaries, known as urban growth boundaries, urban limit lines, or greenbelts. The goal, as is typical for California, has supposedly been to protect nearby environmental preserves. In one survey, nearly 30 percent of California cities had adopted some growth boundary, mainly in the northern and central parts of the state, but boundaries were prevalent in every part.²⁵ In 1990, Contra Costa County, a fast-growing county on the outskirts of the San Francisco Bay, adopted an ordinance that preserved 65 percent of the land for nonurban uses and tried to squeeze all development into the remainder.²⁶

Due to environmental tax incentives and environmental rules, about 40 percent of land in the nine-county Bay Area is used for grazing. The large majority of that land is protected under the Williamson Act. Another 20 percent of the land is reserved for parks or open spaces, on which some agricultural practices can still take place.²⁷ In much of the area, cows are grazing on land that could sell for millions of dollars an acre.

The main area in which California differs from Texas is in its outward growth, and the main barriers to outward growth in California are environmental laws. These are framed in broad ecological terms, but they often end up protecting land of little environmental value. Their unquestioned effect is to drive up housing prices.

Lack of Governance Innovation

The other area in which California lags Texas is in local governance. While Texas allows a diversity of relatively independent local governments, often led by developers themselves, California has created effective cartels of local governments to prevent innovation and competition in governance. The root cause of these restrictions was environmental, because California was concerned more local governments meant more sprawl.

Texas allows developers to effectively create their own governments. They can petition the Texas Commission on Environmental Quality or the legislature to create a Municipal Utility District, affectionately known as a MUD. A MUD can be controlled by the developer through the votes of local residents beholden to him. It can then vote to issue bonds, levy property taxes, and charge fees. It can use those funds to finance water and sewer pipes, and, with approval of the legislature, other projects such as parks and roads. Typically, a developer uses the first tranche of MUD funds to install the next phase of local public goods.²⁸ The state has created nearly five hundred MUDs since 2018.²⁹

The ease of forming these pop-up governments is easy to mock. The HBO show Last Week Tonight with John Oliver pilloried Stingray Services, a company that promised “turn-key voter trailer” MUD services, which meant bringing a trailer and temporary “citizens” to the developers’ land to vote for a new MUD.³⁰ But this ease of local public goods provision has been one of the most important things allowing more outward growth in Texas. The developer has a strong incentive to manage these MUDs well and to keep costs down, since any property taxes and bonds used to fund the infrastructure are burdens on the new development.

MUDs do have downsides. They can have property tax rates that are double or triple those of nearby, established cities.³¹ But the high rates show that such developments tend to pay the cost of new infrastructure. The fact that existing areas do not have to subsidize newcomers means the new areas face less opposition.³²

By contrast, California, decades ago, became concerned about the supposed unruly creation of local governments. In 1963, it required counties to form a Local Agency Formation Commission, or lafco, essentially a cartel of existing local government officials, from the county, municipalities, and special districts in that area.³³ They were and are required to sign off on any new government or changes in boundaries of existing governments. The law explicitly says its goal is “discouraging urban sprawl” and “preserving open-space and prime agricultural lands.”³⁴ The lafco also creates “spheres of influence,” which, like their more famous international equivalents, allow existing municipalities to exert control over nearby territory.³⁵

Even more burdensome for California is that local governments are extremely constrained in how they raise revenue. One of the surprising roots of California’s fiscal morass is a decades-old educational equity lawsuit. The Serrano v. Priest case, first ruled on by the California Supreme Court in 1971 and cemented in a 1976 ruling, held that funding school districts through local property taxes was inequitable and therefore high-property tax districts should compensate low-property tax districts.³⁶ Despite claims by the lawyers and advocates that poor kids were getting shut out of wealthy school districts, the reality was and is that central cities, where a disproportionate number of poor and minority school children were and are located, also tend to have a disproportionate amount of property taxes from their downtown offices.³⁷

The single largest source of local government funds nationwide has long been the property tax, and the single largest use of property tax revenue has always been for schools. Thus, a ruling that redistributed these funds between districts meant local governments could not get as much fiscal upside from new growth. As one study by Jacob Krimmel points out, those cities that lost the most revenue from Serrano tended to restrict housing the most.³⁸ Another study by William Fischel showed that cities that lost the most funding also tended to swing the most toward the Proposition 13 restriction on property taxes in 1978.³⁹ If local citizens were not going to get the fiscal benefits of property taxes, they saw no reason to pay them.

