Austin has been one of the most successful cities in the U.S. at improving affordability, with rents falling steadily over the past three years, and our HOME and compatibility reforms are one reason why. But on September 1, there’s more progress to make through Austin embracing the package of bills passed by the Legislature this session to help the whole Austin metro area get a handle on housing costs. New state laws – including Senate Bill 840, which allows housing on all commercially zoned land – will help build on that success by simplifying the process for building apartments and condos on commercially zoned land, usually corridors with restaurants, stores, and other businesses – a policy supported by 75% of Texans according to The Pew Charitable Trusts.
A recent report from city staff suggested that Austin would need to update its density bonus programs to spur below-market housing. The city can do that by offering incentives, such as allowing taller buildings and updating its 1984 Land Development Code. But it’s a major mistake to think that ramping up production of apartments available to everyone is a setback for affordability. It’s actually a lion’s step forward for Texans’ cost of living. New research from Pew shows that low-income renters are the foremost beneficiaries when a large amount of new housing is built.
Pew found that during the housing shortage, low-income neighborhoods have seen the steepest rent increases, with rent growth there outpacing high-income neighborhoods by 10%. When there aren’t enough homes added in other neighborhoods, residents move to more affordable areas, pushing up rents. But in areas that have added a lot of new housing, including Austin, affordability has improved the most for older apartments usually lived in by low-income tenants. That’s because when large amounts of new housing get built, high-income residents are mostly the ones who move into it, so they stop competing with middle-income households for available homes.
Middle-income residents compete less with low-income residents. That’s why rental affordability improves the most for low-income households – because with more options available overall, they’re less likely to face intense competition for limited supply of lower-cost homes, and landlords often have to lower rents to attract tenants. Ample other research echoes these findings. The implications are clear – making it easier to build housing, of any kind, gets us closer to having enough homes for everyone, especially benefiting those who can least afford steep rents. During Austin’s recent building boom that has earned national attention for pushing down rents, rents fell most for older apartments without amenities.
But there was another new finding in the Pew research that stood out too – the amount of housing available in a region influences local rents four times as much as supply in that locality alone. So even though Austin has been adding housing faster than other jurisdictions, our housing costs are being inflated by lower levels of housing production in our suburbs and neighboring counties. The new laws our Legislature passed this session will help with that by ensuring that Austin isn’t the only municipality adding lots of housing. And thanks to House Bill 24, when our local government takes steps to allow more homes, that’s no longer vulnerable to lawsuits based on an outdated law that made rezonings to enable housing difficult.
If Austin is serious about adding more homes – both market-rate and below-market – that’s great news. We’ve seen promising momentum with HOME 1, which allows three smaller homes on one lot; pre-approved plans and single-stair reform are other smart ways to cut costs and speed up permitting. But we need to do more. This fall, Austin should both embrace SB 840 while modernizing the density bonus programs to meet today’s needs.
Yes, below-market housing is important, but the research is clear: Increasing the overall supply of homes – below-market or not – is what matters most for long-term affordability. Austin is on the right track, and new state laws will help keep us there once rolled out September 1. After all, in a growing city, the fastest way to guarantee displacement is to block new housing. The path is clear – if we want an affordable Austin, we have to build it.
Nicole Nosek is the founder and chair of Texans for Reasonable Solutions, a nonprofit that led the passage of four major housing bills in the state Legislature this past session. Greg Anderson is the chair of the Planning Commission and director of community affairs at Austin Habitat for Humanity.
This article appears in August 29 • 2025.