This Austin Community Foundation report explores strategies for producing, protecting, and preserving housing affordability in Central Texas.
Austin, Texas
Austin's Housing Affordability Challenge
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Across the country, housing prices are outpacing wages, making it more difficult for residents to secure stable, affordable housing.
The challenge is especially acute in metro Austin, where housing costs are soaring amid a red-hot economy. While a family in 1965 could expect to find a home with less than three times their income, today the median metro area home costs $460,000 – over five times the metro Austin median income.
The Austin-Round Rock metro area is the 7th least affordable region (PDF) in the country. For every 100 renter households, just 23 affordable homes are available.
The trend lines are worsening: By the end of this year, metro Austin is projected to become the least-affordable metro area outside of California.
Renters are Already Tightening their Purse Strings
About half of all metro Austin residents are renters, and about half of those are considered rent burdened – meaning they spend more than 30% of their income on rent. These families are disproportionately people of color, with Black and Latino families experiencing cost burdens at a higher rate than white households.
These financial pressures put families at risk of displacement and even homelessness as their bills outpace their income. Without affordable housing, residents are more likely to also experience adverse impacts on their health, education, economic mobility, child welfare, racial equity, and more.
Though Austin's rental prices fell at the height of the pandemic, they have come roaring back. From March 2020 to September 2021, the average rental rate increased 21%.
The troubling bottom line: If the trend continues, the majority of workers living in Austin will soon not be able to afford their monthly rents.
Who Earns Enough to Afford an Apartment in the Austin-Round Rock MSA?
Housing Affordability Report
The Rising Cost of Home Ownership
Although metro Austin’s economy has seen strong growth for more than a decade, most of the jobs created have been low to moderate income, ranging from around $20,000 for retail, service, and other hospitality industries to $40,000 for healthcare and education.
And Austin is expected to continue to disproportionately add more lower- to moderate-paying jobs, according to the Austin Strategic Housing Blueprint.
Local leaders worry this wage-housing cost mismatch could threaten the region’s prosperity. It’s also made it much more difficult for residents to save money for a down payment on a home.
Those who can afford to purchase homes are feeling the effects of the affordability crisis, too. In 2010, the median sale price in the City of Austin was $179,250. In December 2021, that figure hit a record high at $536,331, a 300% increase.
So What's Causing this Affordability Issue?
The roots of Austin’s housing struggles are a bit complex. Some of the main underlying issues Austin is facing include:
Population boom: A booming economy is bringing thousands of people a year to the region, many of them with high-income jobs. The hot housing market and rapid growth has put strains on the inventory (PDF), making affordable housing units even more scarce.
Lagging housing supply: Current housing supply simply can’t meet the community's demand, even with homes being built at historically high rates. As a result, people are bidding up home prices.
Limited taxes: The region has a regressive local tax structure and lacks a state income tax. While the latter may be attractive to some residents, it forces local jurisdictions to fund schools with property taxes, which are much higher than in places like Atlanta.
Opposition to inclusionary zoning: Other state policies forbid innovative approaches like inclusionary zoning, which requires that a given share of new housing construction be affordable to people with low- to moderate incomes.
Outdated zoning codes: Austin’s city council has for years been attempting to update their zoning code to encourage more density. An attempt in 2018 known as CodeNex was abandoned due to community divisions, and the more recent zoning update created in 2019 remains hung up in a lawsuit.
Lacking major housing actors: The region lacks key players needed to boost housing capacity, such as housing-focused financial institutions and large local nonprofit housing developers.
Expensive building supplies: The cost of building supplies has skyrocketed with recent inflation. In the past year, the cost of lumber increased a whopping 377%. That means that a homebuilder can build just two homes today for the same cost of lumber that, until recently, used to build 10 homes.
Distance between jobs and available homes: More than a third of jobs in the region are within a 5-mile radius of downtown Austin. Most people want to live close to their job, but there just isn't enough housing near the current job centers to meet community need. Plus, with limited access to public transportation and increasing congestion, getting from outlying areas into the downtown job center can be difficult.
City of Austin Resident Jobs vs. Permitted Housing Units
A City Divided - Segregating Austin
The 1928 "Master Plan" for Austin has had far-reaching implications on the city and region as we know today.
