Here's why there's no affordable housing in central Austin

It's simple:  No one has built multi-family rental housing in central Austin in years.

This isn't much of an exaggeration.  Outside of the Triangle, and some student housing in West Campus and on the periphery of UT, just a tiny number of units have come on line since the beginning of 2001.

Take all of south Austin, zip 78704.  The city demographer keeps stats on each multi-family project built in the city, dated by the date the site plan was filed.  (Open "Third Quarter 2006 Report" in the link; "multi-family" in this data means more than four units.) Let's count all of the multi-family projects that (1) had site plans filed after January 1, 2001, and (2) were actually built (since people can't live in site plans.)  There were only seven such projects in South Austin, with a total of only 167 units. 

This 167, though, includes condos as well as apartments.  Although the city data doesn't say whether a project is rental or condo, I know that four of these projects, with 135 units, are condos.  This means South Austin has had (at most) a measly 32 multi-family rental units site-planned and built since the end of 2000.

For the sake of comparison, south Austin had 9,811 multi-family units, mostly rental, in 2000 -- and that's excluding the student housing around St. Ed's.  (South Austin had 8,244 single family units.)  I'm not sure when apartment-building slowed down in South Austin, but by January 1, 2001, it had come to a dead stop.

Take zips 78751 and 78752, which together cover most of central north Austin minus the UT area.  Ignoring the Triangle, only fourteen multi-family rental units (units, not projects) have been site planned and built in these two zip codes since January 1, 2001. 

Thanks to City data, we can pinpoint neighborhoods with zero multi-family construction between 2000 and 2005.  (Download NPA_Comparative_Data.pdf ) Here's a partial list:  Allandale; Barton Hills; Bouldin; Brentwood; Dawson; Galindo; Hyde Park; Rosedale.  Crestview, Hancock, Old West Austin, and Zilker added a trivial number during this period.

Perhaps you're thinking, "These are single-family neighborhoods; it's unreasonable to expect them to absorb multi-family." These neighborhoods, however, collectively had thousands of multi-family units on December 31, 2000.  Hyde Park, for example, had 1,604 occupied multi-family units in 2000, roughly 45% of all of its housing units.  Allandale had 658.  Barton Hills, 2,797; Bouldin, 1,000; Brentwood, 1,698; Dawson, 619; Galindo, 742; and Rosedale, 562.   None of these neighborhoods added a single multi-family unit to their total for years.

There's the culprit for the affordable housing shortage in central Austin. 

Look, a fair number of units have to come on line every year just to maintain the status quo.  Some multi-family units are lost every year due to fire.  Or storm damage.  Or deterioration.  Or conversion to other uses.  (I know three apartment complexes on or near South Lamar have gone condo in the last two years.)

Then we have to factor in surging demand.  Austin's "urban core" added an estimated 20,000 people between 2000 and 2005.  The City as a whole added roughly 50,000, and the metro area many, many more.  That's a lot of people chasing scarce housing.

I know that most of the new stuff being built is expensive.  But most of the new stuff is being built as mixed use on transit corridors.  That kind of stuff is always going to be more expensive than, say, smaller complexes built in neighborhood interiors.  One reason is that land is more expensive on busy commercial streets, where there are lots of competing uses, than in neighborhood interiors.  Another is that it's just more expensive to build commercial-grade mixed use projects than standard apartment complexes.  (Don't get me wrong -- the mixed use stuff is great.  The more the better.)

I also know a lot of stuff is in the pipeline.  Housing "in the pipeline" doesn't do any good for people looking for housing today.  Anyway, when you empty out the condos, and the student housing in West Campus, and the high-end mixed-use projects downtown and on transit corridors, the pipeline's producing just a trickle.

I suppose it's theoretically possible that there's been no demand for new apartments in central Austin other than for high-profile mixed-use projects like the Triangle or student housing around UT. 

I don't believe it, though.  Take a look at the population growth.  Consider that tens of thousands of apartment units have been built on Austin's outskirts since the beginning of 2001.  Surely thousands of those tenants would prefer rental units in central Austin.

