AUSTIN (KXAN) — It’s been another tough year for people in Austin’s housing market.
KXAN has been sharing your struggles throughout 2022.
“I have a rental property and I was able to leverage some of that and figure out a way to turn that into a down payment on a house, but not everybody has resources like that,” Tony Baker told us in January.
He moved out of Austin and into Pflugerville.
“Being in your mid-20s and purchasing a $500,000 home just really isn’t our — it’s just not feasible,” Jacob Reynolds and his partner, Belén Ramos, told us in February.
Nicole Longnion was able to buy an affordable townhome from Austin Habitat for Humanity in Mueller, one of only 11 built there.
“It’s like winning the lottery!” she told us in September.
The Mueller development’s own affordable housing program had a 116-person waitlist at the time when a scorecard showed all of Austin’s city council districts were behind on their affordable housing goals.
“I did not think it would get this bad this quickly,” said Ian Mitchell in October, an Austin homeowner who was happy he recently refinanced his mortgage rate for 5.5% before it went up even more.
Buyer slowdown leads to good news for housing stock
Ashley Jackson, incoming president of the Austin Board of Realtors, said those high mortgage rates had many potential buyers hit pause on their search.
The good news is that move let more housing inventory accumulate to 3.1 months of stock.
That’s quadruple what it was in November of 2021, according to ABoR.
The agency’s latest report also indicates in November, for the first month since the spring of 2020, we didn’t break any records for home sales or median home prices.
“I’ve lived here about 40 years and I can count on one hand how many times I’ve seen three months of inventory and this much opportunity in the marketplace for buyers. It’s not frequent. It’s not common to have this. So, I call this an Austin version of a buyer’s market,” she said.
The bad news, though, she said, is the interest rates are locking people out of homeownership.
“If I could design the world, I would prefer that we had more housing inventory available, which can help to temper price increases, versus really abruptly raising interest rates and knocking people … out of the market from being able to buy a home,” she said.
Jackson said housing starts and permit applications are also down because builders have been facing high construction costs. She said they’ve also pulled back because there’s more inventory than they’re used to.
“The concern with that is that we may have that higher demand come back into play. And then now we have fewer new builds to choose from,” she said.
Jackson expects demand to track with interest rates.
“As we see them kind of slowly moving back down, which they have been doing over the past few weeks, then we may see an increase in demand,” she said.
What can we do differently about housing in 2023?
To get ahead of that anticipated demand, she and ABoR want to hit the ground running in 2023 with Austin’s new mayor, Kirk Watson.
“Even though we may have some breathing space and have 3.1 months of inventory, we can’t rest. This is an ongoing issue, and we’ll be right back where we were,” Jackson said.
She said the new administration at city hall can help speed up new home construction in 2023 by bringing down development fees, changing zoning, and creating more variety in housing.
“Make sure our zoning allows for more housing — all types of housing, across the entire city, and every price point,” she said. “If we don’t serve every market, the people at the upper end of that market will start shopping in the lower end of the market, and then knock those buyers out from the being able to purchase homes, as well.”
Jackson doesn’t think we’ll reach the ideal healthy market next year: six months of housing stock.
But hopefully building more in 2023 will prevent a replay of 2022.
“It’s definitely discouraging to realize that I’m never going to be able to live in my own neighborhood that I grew up in,” renter Samantha Tello told KXAN in March.
“As soon as our demand comes back, we will be right back at housing scarcity,” Jackson explained. “We will start to see buyers competing for homes again because we have an ongoing housing supply issue.”
One major move we made this year that is expected to help our housing market next year: Austin voters passed the city’s largest affordable housing bond, ever.
That’s supposed to go toward buying land for building, renovating and improving affordable housing buildings.
It’ll also provide funding for loans and grants for housing projects.
ABoR said while every new home built helps build up affordable housing stock, Austin needs an “all of the above” strategy to build more market-rate housing, too.
“This includes leveraging the City’s affordable housing bonds while also implementing housing policies that incentivize and support the construction of new affordable market-rate housing,” the group said in an email to KXAN.
The group points to the city’s median home price in November of $530,000 and said the city council needs to take “bold action” to temper prices.
“ABoR is committed to being a consensus builder during these important policy conversations and we are uniquely positioned to bring parties together as our members represent every corner of this community,” the group said.
They said one example of policy change that will help was city council member Paige Ellis’ “missing middle” resolution that members passed earlier this month.
“ABoR has consistently advocated for land use and process changes, like these missing middle site plan improvements, intended to help increase the abundance and variety of housing,” the group said.
ABoR backed the resolution, which aims to streamline the approval process for smaller developments, with three to 16 homes, making it easier and cheaper to build more diverse housing options in the city.
“ABoR encourages the Austin City Council to continue exploring additional policy and process changes designed to increase Austin’s housing stock. ABoR supports efforts to reduce regulatory barriers to housing, lower residential development fees, and increase the abundance and variety of housing in Austin,” it said.
“We look forward to working with Mayor-Elect Watson and the rest of the Austin City Council to craft impactful policies that address affordability, increase our housing supply, and result in a more inclusive housing market,” it added.