The City Council’s plan essentially institutionalized racial segregation. Using East Avenue (present-day I-35) as the dividing line, the plan pushed Black Austin residents into East Austin.
Before 1928, Black communities thrived throughout the city, with numerous communities established during Reconstruction. Although it was unconstitutional to use zoning laws to promote racial segregation at the time, the city used other tactics to implement the plan, including eliminating utility services and prohibiting access to public services to Black neighborhoods in East Austin under the guise of “reducing costs.”
The plan continues to impact Austin today, systematically blocking Black residents of East Austin from access to resources and job centers and shaping the city’s racial divide. For example, there is 20-year difference in life expectancy between parts of east and west Austin.
As the city has shifted from being one of the most affordable cities in the country to experiencing its current affordability crisis, there has been a reversal of demographic trends in the city.
Affluent residents are increasingly moving to central neighborhoods, including East Austin, while low-income residents are pushed to the outskirts or out of the city altogether. The result is that Austin now has the highest levels of Black and Latinx segregation in the region.
And the impacts of the persistsent racial segregation have been dramatic in the eastern part of the city. As these neighborhoods become more desirable to higher-income households, long-time residents of these non-white neighborhoods are particularly vulnerable to displacement.
A Future for Housing in Austin
So, what's being done to improve the future of housing in Austin?
In 2018, the City of Austin overwhelmingly voted to approve a $250 million affordable housing bond (PDF), which allocates budget for land acquisition, rental housing development, homeownership assistance, and home rehabilitation and repair. Other housing bonds were approved by the voters in 2006 ($55M) and 2013 ($65M).
In 2020, City of Austin residents voted to approve the $7 billion Project Connect, which included a massive transit expansion and $300 million in anti-displacement funding designed to keep housing prices low in affordable areas so as Austin continues to expand, long-time residents aren't pushed out of their neighborhoods.
Recently, the city has focused its efforts on developing additional solutions to address housing, including:
- Allowing home building in previously commercial-only areas
- Revising building codes to make it easier and cheaper to build accessory dwelling units
- Updating the permitting process to shorten wait times and reduce fees
- Advocating for additional university housing to keep local housing units available for non-students
The City of Austin’s Strategic Housing Blueprint, adopted in 2017, calls for building 60,000 homes that are affordable to families earning less than 80% of the median family income. It also proposes strategies for protecting existing residents from displacement and preserve the affordability of existing units.
The Blueprint set a goal of 135,000 housing units by 2028 at a wide array of price points. By the 2020 progress report (PDF), the city made considerable progress today towards constructing middle- and high-income housing units but are having difficulty meeting the goal of providing 60,000 affordable homes.
Addressing Homelessness
For far too many, the issue of housing is even more dire. In 2020, the Ending Community Homelessness Coalition counted over 3,600 families experiencing homelessness in their street outreach alone.
Austin is known as the most liberal part of Texas, but the city has come under criticism in the past for its treatment of the unhoused population of Austin:
- In 1996, Austin first established a Camping Ban, which outlawed camping in places like parks, alleys, parking lots, hospitals, and offices, with a maximum $500 fine.
- The ban was revoked in 2017, after critics said it made it more difficult for individuals to exit homelessness by stacking fines. The city began exploring a range of options, such as providing shelter.
- A resident-driven backlash to public camping led the city council to reinstate the camping ban in May 2021, fines and all.
A number of efforts are taking place today to address homelessness, both by the government and non-profits.
- The City of Austin established its first Homeless Services Division in 2020, hiring a Homeless Strategy Officer to help lead the city’s efforts.
- The city also has a plan to spend $515 million towards sheltering the unhoused, with a goal of providing more than 3,000 new housing units — 2,300 rental units and 1,000 permanent housing units and funding capacity to reach 4,000.
- The Other Ones Foundation is building the a transitional housing development called the Esperanza Community, with capacity for 200 individual micro-shelters.
- Mobile Loaves and Fishes has developed the Community First Village, in six years has built permanent housing for 300 people while providing services such as employment assistance and access to fresh, local food.
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