AUSTIN (KXAN) — While Austin leaders try to figure out how to bring more affordable housing online, the city is seeing more sales of its most expensive homes — think $1 million or more.
A new report by the Texas Real Estate Research Center (TRERC) at Texas A&M University shows the number of those homes sold in the first five months of this year was almost twice the number sold for all of 2018.
Researchers said we’re poised to surpass Houston in luxury home sales this year, even though Austin is only about a sixth of Houston’s population.
Preston “Ty” Tyree has seen his home become one of those.
He and his wife wanted to go from a two-story to a one-story home in their Mueller neighborhood after she fell down the stairs. They were able to lock in a price of around $700,000, and he said by the time they moved in a couple of years later, the price had shot up to over a million dollars.
They had equity from their previous home and will be using equity from this home to move into a condo next year.
“As a homebuyer — or a homeowner in Austin — you know, you say, ‘Oh, this is great. I’ve got all this equity!’ And the answer is, ‘Yeah, but where are you going to go when you sell a house?” Ty said. “You’re going to have to spend that equity to get something else, unless you downsize like we’re going to, and we’re going to downsize considerably.”
George Ratiu, senior economist at Realtor.com said past generations could find a new home in every price range.
“The last time we had such a large generational wave like millennials was in the time of baby boomers. And when you look back in the 1970s, 1980s, the members of that generation could find a new home across every price range, whether it was entry-level, whether it was mid-range or the upper segment,” Ratiu explained. “By contrast, today’s millennials can only find homes in the entry segment on the existing side. And even then, there’s incredible competition.”
Paul Smith, owner and realtor at Twelve Rivers Realty, said the TRERC luxury home report indicates a growing affordability gap in Austin. He said right now, his system only brings up five single homes within the city limits under $300,000.
Smith said one key to bringing down home prices is density, pointing to the Mueller neighborhood as a good example.
“Where they had… the fourplexes, and the A-plexes that were able to add more inventory and kind of do part of the Austin SMART Housing Program,” Smith said.
Austin’s SMART Housing Program
The City of Austin offers developers incentives like fee waivers and tax incentives in exchange for reserving a portion of their units as affordable rental and ownerships for low- and moderate-income households.
The Mueller Affordable Homes Program includes 25% of its total units.
But Smith said land appreciates so quickly in Austin, including in Mueller, the city needs to make the development process quicker and fees lower, so more folks can enter and stay in homeownership.
Ty said he doesn’t know how millennials or others in Austin can afford to live here.
“I mean, come on, the people working in Kerbey Lane, the people working at the restaurants that we go to, where are they living? The people building our houses? They’re not living in Austin, because we don’t have that spread of housing that we need for them,” he said.
Ty said equity has been crucial for his family and more people need access to it.
“We came into this deal with some equity that… we’ve built over 35 years in Austin. And it wouldn’t work for us if we didn’t have that,” he said.