Affordable Housing

Affordable housing is a term that has many meanings depending on who you’re talking to and what you’re talking about. Most generally affordable housing can be broken down into two major categories:

1. Capital-A Affordability for people living within a certain household income level as defined by the City of Austin
2. Market-rate affordability (ie. the present day cost of housing)

Both of these are entirely legitimate concerns and ways to think about housing, so we’ll discuss them both and some of the ways in which affordability has been and can continue to be addressed. However it’s important to keep in mind that housing affordability is one large piece of a big puzzle that includes cost of transit, utilities, and services. It is also not the end-all be-all of all housing solutions. For example this article doesn’t address the needs of permanent supportive housing. These and other concerns are addressed through other policy and efforts.

City of Austin Housing Affordability Initiatives

Housing security is one of several important safety nets that are crucial to a healthy and functioning society. Towards this end cities often implement policies to help ensure people remain with housing and without undue hardship. Austin itself has had about a dozen different initiatives with varying rates of success.

Some of the most impactful initiatives in terms of units built have been:

• Affordability Unlocked
• Vertical Mixed Use Zoning
• Planned Unit Development

Affordability Unlocked (AU)

Affordability unlocked is a program created by the City of Austin in 2019 (original text, AU guide) to address housing affordability without subsidizing the housing with taxes. The plan achieves this by allowing developers who apply for Affordability Unlocked to build housing that is up to 25-50% taller than the current zoning limitations. This program is most commonly used in tandem with Multi-family zoning and VMU combining zoning districts along transit corridors where residents would have close and convenient access to public transit.

In practical terms this means that buildings using Affordability unlocked are able to build rentable and ownable housing for those living at or under 80% of the Median Family Income (MFI) of Austin’s citizens. Affordability Unlocked is further divided into two types, aptly called Type 1, and Type 2.

Under Type 1 at least half of all units built must be affordable. For rentals they must be kept affordable for a minimum of 40 years for those earning between 20% ($18,700) to 50% MFI ($46,750). For ownable units they must be kept affordable for a minimum of 99 years for those earning incomes averaging up to 80% MFI ($74,800).

Under Type 2 at least three quarters of all units must be affordable and meet all Type 1 requirements. In addition they must locate the building within a quarter-mile of a transit corridor and designate at least 10% of affordable housing for those earning under 30% MFI ($28,050).

As of 2023 over 480 units of housing have been built, 2800 are under construction, and a further 2,800 units are in the planning stages. Incredibly 80% of all planned and built housing units under this plan meet the affordability requirements of AU, exceeding the minimums set in place by the program itself.

Vertical Mixed Use Zoning (VMU1 & VMU2)

Vertical Mixed Use zoning is a provision applied along major existing and future transit corridors with the goal of getting more of Austin’s citizens close to transit with mixed-use development that provides both housing and retail development. This zoning addresses affordability in multiple ways:

1. Allowing for more units of housing to be built along these corridors
2. Placing homes closer to current and future affordable transit options
3. Creating easier access to the daily conveniences people need

The original VMU zoning (VMU1) was introduced in 2010 and allowed for reducing setbacks, mixed use development (residential and commercial), reduced parking minimums, and increased building heights; typically up to 60 feet. Along with this VMU1 set out small allowances of 10% affordable housing for rental and ownership developments.

VMU1 has thus far succeeded in creating over 100 new buildings under this zoning and as such was expanded with VMU2 that allows for buildings zoned for high density multifamily residences (MF-6) to reach 90 feet in height by right (ie. by default); along with a 12% affordable housing minimum.

Both VMU1 and VMU2 can be kept lower in height due to compatibility restrictions.

Planned Unit Development

Housing Affordability in General

Housing affordability in general requires a multi-pronged approach so that housing prices can be brought down to a point where they are affordable to those living above the income levels defined by CoA. It’s not hard to see how even those earning at and above Austin’s median income are struggling to afford housing. Housing affordability across the US has dropped steeply and this is driven by many factors including:

1. Land use policies
2. Interest rates on loans
3. Unrealistic lot size minimums
4. Parking mandates
5. Tax structures which disincentivize building housing
6. Compatibility restrictions
7. Deed restrictions
8. “Valid Petition” laws

Land Use Policies

One of the key hindrances to housing affordability is the availability of housing. Within Austin, and most US cities, supply has been artificially restricted for at least a century. Today Austin has a housing code (aka Land Development Code; LDC) that was last updated in the 1980s along with very large lot size minimums that were last updated in the 1940s; the history of which we cover in our article on euclidean zoning restrictions.

Austin City Council is addressing these overly restrictive and exclusionary zoning restrictions with an initiative called HOME. This initiative is designed to revamp our outdated land development code by allowing more housing to be built within the core of Austin. Housing that used to exist here but was made illegal in 1984.

HOME is planned in two phases that collectively allow for the building of more housing and better neighborhoods by:

• Reducing residential minimum lot sizes from 5,750 sq ft to 2,500 sq ft.
• Allowing up to 3 units of housing to be built on a lot without additional zoning changes to the lot
• Making various other adjustments to the LDC that you can read about on atxhomecoalition.com

HOME will allow more neighborhoods to follow the design principles of livable, walkable, nice areas. Transforming what is currently a limited luxury for the well off of our city into something that everyone who lives in Austin can enjoy. This doesn’t mean all of our neighborhoods will end up looking like any specific place, just that we’ll have more flexibility in what we build, who we build it for, and what it costs.

Interest rates on loans

Much like with the student loan crisis the housing affordability crisis is affected by the availability of loans and low interest rates. However this is a very complex topic and outside the scope of a guide to urbanism as it is not something urbanism can solve directly. Within the context of housing urbanism is principally concerned with the supply side of the housing market (ie. the total amount of homes available for people to live in) while interest rates primarily influence the demand side of the housing market (ie. money people have to purchase property).

Of course no understanding of the situation we are in is complete without some understanding of the effect interest rates have on housing costs so here’s a few resources if you’re interested. Just know that this subject is tangential to urbanism rather than central. Urbanism doesn’t need to address interest rates to fix the housing crisis.

• How Interest Rates Affect Property Values
• How Higher Mortgage Rates Have Historically Affected Home Prices
• Can Home Prices and Interest Rates Soar at the Same Time?

Unrealistic lot size minimums

Austin, like most US cities, has an overwhelming amount of its residential living space zoned exclusively for single family free standing homes on large lots. Within Austin the minimum lot size you can currently build a single family home on is 5,750 square feet and within that lot you can only build a house and other impervious ground cover on 40% of it. 60% of your lot must be left as unused space. This is leading to various crises in the housing market ranging from entire generations of young people being priced out of affordable housing to older generations living alone in large homes and unable to find smaller homes to downsize to.

Tax structures favoring empty lots