For the skittish: This post includes some price data that will make some readers believe they’ll never be able to live in Austin. While it is true that housing inside the city of Austin has become relatively expensive, living in the Austin Metropolitan area is still do-able for most. See So how much does housing cost in Austin? (Part 1) and So how much does housing cost in Austin? (Part 2) for a more complete look at home prices in Austin and many nearby cities and towns.
For this article I’ll focus on the broadest definition of the “urban core” that I’ve seen. Downtown and the UT area are unique market areas in their own right, but for a view of “close-in” Austin I watch the area bounded by Ben White Blvd on the south, Loop 360 on the west, and US 183 to the north and east:
In that area, the average sale price of a single family home in 2015 was $584,278. (All data from the Austin/Central Texas Realty Information System, the Austin-area MLS.) The median price was $453,641. So how much does housing cost in Austin? (Part 2) showed that the city-wide average consisted of a wide range from Southeast Austin to West Austin and Westlake, and even those averages obscure area-specific high and low extremes. The urban core includes a wide variety of single family homes, low-rise condos and townhouses, student housing near UT, and high-rise residential space in and around downtown Austin, and so is a good sample of our housing stock
An interesting feature of residential prices in the urban core is the extreme differential between single family homes and condominium/townhouse-style living. In the same area, the average sale price of condos last year was just $349,656 (median $275,000) — 40% lower than single family properties! Yes, condos tend to be smaller, and the price per square foot is comparable ($323 vs. $313), but smaller is very appealing to many folks who want to live in or near the central city. Even more interesting is that townhouses — the very few that we have — sold for an average of $402,989, or just $230 per square foot. The median price of a townhouse last year was $385,000, for average floorspace of about 1800 square feet, very near the average single family home.
This table summarizes that price data, and more:
Inventory (i.e., months’ supply) was about the same for all three property types, and time on market was very close. The difference was in the relatively low number of more “affordable” condos and townhouses that were available for sale. That points to one possible contribution to improving affordability in Austin — allowing more variety in the new housing stock added across the community.
There is an important project going on in Austin, called CodeNEXT. That’s a subject for another day, but the short version is that the city plans to redesign a land development code that has roundly been criticized as one of, if not the, most cumbersome and confusing codes in the United States. Done properly, the new code will allow the amount and variety of new housing stock to be improved city-wide — from adding “accessory dwelling units” (e.g., garage apartments, alley flats, etc.) at existing homes to respectfully blending condos, townhouses, garden homes, and even small multifamily properties and micro-apartments into existing neighborhoods.
I do not advocate building those homes just for the sake of building them, but a development code and permitting process that would allow the market to lead the way would be a real improvement. Land value in the urban core is not likely to decline, so other than a few public policy tools that I’ll comment on in another post, the path to more affordable dwelling units in the city depends on increasing density and/or decreasing floorspace per unit. In 2015 the market demonstrated demand for those options, and variety can be added without disrupting neighborhood character.