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Yeah but when the market is inflated like Austin even the lower rung units are expensive. The only way to solve that is affordable units. Mixed rate units are best with market rates and affordable ones scattered throughout.
no the only way to solve this is allowing enough units to be built by the market such that the price of the low end units drop. The city will *never* be able to artificially create enough "affordable housing" to be anything more than a token.
The only way to allow more units to be built is to 1) allow multifamily where it is not allowed now 2) reduce the pain/cost of building multi family by reducing the requirements such as parking, environmental studies, permitting delays, etc. 3) prevent protestors from slowing down projects (austin oaks and the grove puds took years to go through the approval process)
if the city allowed developers to build 100,000 luxury multifamily units what do you think would happen to the price of existing older units?
The east side would hate it, but it would be the perfect place to eliminate parking requirements, setbacks, and allow multifamily with simplified site plan requirements.
You could supercharge things by giving them a few years of tax breaks.
Yeah but when the market is inflated like Austin even the lower rung units are expensive. The only way to solve that is affordable units. Mixed rate units are best with market rates and affordable ones scattered throughout.
Most of the affordable housing in Austin is market-priced, privately developed, not subsidized units. This is sort of acknowledged in the make up of the bond with $94M going towards "rental assistance."
Of course the market rate affordable are almost always older units, but much the same as cars there is no such thing as new and cheap. As I mentioned before there is a $6B shortfall in affordable housing and this $250M won't go very far, and is more costly than this as it does not include property taxes that are forgone.
It is no so much that the new housing will serve low income people at this time, but the reality that it will take development pressure off of older developments at risk of being re-habbed for double the rent. Even so eventually some of what is now deemed "luxury" housing will age and filter down the income ladder.
Now having developers foot the bill for affordable units via density bonuses may be where a lot of gains can be made. Of course the other 80-90% of the tenants in a complex might not enjoy paying extra for this privilege - as it will be them and not the developer - where the costs will be absorbed.
Last edited by verybadgnome; 07-10-2018 at 10:52 PM..
I know a lot of people complain about "stealth dorms" but they actually do a lot to increase housing. Take an old 1950's home in Hyde Park, pack in 15 people and you get density real quick and you solve a "unit" problem without building units.
But of course many on here oppose it. We're going to have to think creatively here.
I just went to Detroit last week to see Neil Young in concert, decided to stick around to also see Beck a few nights later, and explore the city. I'd always heard you can buy a house for $5K in Detroit, so I did some poking around.
There are a lot, but none are in the resurgent downtown/midtown areas, which were actually really cool and no different than a lot of urban metro areas. New condos and upscale homes in the urban core were, much to my suprise, as expensive as Austin.
What's this got to do with Austin? I don't know, other than my observation that if Detroit itself can't produce "affordable" core housing in it's core, along transportation routes in desirable safe areas, then where *can* it be achieved?
I just went to Detroit last week to see Neil Young in concert, decided to stick around to also see Beck a few nights later, and explore the city. I'd always heard you can buy a house for $5K in Detroit, so I did some poking around.
There are a lot, but none are in the resurgent downtown/midtown areas, which were actually really cool and no different than a lot of urban metro areas. New condos and upscale homes in the urban core were, much to my suprise, as expensive as Austin.
What's this got to do with Austin? I don't know, other than my observation that if Detroit itself can't produce "affordable" core housing in it's core, along transportation routes in desirable safe areas, then where *can* it be achieved?
Steve
The difference is that people can "take a risk" and get really affordable housing in unsafe areas which are really close to the safe areas and eventually will gentrify.
Austin had that around 10 years ago in East Austin but not that's not available as property taxes have risen so much that it's pushed people out.
There are many people living in those $50k homes that wouldn't have an option in Austin.
The difference is that people can "take a risk" and get really affordable housing in unsafe areas which are really close to the safe areas and eventually will gentrify.
Austin had that around 10 years ago in East Austin but not that's not available as property taxes have risen so much that it's pushed people out.
There are many people living in those $50k homes that wouldn't have an option in Austin.
That's true. And our road infrastructure make "drive until you can afford it" a zero sum gain.
We have dumpy old housing stock out in Taylor (quickly being discovered though) but when you subtract commuting costs from the housing savings, it's not necessarily cheaper.
I have a broader thought on decreasing affordability. Based on these metrics/assumptions:
At 4.5% annual appreciation, it takes a house about 15 years to double in value.
At 3% average annual increase in wages, it takes about 22 years for a salary to double.
So, when I graduated UT in 1994 making, if I remember right, about $30K +/- per year salary as a computer programmer, I was about to purchase my first house, a run down 1,000 sqft 2/1 in Hyde, for $58K. Fixed up it was really a $90K home, so let's go with that. A home cost 3x an out of college salry in Austin in 1994.
15 years later, in 2009, theoretically, that home would have doubled to $180K but the out-of-college salary would only have increased to $46K. So, now, with just normal home value and salary appreciation, it costs 3.9x salary to buy the same home.
Median income in Austin today, depending on which source you use is $55K to $68K per household, and the median value home for the metro area is about $350K. So that is anywhere from 5x to 6x salary it costs to buy a home in Austin.
Do homes cost to much or is there a structure economic absurdity that shows the ratio of salary to homes will diverge over time no matter what, since home values appreciate faster than salaries?
That's true. And our road infrastructure make "drive until you can afford it" a zero sum gain.