Proposition 13, which permanently restricted property taxes to no more than 1 percent of market value, and which limited assessment increases to 2 percent a year, has been blamed for much of California’s local fiscal ills.⁴⁰ But it is important to remember that this policy shift was itself largely the result of the Serrano case. It is also important to note that attempts to manage the distribution of taxes after Proposition 13 were as damaging as the limitation itself.

As Proposition 13 took effect, the California legislature had to figure out how to distribute the existing tax revenue between cities. AB 8, passed in 1979, both centralized administration of taxes in Sacramento and largely froze the proportion of taxes different cities, counties, and special districts received in place at the time of Proposition 13’s passing. This meant some library districts or mosquito districts could get large amounts of funding even if they were unneeded. In 1987, the Tax Equity Allocation further forced equalization of taxes by requiring counties to reimburse cities with low or no property taxes that could not afford local services.⁴¹

The freezing and centralization of property taxes has made new incorporations nearly impossible, even if the lafcos would approve them. Since 1992, during a budget crunch, California has required new incorporations to prove that they are “revenue neutral” and would not take funds from existing government. As one analysis found, before the act, California averaged a small but reasonable four new incorporations a year, but the act “caused incorporations across California to grind to a virtual halt.”⁴²

In effect, the revenue neutrality law required new governments to bribe existing governments with some of the new tax revenue they raised. For instance, in 2001, citizens in a part of Santa Barbara wanted to incorporate a municipality called Goleta. To secure county agreement to the revenue neutrality plank, they agreed to give the county 50 percent of their property taxes and 30 percent of their sales taxes, as well as more top-off taxes for a ten-year window.⁴³

In another budget crunch in 2011, the state government swept up one of the few remaining taxes available to local governments, the local vehicle tax, which made new incorporations and local funding even more difficult.⁴⁴

One can see the differences in how the states treat local government by the number of cities in them. California has fewer than five hundred cities.⁴⁵ By contrast, Texas, much smaller in terms of population, has over 1,200 municipal governments.⁴⁶ In addition, it has almost 1,500 MUDs.⁴⁷

California does allow some innovative districts, and Texas has faced some property tax equalization, but state fiscal structures mean both the positive and negative effects of these policies are limited. In 1982, California recognized the difficulty its funding structure created for new developments, and it created a district similar to a MUD, known as a Mello-Roos district.⁴⁸ These can be developer-led and can get around much of the lafco requirements about approval of new incorporation. In some areas, such as parts of Irvine, they have been successful in developing new areas, and in others they have allowed existing cities to create infrastructure. But if a new district is going to contract with water or other service providers in existing cities and districts, it still needs lafco permission. Even if permission is given, Mello-Roos districts must use a complicated and limited funding structure due to Proposition 13, and their long-term viability is made difficult by the centralized state financing system.

Texas also had a series of school finance equalization rulings. The Edgewood case in 1989 led, after some more skirmishes between the legislature and the courts, to a “Robin Hood” tax that performed very much like California’s post-Serrano system in terms of redistributing school aid.⁴⁹ The redistribution system collapsed so completely that the state had to step in and manage school funding from 2006 onwards. But even after state control, the state allowed local school districts more leeway than California’s, and the state never centralized nonschool funding. The fact that Texas’s school redistribution took place later and fell apart more quickly meant it did less damage to the long-term fiscal independence of local governments.

The reasons why California’s local governance structures are stilted lie with the state’s suspicion of local government and its fiscal constraints. Texas, by contrast, has largely allowed local governments to develop and has allowed them to keep most of the gains of growth.

State Laws Are More a Burden than Benefit

Many have argued that California’s refusal to build is due to an inordinate deferral to local government nimbys, or Not-In-My-Backyard protestors, who refuse to rezone for denser housing. Yet in many respects, Texas is more deferential to local governments than California. In both its building codes and its general zoning, Texas gives far more leeway to local governments, yet it continues to be far more open to building.

