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.