Austin ended 2024 making national news for drops in the price of housing. For instance, in an otherwise gloomy (but realistic) December 4 report on the national housing situation, NPR reporter Jennifer Ludden cited Austin as her one positive example: After the host said that the report was depressing, Ludden replied, “But I can end on a positive note here. I mean, there are places we have seen recently – (where) local construction booms can bring down rents. Austin, Texas, is one example.” Ludden didn’t elaborate.
Then, in his year-end podcast for the New York Times, Ezra Klein proclaimed, “The fact that you can build homes in Houston and Austin, and it’s so hard in San Francisco and L. A. . . is infuriating to me.”
So let’s review.
Ludden and Klein are both accurate in the core points they made. Ludden is correct that apartment rental costs in Austin have come down after a massive surge of apartment building. Klein is right that it is not difficult for developers to build homes in Austin. Klein is also correct in what seems to be his broader point; that regulation is not holding back builders in Austin and Houston from building huge amounts of housing.
Ludden and Klein are right, respectively, that a flood of new apartments has driven down rental prices and that it is not unreasonably difficult to build houses in Austin.
But, whether they know it or not, virtually all the construction they’re talking about happened under Austin’s old Land Development Code (LDC). That’s the Land Development Code that two Mayors, a series of City Councils and Austin YIMBYs (Yes In My Back Yard) said was making it virtually impossible to build anything in Austin. It’s the same LDC that many of them insisted amounted to an “apartment ban.” They made such claims for years, including during the entire apartment building boom. (This is not to say that the LDC didn’t need some updating.) Austin City Councils only began making major changes to the LDC in December 2023 and since.
So, it would be a little early for members of the current Council supermajority to be taking credit for the drop in housing prices. But, if anybody sees Council Member Chito Vela don’t tell him that. It might hurt his feelings.
In a year-end interview with Vela, the Austin Monitor reported, “While reflecting on his first [partial] term, the first item on Vela’s mind was HOME Phase I and II.” (Vela took office on February 7, 2022, filling the unexpired term of Greg Casar, who resigned to run, successfully, for Congress.)
The Monitor then quotes Vela as saying the philosophy behind the HOME initiative was ‘“Additional supply will help moderate prices.” And, continued Vela, ‘“that’s exactly what happened.”’ Vela summarized by saying that a highlight of his term was ‘“Passing those (HOME initiatives), seeing them launch and, more importantly, seeing housing prices go down.”’ (HOME 1 passed in December 2023 and HOME 2 passed in May 2024.)
Vela’s victory lap though is a little premature. Yes, the current situation provides some evidence that a massive amount of building can eventually drive down housing prices, at least temporarily. But, the very first completed HOME project was just reported in early December. And the use of the singular in that previous sentence is no mistake. One project has been completed under HOME, three houses on one lot.
Here’s the heading from Community Impact, who I believe were the first to report the news:
“Austin’s first multiunit HOME projects hit the market; reporting on policy impacts delayed”
The story that followed was about “three approximately 1,700-square-foot homes” on a single lot,
So it’s not really possible that the HOME initiative was behind the drop in housing prices. The Community Impact story noted, consistent with the second part of their headline, “The new policy’s effects on affordability and other housing trends remain unclear for now, though, as city reporting on the new regulations as well as information on homeowner assistance options have yet to be released.”
That “six month” report was recently released, several months late, but no information at all was included regarding any price impacts of HOME. It instead reported, “Since implementation, HOME Phase 1 has received applications that could potentially result in 300 new dwelling units (emphasis added).”
Vela is correct though that housing sale prices have dropped, although not from 2023 to 2024, but from their peak in 2022 until now. The May 2022 peak median sale price was $667,000, according to Redfin. The corresponding figure for December 2024 was $535,000 In December 2023 the median home sale price was $521,000. [Redfin’s numbers are for the metro area rather that just the Austin City limits, as are figures from other major firms who follow real estate prices. There appears to be widespread agreement, however, that the overall trends in the city limits are similar.]
To summarize, Austin’s median home sale price at the end of 2024 was almost 20% (19.7%) lower than the median price at the peak of the pandemic price surge in May 2022.
That December 2024 median ($535,000), however, was still 27.6% higher than the median price at the beginning of the COVID pandemic in March 2020, which was $419,000.
The pandemic peak is thought by some to have been an artificial high and the drop in prices since then an unavoidable correction. Traditionally this type of price adjustment might even be called a downturn in the economy and housing market rather than the result of brilliant, very recently passed, City Council policies.
Reasonable minds could debate those points. But, one thing the drop in housing prices since 2022 has nothing to do with is the HOME ordinance. Three new homes does not a citywide trend make. Sorry Chito.
Also, to reiterate, all but three of the newly constructed homes that Vela cites as driving down prices were built under the rules of the previous Land Development Code, a code that he and others claimed almost totally stymied construction.
By the way the first houses under HOME were marketed at $599,000, or 12% more than the current median price.
The first 3 houses build under the HOME initiative. Photo by Daryl Slusher. Photo at top from Chito Vela webpage.
In addition to Community Impact’s informative and straight ahead report on the new HOME units, there was a more gushing report from KVUE. In their enthusiasm KVUE missed a key feature of HOME, which opponents warned about. That is that new HOME units will, likely, often replace existing affordable housing. For instance the KVUE reporter began her report with this enthusiastic lead, “In South Austin, he (the developer) just finished construction of three homes on a 16,000-square-foot, single-family lot that used to hold just one single mobile home.”
