Dallas’s Hidden Housing Crisis: Protecting Our Affordable Rentals
Dallas faces an urgent affordable housing crisis, particularly for “Naturally Occurring Affordable Housing” (NOAH). These unsubsidized rental homes, which constitute 80% of the city’s affordable stock, are rapidly disappearing due to intense market pressures, threatening to displace thousands of working families. Without intervention, Dallas could lose a staggering 98% of its NOAH properties by 2035.
What is Naturally Occurring Affordable Housing (NOAH)?
When many think of affordable housing, government-subsidized programs often come to mind. However, the vast majority of affordable rentals, around 75% nationwide and 80% in Dallas as of 2022, are naturally occurring affordable housing (NOAH). These are homes that remain affordable for various reasons: their age, location, condition, or even the long-term generosity of a landlord. Unlike subsidized units, NOAH is not income or rent-restricted, making it uniquely vulnerable to market shifts.
The Looming Threat: Dallas Could Lose 98% of NOAH
Dallas is experiencing a significant shortage of affordable housing, and this problem is intensified by market pressures eroding the NOAH supply. Properties once within reach are now becoming unaffordable as neighborhoods gentrify. Landlords, noticing an area becoming more desirable for higher-income residents, may raise rents. Furthermore, long-time family owners, who often provide NOAH and maintain close relationships with their tenants, are increasingly selling to institutional investors. These firms typically remodel units and significantly increase rents to maximize profits, changing the entire business model.
For example, the McDonald sisters, who managed naturally affordable apartments in Dallas’s Bishop Arts area for nearly a century, sold their properties in 2016. They noted that the traditional model of owners handling maintenance themselves, which kept costs down, is rare today. Once NOAH properties raise their rents, creating new affordability in the same neighborhoods becomes incredibly difficult without substantial subsidies due to high land and labor costs. According to the Child Poverty Action Lab (CPAL), Dallas could lose 98% of its NOAH properties by 2035, highlighting the critical need for preservation strategies now.
The Human Cost of Rising Rents
The impact of this loss is profound for Dallas residents. Forty percent of Dallas renters earn up to 50% of the area median income (AMI). To meet their demand, the city needs 115,000 affordable units but only has 69,000, leaving a current shortage of 46,000 units. CPAL projects this shortage to balloon to 76,000 in the next decade, primarily due to NOAH losses.
Ashley Flores, chief of housing at CPAL, explains that many residents are “overspending on housing to keep a roof over their head.” In 2024, approximately half of Dallas renters were housing cost-burdened, meaning they spent over 30% of their income on rent and utilities. For extremely low-income households, the situation is dire: an average family of four making $31,000 spent 78% of its income on housing in 2023, leaving only about $567 per month for all other necessities like food, healthcare, and childcare—less than a fifth of what’s needed according to the MIT Living Wage Calculator. This financial strain leads not only to economic hardship but also mental health distress, affecting children’s academic achievement and behavior.
Innovative Solutions: Social Impact Private Equity
Given the urgency, preserving existing affordable housing units, both subsidized and NOAH, is crucial. The Institute for Housing Studies’ “Preserve NOAH” project aims to inform policymakers on preservation strategies. Their analysis groups Dallas-Fort Worth’s market with cities like Charlotte and Austin, characterized by new development and significant declines in affordable rental units. These cities are pioneering an innovative approach: social impact private equity funds.
“Show Up to the Knife Fight With a Knife”
These social impact private equity funds operate much like traditional private equity but with a key difference: they commit to keeping rents affordable. Backed by private investors, they can act with the speed and discipline of the private sector, allowing them to compete with institutional investors to acquire NOAH properties as soon as they hit the market – a timeline local governments and nonprofits often can’t match. Mark Ethridge, co-founder of Ascent Housing in Charlotte, stresses the need to “show up to the knife fight with a knife” in competitive real estate markets.
Once acquired, these funds use tools like property tax exemptions and deed restrictions to secure long-term affordability. Investors receive modest, single-digit returns over a longer period than traditional private equity, making them attractive to mission-aligned institutions, banks, and foundations seeking both financial return and social impact. Monica Medina, president and CEO of the Texas Housing Conservancy (TxHC), which operates in Austin and Dallas, emphasizes their fund’s design for “long-term stewardship” rather than short-term gain.
Hurdles and the Path Forward
The success of social impact private equity funds hinges on public cooperation, particularly through property tax exemptions. However, in Texas, this cooperation is increasingly challenging. Texas House Bill 21, passed in May 2025, implemented more stringent requirements for organizations seeking tax exemptions, making it harder for groups like TxHC to execute preservation strategies. The bill, intended to curb exploitative practices, has inadvertently complicated the work of legitimate preservation efforts.
In Dallas specifically, preservation efforts face additional hurdles. David Ellis of TxHC notes that Dallas has been less receptive to deals that reduce property tax revenue compared to Austin, preferring to focus on creating new affordability through construction or rehabilitation. The optics of granting tax exemptions for new developments often appear less impactful on tax rolls than for preserving existing properties. While building more housing, including market-rate units, can indirectly alleviate pressure on NOAH through an “escalator effect” (where higher-income residents move into new units, freeing up middle-income, and then low-income units), direct preservation remains crucial.
Further complicating matters, Dallas’s Department of Housing and Community Development merged with other departments in August 2025, leading to a $6.2 million budget cut and a reevaluation of the city’s Housing Action Plan. This plan had previously identified preservation as a key pillar, aiming to preserve 6,450 affordable units and actively monitor NOAH properties for threats.
Ultimately, private solutions like social impact private equity are seen as a way to buy time for the government to catch up. As Monica Medina states, “The future of affordable housing isn’t purely public or private. It’s collaborative, blended capital models that align incentives across sectors.”
Comparing Housing Investment Models
| Feature | Traditional Private Equity | Social Impact Private Equity |
|---|---|---|
| Primary Goal | Short-term gain, reposition/sell | Long-term stewardship, preserve affordability |
| Rent Strategy | Raise rents to market rates | Maintain affordable rents |
| Investor Returns | High, fast-paced | Modest, single-digit, long-term |
| Typical Investors | Seeking maximum profit | Banks, foundations, mission-aligned institutions |
FAQs
- What is NOAH?
Naturally Occurring Affordable Housing refers to rental units that are affordable without government subsidies, often due to their age, location, condition, or the landlord’s long-term rental strategy. - How much NOAH is at risk in Dallas?
Dallas could lose up to 98% of its NOAH properties by 2035 due to market pressures like gentrification and sales to institutional investors. - What does “housing cost burdened” mean?
It means a household spends more than 30% of its income on rent and utilities. About half of Dallas renters are housing cost-burdened, with low-income families often spending over 70%. - What are social impact private equity funds?
These funds use private investment to acquire NOAH properties, committing to keep rents affordable over the long term, unlike traditional private equity. They offer modest returns to mission-aligned investors. - What challenges do NOAH preservation efforts face in Texas?
State legislation (like HB 21) has made property tax exemptions more difficult to obtain for preservation, and Dallas currently prioritizes new housing development over preserving existing affordable units, complicating strategies.
Addressing Dallas’s affordable housing challenge requires a united front, blending innovative private capital with supportive public policy to protect the homes of working families and ensure a stable future for all residents.
Dallas faces massive affordable rental loss