There is a tendency in the literature around housing to focus on zoning and other legal barriers to development while ignoring the actual costs of constructing a house. Yet in California, the costs of the building code are substantial, and they are driven largely by environmental mandates coming from the state.

San Diego did a comprehensive study of the increased cost of housing in the city from around the market nadir in 2013 to the post-Covid plateau of 2023. The city found that the increase in “hard costs” (physical construction) accounted for 31 percent of the increase in housing prices, and the soft costs (consulting, fees, finance, and white-collar work) contributed 21 percent. Less than half of the change in price was due to the increase in land costs, which are generally considered the result of zoning or development restrictions. There is no reason to believe these contributions are substantially different in the rest of the state.⁵⁰ Thus, much of recent housing cost increases are driven by increased construction costs.

Other studies show that the hard costs of construction can also explain much of the difference in costs between California and other states. The RAND Corporation studied the cost of construction of multifamily units in both California and Texas and found the biggest difference by far was in hard costs. The hard costs in California were $253 per square foot, while in Texas they were $115, making up most of the difference in the total cost of new units. Housing hard costs are divided between many particular categories of construction, but the costs in California were proportionally highest in drywall, foundations, masonry and cladding, flooring, and windows. RAND estimated that all of these categories, besides flooring, were impacted by significant environmental or earthquake regulations that drove up costs.⁵¹

Many environmental building regulations have been imposed by the state and imposed recently. The San Diego study found that about $11,000 in new costs for a single-family home and $9,000 for an apartment in a substantially sized multifamily building were due to new state environmental regulations imposed just after 2013, especially mandated solar panel installation, electric vehicle charging spots, and new stormwater management requirements.⁵²

Although soft or white-collar cost increases were substantial in the San Diego report, in most cases, soft costs, such as architecture and engineering work, insurance and legal work, and the construction manager’s fee, are billed as proportions of the hard costs, meaning a rise in the latter will increase the former. Soft costs are also affected by increases in overall building code regulation, which require more white-collar expertise to interpret. The increase in California building-code mandates has thus been a major driver of soft cost increases as well.

In California, building codes are centralized at the state level, and the state continues to ratchet their requirements upwards. The state has promulgated a new California Building Code every three years, which local governments are obligated to follow. In addition, California issues more minor code amendments every eighteen months. The extent of code revision, at least until a 2025 change slowed new rules, was so great that it was hard for local governments to even follow what was allowed and what wasn’t.⁵³

Texas, by contrast, allows local governments much more leeway in building codes.⁵⁴ As one guide to local building permits states, “Texas takes a decentralized approach to building regulation that sets it apart from most other states. There is no statewide building code enforced uniformly across the state.” Although the state encourages cities to adopt one of the International Code Council’s model building codes, they are free to choose whichever edition they want and to add local amendments.⁵⁵ These local governments, which must directly face local developers, have been wary of being too restrictive.

The state of California has a long history of trying to involve itself in local governments’ zoning decisions as well. As far back as 1969, California became worried about housing affordability and required counties and cities to plan for sufficient housing for different levels of income, a stance which eventually led to extensive Regional Housing Needs Assessment reports. The law was strengthened by the 1982 Housing Accountability Act (and subsequent amendments) that made it illegal for cities, in many cases, to reject housing that was included as part of their needs assessment.⁵⁶

The state has passed scores of other laws to encourage housing. In 1977, the state passed the Permit Streamlining Act that required local governments to give permits for housing within set deadlines.⁵⁷ In 1979, it passed the Density Bonus Act that forced local governments to allow increased density if certain housing was designated affordable. The law was strengthened in 2002 and 2004.⁵⁸ In recent years, the yimby or Yes-In-My-Backyard movement has had notable successes imposing other mandates to force local governments to build.

Texas, by contrast, has a strong tradition of “home rule,” meaning local governments are generally competent to legislate in their own spaces, especially around housing. The difference in the two states’ treatment of local government can be seen in the state codes. Both California and Texas control local land use under Title 7 of the local government code. The land use section of California’s code is 423,770 words, while Texas’s is 162,553 words.⁵⁹

There is one part of Texas’s state code, however, that restricts local governments and which has been essential for creating more housing. The Texas local government code forbids counties, unlike other types of local governments, from imposing zoning. This has allowed developers to move out into new areas largely unregulated and has also prevented the imposition of restrictions such as urban growth boundaries. It is not until population in these enclaves grows large enough that people may decide to incorporate and start zoning.

