A decade ago, Austin, the capital of Texas often deemed a liberal oasis in a staunchly conservative state, was among the most affordable places to live. Now, according to a forecast prepared by Zillow, a real estate company that tracks affordability, the Austin metropolitan area is on track to become by year’s end the least affordable major metro region for homebuyers outside of California. It has already surpassed hot markets in Boston, Miami and New York City…
Home sale prices in the city of Austin skyrocketed to a record median of $536,000 in October, up from about $441,250 a year ago. And they have more than doubled since 2011, when the median sales price was $216,000, according to the Austin Board of REALTORS, a trade group. Rentals, too, have surged, with the average cost of an 864-square-foot apartment now $1,600.
Much of this article addresses the effects on the city and residents. The rapidly rising costs have consequences for many.
Thinking beyond this particular city, I wonder at the convergence of people, business, and real estate in the last decade in one city and region. Particular communities, including cities and suburbs, have experienced this before during boom times. Is Austin’s case unique or is it simply the latest American community to go through such growth? Austin has a unique mix of tech industry, cool culture, it is the capital of an important state and home to the flagship university in the state system, and once had cheaper housing.
At some point, the pace will slow down in Austin. This could happen because of the rising real estate values or other factors. What community and region is next? Based on what made Austin successful, I could venture some guesses. The first places that come to mind are on Richard Florida’s lists of creative class havens in The Rise of the Creative Class. Or, perhaps the tech industry gathers in a new yet unlikely location that offers similar advantages.
It is not a coincidence to see two recent articles about effects of growth in Texas communities as this part of the country – and the Sun Belt more broadly – is growing fast. One is the story of a big city where housing is in high demand while the second is a small town that is now a booming suburb.
Nearly 2,700 homes in the Texas capital have sold this year for $100,000 or more above their initial listing price, according to an analysis by Redfin Corp. that examined sales through Aug. 11. While a few other U.S. cities have had more properties sell at that premium to the asking price, none have experienced as big a percent rise in homes transacting at that lofty an increase, Redfin said…
The number of homes sold year-over-year for at least $100,000 over asking price has grown nearly 10-fold in Seattle, and fivefold in Oakland, according to Redfin. In Austin, that figure grew by 57 times the number for last year at this time.
The jump in these sales at six figures above the listed price shows how Austin, which has attracted young professionals for years, has become an even more competitive place to buy in recent months.
Today, the cattle are gone, replaced with clusters of sleek apartments, gated communities and big-box stores. And New Braunfels, the third-fastest-growing city in America, tucked in one of the fastest-growing regions, finds itself at a crossroads…
A once quaint town known for its German roots and the Schlitterbahn water park, New Braunfels grew a whopping 56 percent over the last decade, adding about 32,500 residents…
Newer residents to New Braunfels have been drawn to the region for its affordable cost of living and by larger employers who have settled there, including several distribution centers and technology companies. Over the past decade, the median salary has jumped to $90,000 from $65,000 in Comal County, which includes much of New Braunfels, one of the highest averages in the state…
The community has also grown more noticeably diverse, with the presence of Latinos particularly evident on the city’s West Side. Residents flock to eateries like El Norteño for typical Mexican dishes, such as menudo, a spicy stew known colloquially as a hangover remedy. This week, a server took orders wearing a red T-shirt that read “Menudo Para La Cruda” or “Menudo For the Hangover.”
The emphasis on growth is a long-term pattern. When Census data is released, many like to highlight the fastest growing areas of the country. This can shine a spotlight on places that are changing but it also reinforces a consistent American narrative: growth is good for communities. Indeed, discussion of the opposite trend – losing population (or somehow not losing residents) – reinforces the notion that growth is good.
At the same time, focusing on population numbers is worth considering alongside what is happening to the character of communities with population growth or loss. These two articles highlight both phenomena. In Austin, what happens to a local housing market when so much competition drives up prices? At the least, this means some are priced out of the adjusted values, existing community members may see their property values rise, and builders, developers, and local officials respond to the changes. And the rising prices are often interpreted as a sign that Austin is a desirable place to live.
