Raising the Roof

Austin could become like this super expensive U.S. city, mayor warns

Austin downtown skyline bats Congress Bridge

To head off the San Francisco scenario, Adler said the city must tackle the lack of affordable housing.

If Austin fails to adequately address soaring home prices and apartment rents, the city risks transforming into San Francisco, one of the priciest housing markets in the U.S. That was the unsettling vision laid out January 28 by Austin Mayor Steve Adler in his annual State of the City speech.

By maintaining the status quo on housing in Austin, Adler cautioned, “we’ll end up like San Francisco, where the average house price is $1,150,000 and only the well-to-do and those being subsidized can live [there]. Nothing in between. No middle class, no working class, no creatives and artists.”

San Francisco recently was ranked No. 9 on a list of the least affordable housing markets in the world; by comparison, Austin tied for 216th.

To head off the San Francisco scenario, Adler said the city in 2017 must tackle the persistent lack of affordable housing here.

“If we’re going to change in a way that promotes affordability the Austin way, first we’re going to have to have a clear-eyed talk about housing and housing supply — where we build it, where we preserve it, where we keep it affordable, and how we make it easier to remodel and to build the housing stock we need,” Adler said.

The mayor said the troubling issue of housing affordability boils down to a tug of war between supply and demand.

“For too long, we’ve treated housing like a game of musical chairs,” Adler said. “When the music stops, too many people are vying for too few houses and apartments. Some people lose their place, while others bid up prices. We cannot sit by while Austinites are priced out of Austin and when young people have to leave Austin to start their families. That’s not right.”

Families who are longtime residents of East Austin already are being priced out of their neighborhoods, Adler said. And if nothing changes with regard to affordable housing, he said, “it’s just a question of time before more and more families will be forced to move, and they’ll be joined by more and more being priced out of Barton Hills, Travis Heights, Allandale, Crestview, and beyond.”

When people are pushed out of Austin to seek cheaper housing in the suburbs, that adds to commute times and aggravates traffic congestion, he said.

Of course, the housing crunch also drives up housing costs. The median price of a single-family home in the city climbed to $340,000 in 2016, up 5.8 percent from the previous year, while the average apartment rent in the Austin metro area is projected to reach $1,239 in 2017, up 4.2 percent from 2016.

To stabilize housing prices and narrow the supply-and-demand gap, Austin needs to build at least 135,000 houses, apartments, condos, and other dwellings over the next decade, Adler said.

The mayor said a “good start” toward achieving that goal would be passage by the city council of Austin’s first-ever strategic housing plan, a 10-year blueprint outlining an array of tactics for bolstering the affordability of local housing.

In his speech, Adler unveiled one solution that’s already in the works. He said a newly created nonprofit called Affordable Central Texas will operate a private investment fund designed to buy and preserve apartments targeted at middle-income families, rather than those apartments being lost to gentrification.

“We are working with investors now, and before the end of the year, I fully expect that the Austin Affordable Fund will make its first purchase and begin to protect long-term affordability in Austin,” the mayor said.

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Community Building

Austin's zoning woes serve as case study for housing crises across Texas

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Debates about housing density have far reaching implications in both residential life and policy limitations.

The scene was a familiar one at Austin City Hall: The City Council once again was seeking reforms to curb the capital city’s sky-high home prices and rents, and opponents had turned out in force to try to block them.

The central idea behind the reforms: Austin needed a lot more homes and it would have to relax certain city rules to see them built.

On a Thursday in May, more than 150 people signed up to denounce the changes. Among them were homeowners who complained the overhaul would wreck the character of their single-family neighborhoods and anti-gentrification activists who feared it would further displace communities of color.

Such critics — often referred to as NIMBYs, which stands for “not in my backyard” — have long held sway in Austin and other cities. But something was different this time.

As Austin grew and its housing costs soared during the COVID-19 pandemic, a diametrically opposed group of advocates who push cities to allow cheaper and denser housing — known as “yes-in-my-backyard” activists, or YIMBYs — had gained new footing at City Hall. That day at City Council, they showed up in numbers that rivaled their opponents and urged council members to pass the reforms.

By that point, they barely needed to convince anyone. Austin YIMBYs had laid the groundwork for the reforms during the last citywide election, when they successfully backed candidates who vowed to tackle the housing crisis head-on. Those efforts resulted in a YIMBY supermajority on the City Council that includes Mayor Kirk Watson. After hours of testimony that stretched past midnight, council members approved the reforms.