We have dumpy old housing stock out in Taylor (quickly being discovered though) but when you subtract commuting costs from the housing savings, it's not necessarily cheaper.
I have a broader thought on decreasing affordability. Based on these metrics/assumptions:
At 4.5% annual appreciation, it takes a house about 15 years to double in value.
At 3% average annual increase in wages, it takes about 22 years for a salary to double.
So, when I graduated UT in 1994 making, if I remember right, about $30K +/- per year salary as a computer programmer, I was about to purchase my first house, a run down 1,000 sqft 2/1 in Hyde, for $58K. Fixed up it was really a $90K home, so let's go with that. A home cost 3x an out of college salry in Austin in 1994.
15 years later, in 2009, theoretically, that home would have doubled to $180K but the out-of-college salary would only have increased to $46K. So, now, with just normal home value and salary appreciation, it costs 3.9x salary to buy the same home.
Median income in Austin today, depending on which source you use is $55K to $68K per household, and the median value home for the metro area is about $350K. So that is anywhere from 5x to 6x salary it costs to buy a home in Austin.
Do homes cost to much or is there a structure economic absurdity that shows the ratio of salary to homes will diverge over time no matter what, since home values appreciate faster than salaries?
There is no absurdity to home prices outpacing salaries and I'll explain why. The population of the US keeps growing meaning there is less and less space. The main cost in a house is land and land will always go up. There simply is a finite amount of land in the world and more people to share it.
As far as salaries, that is much more complicated to calculate. Salaries can go up or down depending on the economy and the job outlook in an area.
Real estate is always a safe investment if you can afford it and by nature it's a valuable one that always increases in value. It's kind of like minerals like gold only they are still finding new discoveries of gold so the amount of gold in the world is increasing, albeit very slowly.
Infill is a way of "cheating" as is tearing down structures and building higher structures. It's the only way to really increase square footage without increasing land, but there is inherent cost when you go above a certain number of stories. Density really is the solution but that only happens when the $$$ are so high that developers can profit from that density.
It's really a sad situation because there are no easy solutions. A multi-prong approach is usually best, addressing it from many angles.
The existing model seems to be the jobs are centrally located in a circle of housing. The closer in to the jobs in the middle, the more expensive the housing is. The lower paying worker jobs that support the central 'industry' jobs then have to live further out and commute in, while the higher paying jobs live closer.
The lower paying jobs don't have the clout to 'move' any jobs from the central area, and presumably those workers have to travel to the jobs (they are doing more physical work as opposed to intellectual work - servers, janitors, delivery people, etc.), so if a job was to move from one area to another, they would have to move as well or commute further.
The conventional approaches discussed here are the usual - public transit to lower the cost/effort of commute for these 'blue collar' workers (not entirely accurate, but I will use it for here), increase the supply (densification), or artificially limit housing cost for low-income workers.
A possible future direction may start occurring - the 'middle class' with more economic clout may decide more and more to work remotely, or at least remotely from the city of town. 'City Centers' have been discussed before, but as the cost of the city escalates, there may be more pressure for it to occur naturally. Our company actually has gone to two offices in Austin - one north and one south. Any support jobs we may generate will be in the NW area and SW area, not central. We also have quite a few people that work from home one day per week.
The down-side is portability - if you, as a blue collar worker, lose your job or decide to change jobs, then the work in the periphery or distant city centers may be even further than a commute to downtown. You are either limited to to other jobs in your immediate area or having to move. But that (to me) appears more likely an occurrence than creating an affordable downtown (or even close to downtown) in the immediate future.
The existing model seems to be the jobs are centrally located in a circle of housing. The closer in to the jobs in the middle, the more expensive the housing is. The lower paying worker jobs that support the central 'industry' jobs then have to live further out and commute in, while the higher paying jobs live closer.
The lower paying jobs don't have the clout to 'move' any jobs from the central area, and presumably those workers have to travel to the jobs (they are doing more physical work as opposed to intellectual work - servers, janitors, delivery people, etc.), so if a job was to move from one area to another, they would have to move as well or commute further.
The conventional approaches discussed here are the usual - public transit to lower the cost/effort of commute for these 'blue collar' workers (not entirely accurate, but I will use it for here), increase the supply (densification), or artificially limit housing cost for low-income workers.
A possible future direction may start occurring - the 'middle class' with more economic clout may decide more and more to work remotely, or at least remotely from the city of town. 'City Centers' have been discussed before, but as the cost of the city escalates, there may be more pressure for it to occur naturally. Our company actually has gone to two offices in Austin - one north and one south. Any support jobs we may generate will be in the NW area and SW area, not central. We also have quite a few people that work from home one day per week.
The down-side is portability - if you, as a blue collar worker, lose your job or decide to change jobs, then the work in the periphery or distant city centers may be even further than a commute to downtown. You are either limited to to other jobs in your immediate area or having to move. But that (to me) appears more likely an occurrence than creating an affordable downtown (or even close to downtown) in the immediate future.
Not really, does Dell ring a bell? (no pun intended). Except for government and law offices it seems Austin is pretty spread out. There are tech offices along 183, MoPac, 360, Parmer. Ben White and even 71 East of the airport.
A city like Houston is even more spread out but they still have problems because the rail system is wholly inadequate.
So the solutions for Austin are either to build out rail or support measures like the one discussed. If you vote no for both you are basically kicking the can down the road and eventually this city will be SF lite.
I warned everyone on here to vote for rail or bad things would happen, but people didn't believe me.
In many cases you have to root for the lessor of two evils.
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