Caught in the middle: Affordability still a problem for middle-class homeowners

Editor’s note: Tune in tonight at 10 p.m. for this full report.

When it comes to affordable housing, the KVUE Defenders look at ways all levels of income can afford owning a home in Austin. 

Some make too much money for government assistance, but too little to afford market rates. 

The KVUE Defenders investigated the options for those caught in the middle.

‘Zoned Out’
A filmmaker working from home

Steve Mims isn’t picking sides, he said. The documentary filmmaker showcases controversial issues facing our nation, winning national film festival titles since the 1990s.

When the City of Austin tried to pass a city-wide zoning law called CodeNext, Mims steered his filmmaking focus toward home.

He released a film called “Zoned Out.” It’s the story about folks who live in Austin and who could be impacted by widespread land development code changes.

Some urban density-housing advocates may call it a “NIMBY” documentary, which stands for “not in my backyard.” 

Mims said that’s not true. He supports affordable housing and density, even in his neighborhood, that is, if it’s done right.

Mims said he does not support widespread “upzoning” because he feels it will erase the history of some areas while also increasing property taxes.

Upzoning is defined as a change in land development code to allow for different types of homes in a neighborhood, like multi-family units on single family lots.

A report from the Urban Displacement Project from University of California Berkeley shows upzoning often relaxes certain city codes, like height limitations for buildings or how much housing can be on one lot.

It could add also density in established neighborhoods, as evidenced in single-family lot zoning called SF-3, zoned for one home.

“One of the theories is to go into established neighborhoods and remove the houses that are there and then build new units. Well, it turns out, when you do that, the units cost as much or more … it doesn’t mean that it’s affordable,” said Mims.

The KVUE Defenders found that’s exactly what’s happening.

The problem with upzoning
Prices going up

We pulled construction and demolition permits across Austin and found that some houses were torn down so builders could create two homes, usually with smaller square footage.

The prices neared the million-dollar mark. 

“No one is saying go in and bulldoze the whole neighborhood,” said Scott Turner, president of the Home Builders Association of Greater Austin.

Turner is a devoted advocate for density housing.

“The code kind of incentivizes just building a single-family home,” he said.

Austin’s current land code dates back to the 1980s, with updates added along the way.

Turner said a builder must get approval from more than a dozen different City departments before the first shovel goes in the ground. However, it can take months for builders to get all of the needed permits.

“Currently, plans submitted for review are turned around within their target timeframes over 90% of the time,” said Tara Long, senior public information specialist for the City of Austin Development Services Department, wrote in an email to the KVUE Defenders.

Long wrote that the target timeframe is 15 business days for new construction and additions. Building plan revisions and resubmittals carry the same timeframe, which could delay a project.

“The site plan review team reviews for compliance with site development standards such as placement of structures and parking, drainage and water quality standards, utility requirements and connections, etc. It’s an extensive review process that focuses on site compliance as opposed to building compliance, and processing times vary based on the level of review. We are working to fill critical vacancies and complete training for new reviewers, which will improve our processing times,” Long wrote.

Turner said to build something in the $250,000 to $300,000 price range would not be so simple.

“You would need to have take a hard look at the city’s land development code, for starters,” said Turner. “Today’s code limits our housing supply in a way that is unsustainable unless you can afford a $1,000,000 home.”

Austin’s land development code comes with a stack of fees.

A development analysis released in July by the Austin Board of Realtors and the Home Builders Association of Greater Austin shows construction fees alone would make up 20% of a home loan priced for buyers in Austin’s median income range.

“The application fee alone is around $15,000,” said Turner.

A month prior, a report by the Texas Real Estate Research Center at Texas A&M showed that Austin charges developers more expensive and more types of fees than Dallas, Houston and San Antonio.

Plus, in Austin, most fees are the same type and cost, whether it’s a single-family home or a 200-unit apartment complex. 

“The smaller your project here, the more expensive it is per unit,” said Turner.

The Real Estate Research Center shows total housing development fees for an infill project in Austin averages more than $41,000. That’s compared to $5,000 in Houston and $13,000 in Dallas. Even the second-highest fee, in Liberty Hill, is $19,000 cheaper than Austin.

“That’s a lot of money,” said Turner.

Standard fees include a parkland fee based on type of project, stormwater fee and impact fees. 

Plus, the KVUE Defenders found other fees throughout different types of building permits, such as a $320 fee for the right of way to place “construction entrance ahead” signs and a $863 fee for a tree plan review and consultation.

Re-inspections can add thousands of dollars to a build cost.

One fee not required: $4,000 to get through the process faster. 