There's a more obvious explanation for the dearth of new apartment complexes:  There's nowhere to build them in central Austin.  That doesn't mean there's no space.  There's plenty of space.  There's just little land zoned MF aside from the transit corridors and the UT area.  The small- to medium-size neighborhood apartment complex is a dinosaur, and the dinosaurs are dying off.  If you consider which neighborhoods are listed above, you know why.

Comments

[M1EK]

I think it's worth explicitly (rather than implicitly) noting that single-family use in central neighborhoods in a city this large will never again be "affordable" by a reasonable definition of the word, since so many neighborhoods cling to this fantasy in justifying the opposition to projects they declare as gentrifying (even, yes, in Old West Austin).

Otherwise, the Jeff Jacks of the world win twice - first by not being challenged on the baloney that single family homes in Barton Hills would be "affordable" if we weren't building apartments, and second on his contention that we can satisfy all the demand for central living by putting up apartments on green/grayfields like Mueller.

[AustinContrarian]

I think you're probably right that single family homes will never be affordable again. Home prices would go down only if Austin took a real blow economically, which I don't see happening any time soon and wouldn't want to happen anyway.

Condo/apartment construction west of I35 may keep SF home prices from increasing as quickly. It certainly won't cause them to rise more quickly. I've always thought the gentrification argument for neighborhoods west of I35 was baloney.

The only thing I disagree with is your statement that SF owners "cling to the fantasy" that we can still have affordable SF. I think their talk of affordability is pretext rather than fantasy, at least for NAs west of I35.

[ccosart]

I think you have to take it on a case by case basis as to whether the NIMBYs are duplicitous or misguided when they talk about "affordability". I think some really do care about affordability but don't analyze it a lot and then when Jeff Jack says it's because of "development" they just go along. And then there's a third group which really believes "it's the developer's fault" and has constructed their own alternate reality around the belief and you can't have reasoned debate with them. Not sure which of the three is more annoying.

[Paul Mullen]

The reason there are few new multi-family developments, is obviously mostly due to lack of suitable vacant sites, partly the high cost of residential lots in these areas, and then the opposition from neighborhoods.

Setback requirements between MF and SF zoning make small MF developments in SF areas uneconomic - easier to build town home condos (SF-6 zoning does not require setbacks).

High home prices in 78704 has reduced the economic viability of renting, whether single family or apartments. An apartment worth perhaps $50 to 60,000 based on its expected rental income, might be worth $100,000 as a potential condo (a 12 unit apartment complex on South 1st St, tax-appraised last year at $600,000 is for sale at $1.2 million.

Also your assumption that lots in residential neighborhoods would be worth less than commercially zoned lots on major highways has also been turned upside down by the crazy demand for houses in 78704: a few months ago I looked at a 2000 sf house on South Lamar used as a law office with commercial (CS) zoning for sale at $345,000 - it would likely have been worth far more if zoned SF and tucked away from the busy street, even though CS zoning allows near 100% building cover and zero side setbacks! I then compared tax appraisals of houses on South First St - the ones with commercial zoning are appraised for far less than their neighbors with SF zoning! You see commercial market value is still based on potential rents.

Similarly duplexes, which always used to sell for about the same price per square foot as comparable single family homes, are worth far less. I just bought a house in 78704 which was originally a single family house of 1100 sf and then had a separate wing of 900 sf added, originally as the children's wing of a single family home but later converted into a duplex. Because it was a duplex I was able to purchase it for $220,000 (duplex prices being driven by rental income). But as a single family home, even in present condition, the Appraiser estimated its value at $350,000. I think I'd better knock a hole in the dividing wall (and thereby make money out of reducing the area's rental housing stock) before selling it!

So you see it is house prices (particularly the value of the rare empty lots) that make renting uneconomic. It is the desire to get on the bottom rung of the house owning ladder that then drives the demand for condo conversions of apartments.

Of course if all the condo buyers would otherwise have rented the condo conversions may not make a big difference to the demand versus supply of rented accommodation.

If condo-conversion buyers would otherwise have been forced to buy a new single family home way out in the suburbs, sprawl may have been reduced, but where do the displaced renters go? I suppose they are the ones renting all those apartments being built out along Slaughter Lane.