Austin
10:50 am
Tue October 15, 2013

Do Austin Policies Help or Hurt Affordable Housing?

Austin’s the fastest-growing large city in the country.

All of the city’s socio-economic groups are growing – from the very affluent to people with lower incomes. It’s those low-income Austinites who struggle to find housing as prices climb higher.

Starting next week, Austin voters will decide whether to approve $65 million in bonds to pay for affordable housing initiatives. But regardless of the election results, the need is not likely to go away soon.

Mariska Nicholson isn’t a housing expert – but she knows the market really well. Since her divorce in 2007, the self-employed mother of two has yet to find a place she can afford near her kids’ school in Central Austin.

“The boys and I have moved every year since 2007 because the house that we were living in, the person was going to sell the house – or the rent was raised,” Nicholson says. “The last house I was in on West Lynn, my landlord raised the rent $700 when I was going to renew my lease and I was like: ‘I can’t do that.’”

But others can. There are virtually no empty houses or apartments in Austin. The city hovers between a 97 and a 98 percent occupancy rate. And growing demand keeps pushing prices up. So what can the city do?

Wendell Cox is an international public policy consultant based in the U.S. who specializes in housing affordability.

“Affordable housing is not the outcome of city policies directed at it,” he says. “It is the outcome of public policies that are directed – maybe not even on purpose – toward making housing more affordable.”

Cox says for instance, the length of time builders wait for city permits has a ripple effect on housing prices: the longer the wait, the more interest builders pay on their loans, thus consumers pay higher prices.

That has nothing to do with “affordable housing” policies per se – but these things can either hurt or improve the market.

Cox says there are times when policies also hurt consumers. He points to Portland, Oregon’s so-called “smart growth” policy: anti-sprawl policies aimed at concentrating growth in certain areas. Cox argues such policies “really would have terrible impacts” on home prices. “Effectively, household affordability has been destroyed by smart growth and urban containment policies in a number of metropolitan areas around the world,” he says.

That’s far from conventional wisdom in Austin.

“The first thing about ‘smart growth’ is that it’s one of those terms like ‘Aloha’ or ‘Dude,’” says Brewster McCracken. “They mean so many things that they can mean almost nothing.”

McCracken is a former Austin City Council member who – like most, if not all politicians in Austin – is committed to the idea of smart growth. For him, it’s all about redeveloping underutilized spaces, as in the case of downtown Austin 10 years ago.

“It is a little bit of a quandary,” McCracken says. “What do you do about a situation where you have an apartment complex that is 50 years old and as a result they tend to have all over problems at them – but they’re cheap?”

The challenge is that new development in Austin has often replaced affordable dwellings with pricier ones.

But that leaves people like Mariska Nicholson desperate. And she’s not alone – by some estimates, Austin needs at least 40,000 more affordable housing units just to keep up with current demand.