An article in the Austin Business Journal a few days ago cited a report from the Center for Housing Policy in Washington, D.C.:
I have reviewed the Center’s report, and I agree that the headline is factual. As is generally true, press reports are best served with context.
According to the Real Estate Center at Texas A&M University, Austin also has a better housing (for sale) affordability rating (1.89) than the Texas average (1.84), and is far more affordable than the National average (1.57). (See Texas Affordable Housing Summary)
Regarding rent affordability: the median wage for an administrative assistant in Austin is $0.44 above the minimum needed according to Center guidelines to rent a 2-bedroom home here; nationally the difference is $0.70.
Compared to five other large cities in Texas, here is the comparison — the “excess” median wage above what’s required to afford a “median” 2-bedroom home:
So, clearly renting in Austin is less affordable than in other Texas cities. On the other hand, there is more to any community than housing cost — climate, culture, employment opportunities, natural environment, lifestyle, local and regional attractions and activities, other elements of cost of living, and more. And Austin fares well in the overall comparison.
Perhaps a measure of total attraction to a community is population growth. From 2000 to 2009, the population of the Austin metropolitan area grew by 36.43% — fastest in Texas. The second fastest growth rate among the Texas metro areas listed above was Dallas-Fort Worth at 24.92%. The most affordable city — El Paso — was also the slowest growing at just 10.55% over the last decade.
The Center’s report also lists Austin as the least affordable for renters among cities its size — Charlotte (NC), Indianapolis (IN), Providence (RI), and Virginia Beach (VA). The most affordable was Indianapolis, but it grew at less than half the pace of Austin (14.33% vs. 36.43%).
So, we see supply and demand in action again. As new residential construction of all kinds slowed in 2008 and 2009, people continued moving to Austin. When faced with increased demand and limited supply, the natural result is increased prices/rents. Likewise, because employers and their employees continue to find Austin attractive, there is less upward pressure on wages.
Texas and Austin have been favored with net in-migration for years, so this dynamic has been at work for a long time. Still, rental property in Austin remains almost as affordable as the national average.
Of course, everything else being equal more affordable housing is better than less, but everything else is not equal, and the market reacts accordingly.