In New Braunfels, this is both a common American story – small town outside big city turns into a sprawling community in a relatively short time – and a story with particular traits as the community has a particular character. The German roots of the community now sit among a more diverse population. A quaint town is now much bigger and there is a lot of building activity. The businesses there for a long time are now joined by new ventures.
Even as population growth is usually viewed as a good thing, it comes with costs and changes. Few communities would reject growth just to avoid change but there can tension over how to respond to growth. Many cities and suburbs have struggled to match their existing character to changes and what the community will end up being once a construction boom and/or sprawling subdivision growth subsides.
Given a Planning Commission vote and a range of opposition willing to stay late to fight, it seems unlikely that McMansion rules on carports and garages will be changing any time soon.
At their most recent meeting, Planning Commissioners considered an amendment that would change part of Subchaper F, aka the McMansion Ordinance, that eliminates exemptions for carports when they are enclosed. (Enclosing carports, of course, turns them into garages.) Instead, staff is recommending that the exemption be based entirely on where the structure is located in relation to the house, not whether it is a carport or a garage.
Senior Planner Greg Dutton explained that, under the current code, carports get a 450-square-foot exemption when 10 feet or farther from the main house. If closer, the exemption is 250 square feet. However, if exempted carports are subsequently enclosed, that exemption is reduced, and can cause problems for unsuspecting homeowners.
The change was initiated after a perceived flurry of requests for waivers from that rule hit City Hall. Those requests came from homeowners who put doors on what they thought were unfinished garages, only to be told their homes were now out of compliance because those structures were previously considered carports under city code. Dutton said the influx of waivers seems to have died down.
I could see two reasons for having a carport rather than a garage:
They are cheaper to construct because you don’t need to enclose the whole structure.
With warmer weather, carports become more viable because all you want is a roof over the vehicle. (Hence, there are not as many carports in colder weather climates.)
Yet, the first reason would feed into a common critique of McMansions: so much money is spent on trying to impress people from the street – usually with the size of the home or the overblown architectural elements – that there is little leftover for other features like the back of the house or a carport. In other words, if you spend a lot of money to build a McMansion, couldn’t you go a little further and construct a garage as well?
To be honest, I’ve never seen a picture of a McMansion with a carport. Indeed, one of the nicknames for McMansions is “snout houses” because they tend to lead with a large garage. Perhaps carports occur more in teardown situations where the size of the lot makes it more difficult to have a large garage on the front and an existing carport in the back or on an alley is a viable alternative.
I’m visiting Austin and heard about these McMansions. It’d be really cool to drive around and see some of these beasts. Which neighborhoods or streets are worth seeing?
The other thread participants then offer some good feedback for a city that recently instituted guidelines intended to reduce the number of new McMansions. But, if your city is known for its big houses, why not take advantage of this? Most cities would love to bring in more tourists who then spend money and demonstrate that the city is worth visiting. According to critics, McMansion owners want these homes in part because they want to impress others with the square footage and attention-grabbing architecture. Match this desire for visitors with the attention McMansion owners want (at least according to critics) and you could include such homes as important sights to see.
Of course, some cities might not want to highlight McMansions that are criticized for a variety of reasons. I’m guess Austin wants to be known for creativity and tech, not the poor architecture of overlarge homes. Similarly, I imagine many McMansion owners would not be thrilled if tour buses started regularly driving slowly past their homes giving tours.
At this point, I could only imagine regular McMansion tours being given by those who don’t like McMansions.
The directors of the city’s planning and permitting departments estimate it would take $400,000 to hire temporary workers and pay for overtime to eliminate the current backlog in the next 90 days…
Next year the department plans to ask for $1.6 million in additional money to fund 11 new positions. This memo comes as the city is just launching its annual budget process. Over the next few weeks, every department is going to be compiling a budget wish list, which eventually is sent to the City Council…
Some of the blame for the three-week delay in residential planning and permitting was placed on the “complexity” of the city’s McMansion ordinance, which limits housing sizes in certain neighborhoods. “As such the department will recommend changes to the (land development code) that will simplify the McMansion provisions and will extend turnaround times for those types of reviews to ensure that there is sufficient time to perform a thorough review,” the memo states.
