By Ricki Markowitz
One of the most consistent refrains used over the past decade or so to describe the real estate climate in Austin is “robust.” Headlines in 2018 alone praised the market for “shattering records,” declaring it “the hottest housing market ever,” and the city is “on pace for another record year.” On the flipside of these headlines, however, there’s a darker story.
For at least five years, housing affordability in Austin has gone from bad to downright grim. So much so, think tanks have coined a term for when certain economic classes are priced out of cities and flee to the suburbs. It’s known as the suburbanization of poverty, and it’s a big jump from 1950s urban sprawl when the middle class fled to suburbs seeking serene surroundings and room to roam.
Less then a century later, U.S. suburbs are home to more poor people than cities. In 2016, the Statesman reported that in census tracts surrounding Austin, the concentration of poor residents living in high-poverty has increased faster than neighborhoods in the country’s top 100 metro areas. Out of 41 suburban neighborhoods surrounding Austin, 18 had poverty levels between 20 and 40 percent, and nearly all posted increased poverty levels since 2000. Also in the Austin metro, between 2000 and 2015, the high-poverty population growth in high-density suburban neighborhoods nearly doubled, according to research from Harvard.
City leaders, including Mayor Steve Adler, have compared Austin’s future to metros that are ground zero when it comes to the housing affordability crisis—places like Los Angeles, Seattle and San Francisco, “A wonderful, incredibly expensive city with a median home price over $1 million, where only the wealthy and the subsidized can afford to live.” Updating and passing a new development code is a great way to address housing issues here in Central Texas, but experts say Austin may already resemble those west coast cities more than we’re ready to admit. How so? Cedar Park, Pflugerville and Georgetown, plus other close neighbors, are also in a sprint to provide economically diverse housing options to accommodate their own population growth, many of whom will come from Austin.
So if Austin has been experiencing explosive growth, businesses are happily relocating here, it’s a top 10 location for startups, and even more people are choosing to buy homes in surrounding suburbs just to be close to Austin, what’s the problem? We only need to look at other urban-sprawl stories to see where this leads. Cities riding Austin’s coattails today will be experiencing their own housing affordability crisis down the road, if they’re not already dealing with it.
As we speak, city leaders, as well as concerned citizens, are placing much of the blame for our housing problems on the land development code that hasn’t been updated in four decades. Austin’s City Council is reviewing the final draft now and those responsible for updating and approving CodeNext are hoping the city can begin to churn out housing for all income levels. But that only checks off one box. It doesn’t solve the skilled-labor shortage in Central Texas, which adds costs to homebuilding projects. Labor costs are another top obstacle, according to a survey by the National Association of Home Builders. Both of these are worse this year compared to last year. Building material costs were cited as a hindrance by 84 percent of members, up from 77 percent in 2017. And then there’s income growth. Like the rest of the country, it’s been stagnant for decades. Median family income in Austin has increased 17.5 percent; but median home prices have shot up 42.5 percent. Home prices in Hays and Williamson Counties are going up, too, but the incline has not accelerated as steeply or as quickly. That’s what makes the suburbs so appealing, especially for adults who can’t rely on wage growth in step with inflation.
Non-profit organizations are cropping up to help turn around some of these issues. Since 1953, HomeAid has been bringing together entities like builders, suppliers, lenders and government to create housing for the homeless. A new Austin chapter recently launched in partnership with the Home Builders Association of Greater Austin. Executive director Melissa Nicewarner Daly says, “The biggest challenge when trying to place people in jobs is their housing status. You can find people jobs any day of the week, but to find affordable, convenient housing is increasingly more challenging. They need access to bus routes, for instance. So people are getting pushed further and further away from the urban core.” This is one cycle we can’t seem to dig ourselves out of.
Counties in the Austin-Round Rock metro are taking steps to address or head off their own affordability crisis. Williamson County is trying ways to make housing less expensive with vouchers and tax credits. Both are already in high demand. Georgetown’s current affordable housing options have a four to six-year waitlist, but early in July, Hillwood Development Company announced its acquisition of a 366-acre plot of land, and to be part of Wolf Ranch master planned community, known as Guy tract (for the family that owned the land), builders are constructing more than 2,500 single-family homes and multi-family projects.
One neighboring city that is experiencing population growth—between four to six percent the last few years—doesn’t appear on any “top destination” lists for adults fleeing Austin—or fleeing anywhere, for that matter. In June, Hutto announced the approval of 2,000 new home zoning permits. The city also is designing a new amphitheater that will hold up to 10,000 people. For a small city with a population just over 20,000, that’s a pretty ambitious project. But unlike a lot of surrounding suburbs, for quite some time, Hutto seems to have been on the right side of planning for a possible population explosion. “Hutto started as a bedroom community, so we have an abundance of affordable starter homes – more than 5,000 lots starting in the lower to mid $200s. Some builders are pulling as many as 20 construction permits a day,” says Eliska Padilla, executive director of communications for the City of Hutto. “The next thing our community wants are “step-up homes” so families stay and put down roots here.”
So it’s good to see suburbs are rolling out initiatives welcoming families and individuals who can no longer justify spending more than 30 percent of their stationary income on a mortgage and other living expenses. On the other hand, should Austin just concede that our affordability problems may be here to stay? The best that experts can say right now is that “we’re working on it.” RL