Our nation is facing a starter home crisis, presenting severe challenges to affordability and family formation by the middle and working class. More than half of Gen Z adults say the cost of living keeps them from affording the life they want.
Solutions are being discussed at all levels of government. But in 2025, Texas did more than any state in America to make housing more affordable.
Baby boomers are often considered synonymous with “Not in My Back Yard” or NIMBY policies. They have been a key impediment to two obvious solutions — starter homes on smaller lots and allowing residential and mixed-use housing on commercial land in cities. Yet boomers owe their very existence to an explosion in starter homes after World War II.
In 1946, there were more than 1 million housing starts, up from 326,000 in 1945. The growth continued, reaching nearly 2 million in 1950. In the 1950s, single-family homes had a median living area of 1,350 square feet — enough for 3 bedrooms — and sat on a median lot of 8,700 square feet.
Thanks to NIMBYs, the starter home of the baby-boom era has largely been banned, and affordability has suffered. A study of nearly 11 million new homes built from 2000 to 2024 found that the median single-family detached home had a 70 percent larger living area at 2,300 square feet and sat on a lot of 8,000 square feet. Minimum lot requirements make it cost-prohibitive to build smaller homes on smaller lots.
Consider this simple thought experiment. If median single-family detached lots and living area had instead been about 5,500 and 1,960 square feet, and if 20 percent of the land used for them had instead been used for townhomes, an additional 10 million family-friendly homes would have been built on the same amount of land. Moreover, they would have been available at a 15 percent lower price, without subsidies. Other studies show that if builders had the flexibility to build starter homes, they would.
A favorite NIMBY myth is that smaller lots and light-touch density would negatively affect property values. Another myth is that these homes would impose infrastructure costs that American cities can’t afford — a myth disproved again and again.
The organization that one of us chairs was instrumental in assembling a big-tent, grassroots coalition of 59 groups to make the case that Texas, to avoid California’s fate, needed to take decisive action. It has demonstrated that the answer lies with starter homes on smaller lots in new neighborhoods, as well as opening up commercial land to build homes (condos, townhomes and apartments alike). In the legislative session that just ended, Texas Senate Bill 15 provides for lot-size flexibility for new residential subdivisions in larger cities, thereby allowing builders to build more starter homes on smaller lots.
When Houston implemented a similar proposal in the early 2000s, they found detached townhomes built on the now-legal smaller lots were priced at an average of $340,000, compared to the average price of $545,000 for other new single-family homes over the same period.
Americans can also look to a second game changer from the Lone Star State: Senate Bill 840 opens up commercial and other non-residential zones to build homes and apartments. Research demonstrates that greater housing supply leads to a direct decrease in surrounding rents by a whopping 6 percent.
Treasury Secretary Scott Bessent recently pointed to a coming “blue-collar boom,” but noted, “We don’t want to step into the business of states.” Encouraging other states to adopt Texas’s approach is the solution.
Consider where the new Hyundai factory in Ellabell, Ga., near Savannah, is expected to add 8,500 jobs by 2031. Almost all homes built in the area since 2010 are single-family detached homes, and few are within 10 miles of Ellabell. Production worker households recently buying homes in the Savannah metro area had an income of $76,000 and purchased a home costing $313,000.
But metro wide, newer single-family detached homes represented 86 percent of the single-family homes built, had a median value of $372,000 in 2024. They had a lot size of 9,300 square feet with 2,090 square feet of living area. Townhomes, which represented the other 14 percent, had a median value of $302,000 and a median lot size of 1,700 square feet, with 1,560 square feet of living area. The road to providing homes for production workers is starter homes on smaller lots.
It is time for baby boomers to return the favor, and in the process provide the answer to the question: where will their children and grandchildren live?
Edward Pinto is a director of the American Enterprise Institute’s Housing Center. Nicole Nosek is founder of Texans for Responsible Solutions.
