When would you say Austin became too expensive for the average person? (Houston: low income, 2014)

[scm53]

Originally Posted by buffettjr

I understand what you're saying, but I think you're being a little disingenuous with your post. I would suspect that just about anywhere you look up would show a high amount of price appreciation due to "regulatory costs" from regulations that are just common sense in a town where people are living in close proximity.

Further, I think the city has done much to address population growth by having the stated goal of increasing population density in the urban core. I think that would depress prices, all else being equal as it limits sprawl. The problem is that we have far more people moving here than can be addressed by adding new condos/apartments in the core, though we are certainly doing that as fast as we can.

Did you read the article? It does a nice job of laying out, from a professional land use expert's view, the added costs of Austin's regulations vice the suburbs. Other areas in the US are immaterial, as the choice has been made - move to Austin. The issue then, is where? Austin or the 'burbs? In the 'burbs, you wouldn't have a renter able to block the demo permit for eight months of carrying costs. If you are outside Austin, you wouldn't have to incur costs to remove a tree that even the city's arborist said should have been removed. You wouldn't have been restricted to not building a new property properly sized for the lot. You would probably have nearly the same storm water protection costs. And you certainly would have been able to use a stock design.

Finally, while we may be "adding new condos/apartments", the reality is, that not everyone wants to live in one. There are specific decisions made by the CoA that have resulted in increased costs of SFR construction, relative to the 'burbs - as this specific example illustrated (my apoligies for saying "the average Austin central city residential lot" - should have said "an"). No one should be surprised that those actions have increased the cost of living inside the city limits.

[MtnLion512]

78745, 48, and even parts of 49 have homes for sale around the 200K mark. None of what I'm seeing looks super run-down or suspect, just modest. Lots of nice trees. As far as I know none of those areas are far-flung suburbs or outlying towns.

[Novacek]

Originally Posted by scm53

You wouldn't have been restricted to not building a new property properly sized for the lot.

The 'burbs still have setback requirements. That's going to keep you from building the house on a significant portion of the lot.

Originally Posted by scm53

And you certainly would have been able to use a stock design.

But would you have?
In the example in question, they're spending $260k just on the lot itself. Plus demolition (the actual work, not even considering the delay). To make that worthwhile, you've got to be turning around and putting in close to half a mill in new construction. Call it three quarters of a million total. Spending that same chunk of change in the burbs, would you actually use a stock design, or would you still go custom?

[scm53]

Originally Posted by Novacek

The 'burbs still have setback requirements. That's going to keep you from building the house on a significant portion of the lot.


But would you have?
In the example in question, they're spending $260k just on the lot itself. Plus demolition (the actual work, not even considering the delay). To make that worthwhile, you've got to be turning around and putting in close to half a mill in new construction. Call it three quarters of a million total. Spending that same chunk of change in the burbs, would you actually use a stock design, or would you still go custom?

My 'burb's setback is 20' in front (much of it easement anyway), 5' on the other three sides. Now, that is before you get to the IC restrictions ...

As far as would you go to a stock plan? I don't think that is the issue they were addressing, or what was at the heart of the OP's question - it is why is Austin so expensive, and when did it get that way? I don't think you would spend $750K in the burbs, and that is just the point. The question is, why is the construction cost for a SFR inside the central core over $300K, while a comparable, bigger SFR in the burbs $165K? Not sale price, but construction cost? The regulatory cost has an impact - not any one, but the aggregation of them.

That is part the answer to the OP's question. YMMV.

[Novacek]

Originally Posted by scm53

The question is, why is the construction cost for a SFR inside the central core over $300K, while a comparable, bigger SFR in the burbs $165K? YMMV.

Because it's usually not comparable. It would be stupid to spend $300K on just a lot, and then turn around a build a $165k (construction cost) house on it. So you go high-class, all the trim. Granite everything, etc.


Plus you're usually comparing apples to oranges of an entire subdivision vs. a one-off specialty. Economies of scale and all that.

[scm53]

Originally Posted by Novacek

Because it's usually not comparable. It would be stupid to spend $300K on just a lot, and then turn around a build a $165k (construction cost) house on it. So you go high-class, all the trim. Granite everything, etc.


Plus you're usually comparing apples to oranges of an entire subdivision vs. a one-off specialty. Economies of scale and all that.

You are missing the underlying question - why is the lot $300K? The author, with some pretty solid examples in just one case, says that much of that is CoA regulatory cost.

[CarnivalGal]

Originally Posted by FueledByBlueBell

but it will be a heavy fixer upper, so $500k is a bit misleading.

You can get a nice house in Jester for $500K.

[CarnivalGal]

Originally Posted by MtnLion512

78745, 48, and even parts of 49 have homes for sale around the 200K mark. None of what I'm seeing looks super run-down or suspect, just modest. Lots of nice trees. As far as I know none of those areas are far-flung suburbs or outlying towns.

A co-worker closed on a house this summer in 78749 for $178,000. Nice 3 BR house that didn't need any work. Zoned to Bowie High School.

[Novacek]

Originally Posted by scm53

You are missing the underlying question - why is the lot $300K? The author, with some pretty solid examples in just one case, says that much of that is CoA regulatory cost.

Uh, no. He was addressing regulatory burdens on construction (which exist). He didn't say anything about regulatory burdens of why the tear-down lot was $260k. _All_ his examples were post-acquisition.

[buffettjr]

Originally Posted by scm53

You are missing the underlying question - why is the lot $300K? The author, with some pretty solid examples in just one case, says that much of that is CoA regulatory cost.

Because people want to live in the urban core to avoid the enormous costs of commuting (tangible and intangible costs) and because Austin has a particularly bad traffic problem which makes the problem more pronounced. There is demand for those lots, and people fight over them. Luckily we live in a system where people fight over things with dollars instead of bullets, but the result with a rapidly rising population is rising prices.

Are you going to argue that the 15% rise in prices year over year in my central neighborhood was due to evil government regulations? What new government regulations were enacted only in the last year that effected every existing lot to account for the price increase? Or is it because the population is increasing and living in the urban core is more desirable to wealthy people than the suburbs?

When we saw white flight in the 1950s, city property values decreased, did they not? Are you going to argue that was because the government suddenly removed a lot of regulations? Which ones were in place that they removed?

While it can be argued that regulations have some impact in limiting supply in an urban core, it seems to me the far bigger reason is that lots are limited due to simple physical, geographical reasons, and that demand for them is strong and increasing.