As a consequence of its limitation on county zoning, Texas has seen much more growth in unincorporated areas. In Texas, over 25 percent of the population lives outside of incorporated areas.⁶⁰ By contrast, in California, where counties can continue to regulate land use, about 16 percent of the population lives outside them.⁶¹ The Texas areas are largely governed by general county rules, MUDs, or homeowners’ associations until they get incorporated.

Some state laws restricting local governments can clearly be helpful in creating more housing. But if one is looking for an explanation of the divergence in housing prices between California and Texas, insufficient state control of local governments in California is not the reason.

Getting to Texas

Texas’s advantages and California’s disadvantages have tended to compound over time. Areas with high housing prices tend to create more regulations to protect those prices, leading to even higher prices.⁶² The “economic rent,” or excess value of California housing, is so high that even many state-level attempts to push for more housing lead to handouts to favored interest groups, such as unions or existing tenants, who can then absorb some of the rent dissipation.⁶³

But California’s high housing prices have also created a counterreaction. In recent years, California has become famous as the epicenter of the yimby movement, which seeks to force local governments to densify and allow more local housing.

There have been major and minor successes of the movement. For instance, the Housing Crisis Act of 2019 allowed developers to submit a preliminary application that freezes most of the design, zoning, and other standards in place at the time of application, instead of shifting the goalposts later. This brought the standard closer to the Texas state law which keeps standards in place from the time of application.⁶⁴ A 2025 law, SB 79, forced an upzoning around major transit stops.

Yet the state yimby movement does have to face some awkward truths. States such as Texas are not affordable because of their ability to densify existing cities; rather, it is because they have allowed more sprawl. The yimby movement in general has not focused on building outwards or attacking environmental legislation that inhibits such growth. In fact, they have framed the movement as a way to fight automobile emissions and sprawl.⁶⁵ Such framing could do more harm than good to those interested in lowering housing prices.

States such as Texas that are affordable also do not have the panoply of state-level zoning laws that the yimby movement aims at. In fact, their local governments have more discretion and less interference from the state than California’s.

There are virtues to many state-level mandates, because local governments can often place unnecessary burdens on property and effectively expropriate developers. State-level zoning reform laws, such as those allowing private inspections and permitting, as well as more Accessory Dwelling Units (ADUs or granny flats), can elicit more development. Texas has embraced some of these and nurtured its own yimby movement in recent years.⁶⁶

Sometimes, the diversity of local rules can slow builders, and a state-level rule can bring simplicity. The confusion of local building codes in Texas, even if it’s better than California’s top-down micromanagement, can be problematic.⁶⁷ Florida has a statewide building code that creates a state floor and allows amendments only after a public hearing process.⁶⁸ The statewide standard there is not inhibiting homebuilding and is probably helping it. yimby efforts to create more such state standards should be celebrated. But the basic truth is that if one is trying to understand why Texas is affordable and California is not, the root problem for California is not unconstrained local government. The root problem is a state that has centralized too much decision-making in Sacramento and that has made environmental protection its core goal over every other.

One of the major lessons of a comparison between Texas and California is that state rules themselves can become one of the major blocks to growth. A recent yimby victory, which limited the effects of CEQA on infill developments, points a way forward. Removing state rules which inhibit outward growth would be even more beneficial. Texas’s relatively decentralized system here provides the correct model.

Political theorist Francis Fukuyama famously argued that the goal of politics was “getting to Denmark,” meaning citizens and politicians should aim to approximate that country’s stable, economically dynamic, democratic system. The goal of housing policy should be “getting to Texas.”⁶⁹ Texas is not only building fast relative to other states in America: it is building faster than almost anywhere else in the developed world. Everyone can learn from it. Texas’s housing system, like Denmark’s general political system, has a host of problems that require further work, but the closer states like California get to Texas, the better off they will be.

This article originally appeared in American Affairs Volume X, Number 3 (Fall 2026): 94–110.

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Notes