Austin Real Estate Blog

There has been alot of talk about affordable housing in Austin. For the most part, this discussion has been centered around the new Mueller redevelopment and the condos being built in downtown Austin. The proposed solution has for the most part revolved around setting aside a certain number of the houses or condos in new developments for affordable housing. So for instance, if a developer is building a condo complex, they will set aside 5 to 10 percent of the condos to be sold at a lower price. In order for people to qualify to buy affordable condos, people need to make under a set income amount. The developers are often offered incentives by the city to provide the affordable units.

The goal is to provide people with lower incomes different housing choices. By providing people with lower incomes an ability to buy in these developments, there is a hope to have diversity of incomes in these new housing and condo developments.

While this is a noble goal, the current solution is somewhat short sighted. It's possible these developments will be around in 100 years. But just looking forward 5 years, alot of these "affordable units" will have resold most likely at market values. At that point, I don't even know if people will remember which units were affordable and which were not. While sellers usually tout that they have the "model" unit, I doubt they will tout that they have the affordable unit.

In my mind, this does little to provide real housing choices for the majority of people with moderate incomes. According to wikipedia there are 1.5 million people in Austin which leads to about 750,000 people in Austin that make under the median income. There are maybe 200 affordable houses and condos that should be coming online through the various programs. So instead of providing housing choices, this is more of a lottery where a few lucky winners will get a 40,000 gift from the city. I couldn't be more happy to the people that win and I hope its someone I know, but this doesn't really seem to be a sound city policy focused on long term housing planning, because again the effects of this lottery will for the most part be gone in a few years.

Instead, I think the city should use its resources to do things that will benefit people for a long time in the future. Money could be set aside to build parks. Or the city could encourage better mass transit. So that if downtown Austin is going to be the great metropolis that we hope, the vast majority of those 750,000 people that didn't get an affordable house through the lottery can at least get downtown without being stuck in traffic for 5 hours. It would seem better to use city resources to provide a benefit to everyone than a few lucky lottery winners.

I am not just talking about additional lines but also parking near the transit centers. For instance, the current Crestview station is called a kiss and ride station. There is a limited amount of parking near the station. The idea being that a loved one will drop you off. While this is not a problem for people that live in the new developments, if someone lives 12 miles away it becomes a problem. If I was going to go downtown to watch a show or get something to eat, I would not want my wife to drop me off, we would most likely want to go together. I mean I have no idea who would drop me off. I'm going to call someone and say "Hey I want to go downtown to play some pool, but umm not with you, can you give me a ride to a transit center". I think more parking would encourage more people to use the transit centers to get downtown and would discourage people from driving downtown leading to traffic nightmares.

Ok so regardless of the parks and transit center changes, we are still stuck with downtown being unaffordable in 5 years. Their is one option as far as I see. A 1700 square feet condo is going to be expensive. Looking at the building costs and land costs these units are not going to be affordable. Artificially lowering the price will only work for so long. But if we built smaller units these could be sold for less. Additionally, since the units are selling for less because they are smaller instead of being artificially sold below market rate, they remain cheaper over time than the larger condos, hopefully providing housing choices for people in the future as well as today. Another benefit is that it would increase the density of downtown which is a stated goal of the city.

Now I know alot of people believe that it is impossible to live in anything under 1000 or 1500 square feet. I can state from experience that this is not the case. The first place I moved after school was pretty far out. I liked that their were deer and rabbits in my backyard. After a few months I realized I was spending more time in my car than enjoying nature. So I decided to move to central Austin where I would be closer to my work and places I frequented. At the same time, I liked the idea of saving so I didn't want my mortgage to jump up. Faced with this, I realized that something was going to have to give and that was square feet. I bought a duplex and moved into one side. The new place was dramatically smaller but all in all I was much happier. I got rid of alot of stuff I didn't really need. I put a few things in storage. In the end, I was able to move closer in and actually lower my monthly housing bill quite a bit.

I want to be clear that I'm not saying I'm against affordable housing. In fact I would be willing to give the current incentives for a plan that would provide long term affordable housing. I would actually support the city giving substantially more incentives or funding for a plan that would actually work over time. I am simply against providing incentives for a plan that is doomed to fail and provide a negligible benefit over the course of time. I would prefer to see a strategy that provides affordable housing choices over a longer period of time than 6 - 12 months when these affordable housing units are sold.

Anyway, in keeping with the title of my blog, these are my late night real estate thoughts and I'm going to bed. Its past 3 o'clock I have no idea what I am doing up. I would be interested in other peoples thoughts on the subject. Feel free to comment here or better yet post something on your own blog.