The Austin housing market has made the national news again. The latest is an article in Bloomberg which explores one of the subjects we’ve covered frequently here. That is the New Urbanist mantra that simply building more housing, especially apartments, will lower housing costs. Austin is used as Exhibit A in how that ideology is not working out. (In their article Bloomberg uses another name for New Urbanists, “Yimbys or Yes In My Backyard).”
For one thing the article backs up prior articles here in the Independent about Austin leading the nation in apartment construction, but that not resulting in significant affordable housing; a result that is contrary to Yimby ideology. For instance the co-authors Prashant Gopal and Patrick Cook write, “Austin is experiencing an unrivaled apartment boom. In 2021 the region including the Texas capital issued nearly 26,000 multifamily housing permits, about 11 units per 1,000 residents. That’s more per capita than any large US metro area since 1996, when Las Vegas OK’d new apartments at only a slightly higher level, according to rental marketing firm Apartment List. By the same measure, which is based on an analysis of US census data, Austin topped the 50 largest US metropolitan areas in 9 of the last 10 years.”
Keep in mind that Bloomberg’s numbers are for metro areas. In the Independent’s articles from October of last year we were able to find and analyze federal data for just the City limits. It shows exactly the same patterns within the city limits. For instance we found that during the five year period from 2017-21 the City of Austin was not only the national per capita leader in permitting apartments, but also issued more multifamily building permits than any other major city except much, much larger New York City and Los Angeles. We also noted that despite this reality local Yimbys repeatedly insist that Austin has an “apartment ban.”
The Bloomberg article continues, “Many, if not most, of these apartments are classified as luxury, depending on how you define it.” Such luxury apartments, write the authors, “have become a flashpoint in a fierce, often bitter debate raging in Texas, the US and around the world. It’s about the best way to shelter this generation and the next, particularly in the most sought-after and expensive cities.”
A Definition of Yimby/New Urbanist Ideology
The article not only describes how solutions have proven elusive in cities all over the world, but adds, a concise summary of Yimby ideology:
“Academics, developers and people in their 20s and 30s—particularly those most active on social media—have reached an unusual level of consensus. Their solution, supported by a wealth of scholarly research, is simple and elegant: Loosen regulations, such as zoning, and build more homes of any kind—cheap, modest and palatial.
The shorthand for the movement has become ‘Build, build, build’ or ‘Yes, in my backyard’—Yimby [aka New Urbanists], for short. It’s a rejoinder to the ‘Not in my backyard,’ or Nimby, crowd, the hidebound folks who typically thwart construction.”
The Bloomberg article barely quotes any of the referenced “scholarly research” that backs Yimbyism. It does, however, offer plenty of examples of how this ideology is not panning out in the real world.
For instance: “Inconveniently for the Yimbys, Austin, like other cities, is still way more expensive than it was years ago, even though it’s built so many apartments.”
At another point they write, “Desirable cities around the world have all, one way or another, tried the Austin-style solution to their own housing crises. And they’ve all ended up in a similar bind: urban centers packed with luxury properties that regular folks can’t afford.”
The article also notes how some of these cities changed development regulations and zoning codes, but still ended up in the predicament described above.
One section of the article does cite some academic research favoring Yimbyism. It describes an academic theory called “filtering” wherein, as the Bloomberg journalists describe it, “richer renters trade up into new luxe units, starting a chain of move-ins and move-outs that lower prices for modest homes. Think trickle-down economics but for apartments.”
The article reports that: “A growing body of research focusing on cities such as San Francisco and Helsinki has offered support for the filtering effect. Building more apartments, even luxury ones, does indeed moderate prices in surrounding neighborhoods. Older buildings become less attractive; other tenants move in and pay less.”
The authors add, however, that “as a result” of the experience of Austin (the national leader in apartment building) and other cities around the country and the world, “a small group of academics is starting to question the free-market path. These critics note that the market leads developers to build luxury housing on scarce and sought-after property to maximize the return on their investment.”
The authors then cite “Yimby-skeptical University of Minnesota researchers” who “found that new construction reduces rents nearby—but only in upscale buildings and not in a significant way. More important, though, a gentrifying neighborhood drives up the prices of more ordinary units. Overall, they determined in their study of Minneapolis from 2000 to 2018, the new units actually pushed prices up, validating the displacement fears of low-income residents.”
Of course gentrification is a major factor in Austin, so it seems, at least to me, that the latter example from the Minnesota research would more likely be the case in Austin.
The Bloomberg article also features a chart showing that Austin’s monthly increases in rent have been above the national average for the 150 largest markets for all but one of the last ten years. Austin surged even further ahead of that national average beginning in 2021.
So Austin, the national leader in building apartments, also outpaces the national average (for the 150 largest markets) in rent increases. That certainly seems to run a bit counter to the theory that simply building more units will lower prices.
Backers of Yimby ideology in Austin still maintain that things would be different if the previous Council’s Land Development Code rewrite hadn’t been shot down in court(s).
As Bloomberg summarizes their views, “The Yimby-oriented say it would have been far worse without the increased supply. In addition, an effort to promote density throughout the city is now tied up in court because of community opposition. If it had moved forward, Yimbys say, increases may have been more moderate.”
Following that summary, the Bloomberg article turns to João Paulo Connolly, organizing director for the Austin Justice Coalition and a member of the Austin Planning Commission. Connolly, as Bloomberg summarizes, “says zoning codes still make it difficult to build multifamily housing in much of the city.” Of course that claim ignores the fact that Austin rental prices are soaring despite being the runaway national leader in building apartments.
The authors follow with a quote from Connolly: “We could create housing in other ways, but we have a capitalist system so that’s how we do it.”
That is an interesting perspective on a number of levels, but here we will just note the irony of someone yearning for a non-capitalist system while buying into a capitalist, free market, laissez faire, trickle down approach to housing.
The view here is that the local reality was captured better by “Rich Heyman, a geographer who teaches at the architecture school of the University of Texas at Austin.” Heyman said the problem is wage inequality, which he said needs to be addressed by government. Heyman added, “Somehow, the real estate industry has gotten a lot of self-styled progressives to buy into the idea that deregulating land use is the one key to unlocking affordability in housing.”
So, still another national publication, and one focused on financial news and data, has published data and analysis showing that the Yimby ideology is not delivering affordable housing as Yimbys/New Urbanists adamantly claim it does. Yet, much of local media seems to have almost totally accepted the Yimby narrative and often reports it as fact, especially when discussing the Land Development Code saga. That is especially true of the City’s two biggest print publications — the Austin American-Statesman and the Austin Chronicle (except for publisher Nick Barbaro). Also, the fact that reporting on the issue requires some detailed research makes it more tempting for reporters to just accept the Yimby/developer narrative (To be fair, some Chronicle reporters appear to be true believers).
To lessen the burden of research, journalists could work from the array of readily available national real estate and business reports that describe Austin as number one in apartment construction and above the national average in rent increases — for at least a decade. For instance they could report on the Bloomberg article discussed here, which to my knowledge has not been done yet.
I don’t have a solution to all that, however folks might want to send the Bloomberg article to local editors and reporters. But, don’t bet the rent on that convincing them to do more balanced or detailed reporting.
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