“The smaller projects, which are infill housing, have a whole lot more barriers,” said Turner.

Enter the ADUs
That’s an accessory dwelling unit

Ultimately, these are barriers that increase costs and make it harder for a family to buy a house.

For example, in Austin, a standard single-family lot (SF-3) must be at least 5,750 sqare feet – about a 10th of an acre. The city limits how many homes can be built on that property to no more than two. 

So, to add density and put two families in two separate structures on one lot, builders like Turner construct what’s called an accessory dwelling unit, or an ADU. It’s a dwelling, a home behind the main home, adding to the housing supply.

RELATED: Austin City Council votes to expand use of accessory apartments to develop affordable housing

But ADUs have additional requirements

Austin code limits the size of an ADU to 1,100 square feet or less, or no more than 15% of the lot size. Builders must also work around certain trees. Specific types cannot be removed if larger than 19 inches in diameter. 

Builders must still leave room for parking spaces. Plus, the ADU must be at least 10 feet away from any other building and 5 to 10 feet from utilities.

Turner said these barriers alone can force a builder to tear down the existing home in order to fit a main home and an ADU on a lot.

“That leads to a lot of really good little houses being torn down simply because the code doesn’t encourage us to keep them … affordability only gets worse,” said Turner.

It’s not only the code limits. Some deed restrictions prohibit ADUs. These are the areas the City shows as a potential for an ADU.

The KVUE Defenders pulled building permits for accessory dwelling units, finding that 869 ADUs have been built since January 2020. More than half of them (445) were in Austin Districts 1-3, areas experiencing gentrification for decades now. 

Preserving Old Austin
It’s also a gentrification problem

Lindsey Derrington is the executive director for Preservation Austin, a group that fights to protect older and historic spaces

“We’re losing houses left and right because it is just easier to demolish and rebuild than it is to preserve,” she said.

Historic zoning laws cover less than 1% of Austin.

“What we care about is a meaningful preservation of historic neighborhoods,” said Derrington. “It’s acknowledging neighborhoods grow and cities evolve, but keeping that balance … we need to preserve Austin too.

As of late October, Demolition records show more than 6,400 homes were torn down across Austin in the last 10 years – nearly a third of them since 2020 alone. Of the 2,081 homes demolished since 2020, 720 of them were in Austin’s Eastside.

“That part of town is being redeveloped so quickly,” said Derrington. “We’re losing Black families. We’re losing Mexican-American families whose history defines those places.”

Derrington’s group teamed up with some of Austin’s infill homebuilders to lobby the City for a compromise: How to build density housing without changing a neighborhood.

“They connect us to our history, they connect us to our future,” said Derrington.

One idea they had was to relax zoning rules to help build an ADU – or two ADUs – while also preserving the main house.

But are ADUs the solution? 

“I think they’re ‘a’ solution. I think they could be a more accessible solution if they were more affordable, more accessible,” said Derrington. “Preserving the front house and then building in the back … just think of all the housing we can create.”

Turner added that going back to older standards would help too.

“Lot size,” said Turner. “Two- to three-thousand square feet was considered an adequate lot size back in the thirties.” 

Not the 5,750 square feet zoned today.

“In the grand scheme of things, minimum lot sizes are one of the ways in which our housing supply is limited,” he said.

Not to mention property taxes
‘It’s become a big investment’

The lots in Mims’ Rosedale neighborhood are smaller than Austin’s current standards. The neighborhood was mapped out about a century ago, and includes historic buildings like the Moore-Hancock Farmstead off Sinclair Avenue.

“They lay out these lines in the 1920s, and they’re not vast. They’re small ones, small houses,” said Mims.

Homes here have space for two cars but it’s still tough to fit in a full-sized ADU.

Turner’s lot is almost half of Austin’s now-standard size – 3,334 square feet. The road out front is not wide enough for both street parking and thru traffic.

“It’s more about the humanity of the place,” said Mims.

It’s dense, but not affordable. Homes up for sale here call for nearly $1 million.

Mims’ appraised home value doubled in the last five years, which is why he must save more than $1,000 a month to pay property taxes. Records show he paid $12,463 last year.

“It’s become a big investment, and not an investment for a middle-class family but investments for corporations,” he said. 

Corporate landlords are what Mims doesn’t want in his backyard.

“They’re not vested in the community. Their interest tends to have shareholder value,” said Mims. “The best return on investment, rather than a concern for the humanity of the people who live there and the ability for people to stay in the city.”

This is one reason why he turned his filmmaking focus toward home – his home, the house he didn’t want to lose.

“I think it’s just a difficult problem,” said Mims.

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