INNOVATE FOR AFFORDABILITY By Paul Cauduro, AAA Director of Government Relations
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NAA research shows that 4.6 million new apartments are needed in America by 2030, in addition to as many as 11.7 million older existing apartments that could require major rehabilitations during the same period.
ousing affordability has become the issue of focus that dominates the conversation of local elected officials and community leaders throughout the region and especially in the City of Austin. Housing affordability has been called Austin’s existential threat, and questions about affordability are raised in conjunction with nearly every development proposal or zoning change request. At least every few months the issue is guaranteed to be frontpage news when quarterly real estate data reports are issued affirming the housing shortage and charting the continuous rise in home prices and rental rates. Austin’s housing affordability crisis has even garnered national front-page attention as the subject of a recent cover story for both the New York Times and New York Times Magazine. The factors that impact the cost of housing are complex and include land availability, income levels, job growth, availability of homes for sale, and even investor interest in the market, as highlighted by New York Times Magazine. So, amid this complexity, what does the rental housing industry itself have to say about housing affordability and, as the key stakeholder in the conversation, what innovative strategies can rental housing operators promote as implementable solutions? The facts are clear: according to U.S. Census Bureau data, Austin grew
faster than any other major U.S. metro every year from 2010 to 2020 and consequently there is a housing shortage. The shortage is being driven by the new arriving Millennials seeking homes in active urban-centers at the same time that the empty-nester Baby Boomer set are deciding to leave the suburbs for a more metropolitan lifestyle. Other drivers include job-seeking immigrant residents who are an increasing proportion of U.S. population
Read about AAA’s current advocacy issues at www.austinaptassoc.com/news/advocacy-in-action
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Industry UPDATE
growth, and the aforementioned corporate investors seeking both short and long-term real estate gains purchasing homes in core and emerging-core areas. In October 2021 the region’s Median Home Sales price hit $455,000, up 24% in a year’s time, and supply of sales inventory hovered at only a month. Vibrant economic growth and the lack of purchase options pushed increases in apartment occupancy rates, and more than 21,000 apartments were absorbed in year 2021 when numbers half of that amount is considered robust. These factors asserted pressures on rents, and Austin renters are now paying 25% more on average than a year ago. Austin’s $1,535 median rent is higher than the average rates found in in Houston, San Antonio and Dallas-Fort Worth. Almost 23% of Austin residents are considered housing cost burdened because they must dedicate more than 30% of their income to housing costs (including utilities), and 9% of Austin residents are severely cost burdened since they dedicate more than 50% of their income to housing cost. Increasing the supply of housing of all types would certainly stop the rapid escalation of prices, but it would be difficult to catch up.” Apartment Association (NAA) research reveals that 4.6 million new apartments are needed in America by 2030, in addition to as many as 11.7 million older existing apartments that could require major rehabilitations during the same period. As for single-family homes, an estimated 65,000 starter homes were completed nationwide in 2020, less than a fifth of the number built annually in the late 1970s and early 1980s. The Bureau of the Census reports that in 1980, 40% of homes constructed were entry-level homes. In 2019, only 7% of homes constructed were entry-level homes. With steady demand and increasing costs there are some policy levers that government leaders may be tempted to pull, but these actions often disrupt the free enterprise housing market and stymy housing availability at all prices points. However other levers are at their, disposal,