The reporter failed to realize, or report, that these three homes replaced an existing affordable structure. We don’t know if the person who lived in the mobile home got a decent price for their property (although appraisal records do appear to show that the lot was owned by the resident). And, this sort of thing is largely an unavoidable feature of the rapid growth that Austin has experienced for some five decades now. Nonetheless, it illustrates a side of HOME that its proponents tend to ignore.
In conclusion, I want to note that, like most sentient Americans, I realize that there is a housing crisis in the United States. I realize that this crisis in particular affects younger people, many of whom have difficulty finding homes that they can afford to purchase. Also, I am working hard to keep an open mind on whether HOME and other Council initiatives deliver more affordable housing, and improve the situation. In the dynamic we discuss here, however, Council Member Chito Vela brazenly claims credit for something that it is numerically and chronologically impossible to have yet been affected by the Council policies he cites. This spotlights either a high level of cluelessness on Vela’s part or a belief by Vela that people aren’t really paying much attention, and he can thus claim credit for things in which the action of he and his colleagues played little, if any, part.
In a future installment we will look at the drop in rental prices, particularly for apartments. Also, coming up we will explore another deep thought from Chito Vela:
“We were working under the premise for a couple of decades here in Austin that if we did not allow new construction, that would help preserve neighborhoods and hold down costs. That has just been objectively shown to be false, and that the contrary approach is true.”
A Few Short Items – Project Connect lawsuit dismissed
Back on December 20 Judge Eric Shepperd dismissed a suit that sought to derail Project Connect, Austin’s light rail project. As Bill Aleshire, lead attorney for the plaintiffs, summarized after the ruling: “We tried to prove the current (state) law protects taxpayers from a bait-and-switch scheme where the City of Austin tricked its voters into approving the biggest property tax increase in its history for a ‘citywide’ light rail plan connecting to the airport, but then keeps the full tax increase while shrinking the rail plan in half, to just a central city plan that doesn’t connect to the airport.” Aleshire predicted that the state legislature might want to “fix this once and for all.”
The plaintiffs were: former State Senator Gonzalo Barrientos, current Travis County Commissioner Margaret Gomez, former Austin City Council Member Ora Houston, Susana Almanza, longtime leader of PODER (People Organized in Defense of Earth and her Resources) and Dirty Martin’s, the famed burger joint on Guadalupe near 29th Street — along the path of the proposed light rail line.
The Austin Transit Project (ATP) — the entity created by the Austin City Council and Capital Metro to implement the project — is pushing forward. There are, however, still more barriers. That includes more potential legal challenges. Another huge hurdle is on the financial front. ATP is counting on roughly half the project’s costs to be funded by the federal government. That funding might well be in danger with the new administration slashing federal spending. Plus, this administration is not exactly filled with mass transit enthusiasts. Even if rail funding continues, ATP will face stiff competition with other projects from around the nation. Stay tuned.
32-hour work week proposal withdrawn in less than 32 hours
Who could have foreseen it? The Congressional Progressive Staff Association’s proposal for a 32-hour work week, reported in our last installment, ran into an immediate torrent of ridicule. I’m talking about a January 16 letter that a group of staffers to “progressive” members of Congress sent to the four top leaders of Congress. The group proposed a 32-hour work week for Congressional staff; not for anybody else, just for Congressional staff.
To be thorough, the letter suggested a “rotating” 32-hour schedule for Congressional staff, rotating between when the member of Congress is in their home district and when the member is in Washington. Whenever the Congressperson is in Washington the home office staff would work 32 hours and vice-versa.
Photo from House.gov
The letter was sent to the four leaders of Congress on January 16, as in four days before Donald Trump took office. The proposal was then withdrawn three days before Trump took office i.e. the day after the letter was sent. It didn’t even last 32 hours.
The withdrawal came in the form of a second, shorter, letter. Therein the progressive staffers wrote:
“The Congressional Progressive Staff Association hereby withdraws its recent letter to congressional leadership on a rotating 32-hour workweek.”
They continued, “The letter failed to make two things clear: First, that progressive congressional staff are dedicated to serving the American people no matter how many hours it takes to get the job done. Second, that there are well-known, longstanding workplace issues that deserve Congress’s immediate attention if it wishes to effectively serve the people.”
Well, that’s a lot to miss. For instance, leaving out they are willing to work as “many hours (as) it takes to get the job done” is a pretty important component to leave out of a letter asking for a 32-hour work week.
Timing was also an issue. There was probably no good time to release this proposal, but four days before Donald Trump reassumed the presidency was particularly bad. I mean, it was no secret that he and his new Administration intended to get off to a fast start. We now know that fast start doesn’t quite capture what has happened since Trump was sworn in.
These were people who were supposed to be staffing the “progressive” barricades during a historically critical time. And they chose that time to petition for a reduced workweek. It’s almost as if the staffers thought there needed to be a little more evidence that Democrats are elite and out of touch with the population.
The perception that Democrats are elitist was, of course, a major factor in the party of Franklin Roosevelt losing the working class. Proposing a reduced workweek, just for those with your job among the Capital Hill elite, is a very illustrative way to reinforce that perception.
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