Model subdivisions: The new face of developer lot sales for low-income colonia-type housing in Texas

Abstract

This paper examines developer practices and self-help housing in serviced subdivisions targeting very low-income Hispanic homesteaders in the Texas border region. Laid out under “Model Subdivision Rules” after federal and state legislative intervention in the early 1990s, this initiative sought to curtail further colonia development and to ensure that any further homesteading followed regulations regarding service and infrastructure provision. Model subdivisions (MSs) proliferated after 1995 and this paper examines developer practices of seller financing, lot sales, and lot repossession for the large number of low-income families who default. Descriptive data are presented about housing costs in a number of different sized model subdivisions, and regression analysis of over 1247 individual lots reveals aggressive rent-seeking developer practices that lead to: (i) high levels of default and repossession; followed by (ii) resale (flips) of lots to other unwary buyers; and (iii) rapid “flipping” (re-sale) of lots by developers soon after repossession. Informal (seller) financing at high interest rates, combined with high private transportation and other consumption costs associated with low-income residence in peri-urban areas leave little cash surplus for self-building and home improvement such that housing conditions are among the worst in the State, and often worse than self-built homes in the colonias that the MSs were designed to replace. The paper concludes with a brief overview of the implications for theory and for a new round of public policy responses.