Public Notice: The Housing Conundrum
Good news? Bad news? It’s all in your point of view.
We get a lot of press releases in our Chronicle inboxes. And for the last few months, I've noticed a big uptick in absolutely giddy releases about the rosy state of the local real estate market.
"Zillow predicts that Austin will be the nation's hottest real estate market in 2021." A different market overview reports that the median priced home is up 15%, to $375,000, while the number of homes on the market and the average time a home stays on the market are both down sharply. Problem is, these are not positive things for pretty much anyone but those in the real estate industry. Or perhaps those "cashing out" by dying or moving out of town. Because of course as value goes up, cost of living goes up, probably at a faster rate than wages do.
Meanwhile, as the cost of market-rate housing moves out of reach, developers and landlords are trying to rebrand it as "workforce housing" – housing that's (barely) affordable for those making up to 120% of the median family income for the area, which works out to some $115,000 a year, which is what some "workforces" earn, I guess, but not the servant class who serves them their beers and cappuccinos.
But if "workforce housing" doesn't exactly mean shantytown barracks where the common folk can live, the accommodations actually on offer at these exorbitant prices do kind of fit the bill. One new Downtown building is touting "workforce housing" where they estimate their three-bedroom, two-bath units will cost just $1,400 per person per month, assuming a three-person occupancy – which is indeed affordable under federal guidelines for an individual making $80,000 a year – just over 80% of our area's MFI. (Meanwhile, a minimum wage worker working 40 hours a week only earns $1,255 a month – not even enough to cover rent here, let alone groceries, clothes, medical care, etc.) They've clearly identified their target market, banking on this high-achieving workforce of single people – and you can see why. For a family of four, not splitting the bill but paying for the unit altogether, the $4,200 rent is "affordable" for a household earning $168,000 or more – about 172% of Austin's MFI.
Then there came an outlier the other day: Due to the pandemic, "the average cost for a 1- bedroom apartment is going down in 15 states" including Texas, says QuoteWizard, a renters insurance firm. And the drop is largest in big cities, while rates are rising in rural and suburban areas. Does that fit with your experience? Has your housing cost gone down in the last year? Why not? A recent Washington Post article by Catherine Rampell had an answer of sorts: "Rents for the rich are plummeting. Rents for the poor are rising." She cites data to that effect: high-end rentals in pandemic-ravaged cities became less attractive for those with options, while those without options were stuck and subject to those ever-rising costs of living, exacerbated by that booming real estate market. And so it goes ...
Next week: What about that Land Development Code rewrite? Couldn't that at least start to help?