“If you put your neighborhoods in amber, you’re literally saying ‘people can’t live here,’” said Felicity Maxwell, a board member of the Austin YIMBY group AURA. “We can’t stay like that. There’s no way to make your city freeze. And if you do, there’s a lot of dire economic and social outcomes because of that.”

As the nation grapples with high housing costs, YIMBY ideas have hit the mainstream and caught the attention of some of the state’s top Republican leaders, like Lt. Gov. Dan Patrick and House Speaker Dade Phelan, as well as Democratic leaders who are increasingly nervous the state’s once-celebrated housing affordability is slipping.

The housing crisis will only get worse if nothing changes, YIMBY activists argue — but reforms to ease it are far from a sure thing.

A shift in Austin
The state’s housing crisis is effectively a new problem for state and local leaders — mainly because, for the longest time, Texas used to be cheap.

The state’s poorest residents have usually struggled to find housing they can afford, but housing used to be inexpensive and plentiful for middle-class families — especially when compared with Texas’ chief rivals, California and New York. Now the crisis has crept up the income ladder. Worries have begun to percolate that if Texas doesn’t contain housing costs, it could eventually wind up in the same boat as those states — with homes completely out of reach for typical families and residents fleeing for cheaper states.

At the heart of the state’s housing affordability woes lies a deep shortage of homes. Homebuilding lagged as the state’s economy boomed over the past 15 years and millions of new residents moved here. That left Texas, which builds more homes than any other state, with a shortage of 306,000 homes, according to an estimate by housing policy organization Up For Growth.

A growing body of research in recent years shows that stringent local restrictions on what kinds of homes can be built and where, known as zoning regulations, ultimately limit the overall number of homes and thus contribute to higher costs. In Texas cities, standalone single-family homes can be built almost anywhere homes are allowed. But it’s largely illegal to build other kinds of housing like townhomes, duplexes and small-scale apartments in those same places, a Texas Tribune analysis found. And cities set aside comparatively little room elsewhere for those kinds of homes as well as large apartment buildings.

Relaxing those regulations, research shows, helps cities add more homes and contain housing costs.

Austin officials have sought for much of the past decade to update those rules, but longtime homeowners opposed to new housing have often frustrated the city’s biggest efforts. Just before the pandemic, some homeowners convinced a judge to kill a major overhaul of the city’s land development code that would have allowed denser housing.

Then came the pandemic. Housing prices in the Austin region skyrocketed amid record-low interest rates, the rise of remote work and sustained population growth. The typical home in Austin went for more than $500,000. Rents took off, too, rising three times faster between 2019 and 2022 than they did in the three years preceding the pandemic, according to Zillow data.

Austin’s housing crisis had become undeniable. How to solve the problem became a dominant theme in the city’s 2022 elections.

The council members YIMBYs helped elect passed several reforms aimed at juicing the city’s housing stock.

The most contentious new policies aimed to broaden the kinds of homes that can go in the city’s single-family neighborhoods. Late last year, council members voted to allow up to three housing units in many places previously limited to detached single-family homes.

The council then reduced how much land the city requires single-family homes to sit on, known as a minimum lot size requirement. For more than 80 years, that requirement had sat at 5,750 square feet in much of the city. In May, they reduced it to 1,800. The idea was twofold: allow smaller and cheaper homes and make it possible to build more homes overall. At the same time, they enabled the construction of apartment buildings along the city’s planned light-rail line and closer to existing single-family homes.

Within two years, the council made more sweeping changes to the city’s zoning rules than it had since the Reagan administration.

That was a marked reversal from previous years, when homeowners and neighborhood groups that wield tremendous influence made one thing clear to local politicians: Touch our neighborhoods and pay for it at the ballot box. But in the face of a devitalizing affordability crisis, complaints about how different types of homes like duplexes or triplexes might change the feel of a neighborhood lost some of their bite.

“We don’t have the luxury of not doing anything,” Watson, Austin’s mayor, told The Texas Tribune.

YIMBYs’ opponents are deeply skeptical of their proposals. They argue that some city efforts to allow more housing will spur builders to further target Austin’s low-income neighborhoods and flood them with expensive new housing that will hasten the displacement of Black and Latino residents. Those fears fueled advocates with Community Powered ATX — a coalition of progressive activists based in East Austin, which underwent rapid gentrification over the last 15 years — to rally against the changes.

