SOCA: Supply & demand in Austin housing

A key part of any change agenda this year has to focus on affordability. We must make Austin affordable for people who live in Austin, and we need to build ladders of opportunity for communities that historically have been cut off.

If we’re going to change in a way that promotes affordability the Austin way, first we’re going to have to have a clear-eyed talk about housing and housing supply. Where we build it, where we preserve it, where we keep it affordable, and how we make it easier to remodel and to build the housing stock we need.

The cost of housing is what takes the greatest chunk out of most family budgets in Austin, and it is this cost that is primarily responsible for driving people out of Austin.

For too long we’ve treated housing like a game of musical chairs. When the music stops, too many people are vying for too few houses and apartments. Some people lose their place, while others bid up prices. We cannot sit by while Austinites are priced out of Austin and when young people have to leave Austin to start their families. That’s not right.

The biggest problem with housing is that there’s just not enough of it to go around. I’m here to tell you that the law of supply and demand, and its relationship to prices, applies even in Austin. We simply don’t have enough housing supply now to keep up with demand. And by not creating enough housing in Austin, we’re pushing people out of town to cheaper housing in surrounding communities, adding to their commute, our congestion, and everyone’s expenses.

As a consequence, home prices have hit a record high in Austin. The median-priced home in Austin is now $284,000. They say that our housing market is cooling off a little, but that only means prices will rise less quickly if we do nothing but maintain the status quo. Experts tell us that 95,000 people are going to move to the Austin area by 2020. The experts also tell us, we will continue to grow by about 110 people every day.

To stabilize housing prices, we need to build at least 135,000 new housing units over the next decade so supply more closely meets demand. To do this, we’re going to have to change the way we do things in Austin. In a few weeks, I hope this Council adopts the Strategic Housing Plan as a good start.

Part of our problem is that our laws that tell where and how we can build housing – our land-development code – are convoluted, confusing, and lack the tools we need to manage growth. Actually, over the last 30 years, our development code has been amended and written over so many times that it’s a wonder anything gets built at all. When it comes to our current land development code, the only thing you can consistently predict is that there is insufficient predictability and inconsistent application.