“We want more deeply affordable housing to be built,” said Alexia Leclerq, a Community Powered ATX co-organizer. “What they’re proposing is not part of the solution. It’s actually making it worse.”

Zoning reform proponents have long countered that displacement in East Austin came about because city rules hampered the city’s overall housing supply and forced development pressure upon only a few parts of town. They point to research that shows loosening regulations to allow more homes across a city may actually safeguard neighborhoods more vulnerable to displacement.

Austin got a glimpse of the effect building new homes has on housing costs even before the zoning reforms were approved. Though rents remain above pre-pandemic levels, a boom in apartment construction in the Austin region drove rents down last year — in newer high-end apartments and older, cheaper apartments alike.

YIMBYs now face the task of protecting their supermajority in the November elections. And while the reforms in Austin represent unprecedented victories for YIMBYs in Texas, their ideas face a steep climb elsewhere.

Can Dallas move forward?
Some 200 miles north on Interstate 35, an attempt to mirror Austin’s moves imploded before it had a chance to get off the ground.

Housing in Dallas, too, grew much more expensive amid the Dallas-Fort Worth metropolitan region’s vast growth.

“If our city doesn’t do something now, it’s just going to continue to get worse,” said Dallas City Council Member Chad West, who represents the northern part of the city’s Oak Cliff neighborhood.

West took inspiration from Austin’s efforts. Late last year, he and four council colleagues called on the city to explore similar ideas, like allowing new homes to sit on less land and up to four homes where now only one or two may go.

Opponents on the City Council moved fast to squelch the ideas, and West’s effort fizzled. Then came ForwardDallas, an update to an 18-year-old document that guides how the city should use its land. The plan seeks to encourage more kinds of housing — like townhomes, duplexes and small apartment buildings — in existing single-family neighborhoods.

More than 100 people showed up to City Hall over several months this spring to testify about the plan. More than half were homeowners opposed to allowing other housing types in their neighborhoods, most of whom bought their homes in the decades before the state’s current crisis began to kick in.

Council Member Paul Ridley, who opposes allowing denser housing types in existing single-family neighborhoods, broached compromise language seeking to direct “incompatible multiplex, townhome, duplex, triplex, and apartment development” away from those neighborhoods, among other tweaks designed to ease opponents’ concerns.

The City Council approved ForwardDallas with Ridley’s amendments last month — but no one seemed completely satisfied.

Among Dallas YIMBYs, worries abound that City Hall won’t take bold action until the city’s housing crisis looks like Austin’s. Dallas rents aren’t far behind where they stand in the state’s capital. Home prices aren’t as bad in Dallas as in Austin but hover well above where they stood five years ago.

Who should fix the crisis?
How Texas lawmakers might address the housing crisis when they return to Austin next year isn’t clear. But the state’s top Republican officials have signaled growing unease about the issue. And polls show strong bipartisan agreement that housing costs are a problem.

There are signs Texans are open to the proposals YIMBYs espouse. Most Texans support allowing townhouses, accessory dwelling units and small apartment buildings on any residential lot, a recent Pew Trusts poll found. Reducing cities’ minimum lot-size requirements found favor with some 45% of Texans they polled.

The Texas Public Policy Foundation, an influential conservative think tank, came out earlier this year in favor of completely getting rid of cities’ lot-size requirements along with limits on how many homes can go on a given piece of land.

Weighing in on cities’ residential zoning laws is awkward territory for Democratic state legislators, who have spent much of the last decade trying — and failing — to fend off Republican efforts to sap authority from the state’s bluer urban areas. At the same time, Democrats generally support affordable housing, and defending cities’ right to uphold some of those laws might work against that cause given those rules play a key role in exacerbating housing costs.

There also appears to be some agreement on both sides that cities should make it easier to build residences in places that allow commercial development— something many of the state’s largest cities don’t allow.

The state also spends very little on housing explicitly targeted at low-income families.

Texas still adds more jobs than any other state and remains an attractive place for companies to relocate. But quietly, some circles are fretting that Texas is losing its competitive advantage on housing.

This story was originally published by The Texas Tribuneand distributed through a partnership with The Associated Press. It has been excepted by CultureMap for conciseness.

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