The planning and permitting departments, which used to be one department called Planning and Development Review, are responsible for approving all real estate development in the city, from housing remodels to new subdivisions.
It can take some time to see how ordinances actually play out and perhaps the initial ordinance can be “smoothed out” for this sort of process. Communities can also run into this problem if they have high rates of growth. Austin is a desirable place for construction so it may make sense that it has a lot of permits to deal with.
I wonder how much these decisions to speed up the permitting process are driven by builders and developers who generally want to move as quickly as possible. If there is a bit of a delay in the process, would these builders actually cancel their projects or go elsewhere? Builders and developers are often powerful and are viewed as important harbingers of economic growth. Yet, isn’t Austin so desirable that a delay won’t harm things much? Granted, lots of people might want more efficient government but that also may just require more government employees.
The arrival of this year’s appraisal notices — which in Travis County showed homes’ average market values jumped 12.6 percent and average taxable values rose 8 percent for 2014 — is sparking a push for reform. Similar jumps have occurred in Williamson and Hays counties.
Real Values for Texas, a statewide group advocating for property tax reform, local officials and others say they believe enough momentum is building around the state to put pressure on the Legislature to fix what they say is a flawed property tax system. The issue is an especially hot one in Austin, where property values have risen at a much faster rate than wages in recent years, leaving more and more area homeowners saying they are struggling to pay their property tax bills.
At issue is what can be done. Market forces generally dictate home values. And with no state income tax, the state government and local taxing entities rely heavily on property tax for revenue to fund schools and many local services…
A key problem, critics say, is that the current system has shifted a disproportionate share of the burden of paying for schools and local services on homeowners, in favor of commercial and corporate interests who can afford to appeal their values and win big reductions year after year. The share of property taxes from homeowners to support public schools grew from 45 percent to 54 percent over a 12-year period, while commercial and industrial owners’ share has declined to less than 20 percent. (Other sectors, from oil and gas to personal property, make up the rest.)
One way to read this would be to see this in a long line of American homeowner complaints about property taxes. This has been a common theme in recent decades, famously illustrated by the Prop 13 campaign in California in the 1970s. Homeowners may enjoy owning a home but they tend to resent continually rising requests for money for local governments, even as they tend to want good, or even better, local services. Most homeowners want rising housing values as this increases the value of their investment yet don’t necessarily want to pay for it while living there.
Yet, the property tax reform suggestions here are interesting. Just how much should local homeowners pay compared to corporations? Is the best comparison to look at the rates each pays or the cumulative percentages each group contributes to the local pot of tax money? This could be related to a larger issue that goes beyond property taxes: what kind of tax breaks should corporations get from municipalities? This is a difficult issue to sort out as communities like jobs and important businesses yet homeowners tend to resent “handouts” for corporations that they think could afford to pay more.
1. It looks relatively large. At the least, it is not a small house.
2. It is built in a more traditional style: no two-story entryway, no Palladian window, there is some lawn around the whole house (though not much on the sides of the house), there is a limited number of roof gables. There is a real front porch where residents can actually sit. At the same time, the siding is not too distinctive, there don’t appear to be too many windows on the sides of the house (the neighbors are fairly close), and the kitchen is fairly typical dark cabinets, granites countertops (including an island), and stainless steel appliances.
3. The first floor has an open floor plan where the living/family room to the right of the front door opens right up into the kitchen. There are at least two bathrooms. Oddly, there are photos of two laundry rooms.
Zillow suggests the home has 2 bedrooms, 2 baths, is 2,248 square feet, and is in a neighborhood with a range of home values. This particular house seems fairly muted compared to some of his other designs. It is hard to know exactly how much the Austin McMansion ordinance changed what could be done with this particular house but the McMansion designs elsewhere seem more stereotypical.
One last question: the designer appears to have labeled the home a McMansion. Given the loaded nature of this term, is this the best strategy?
Since 2000, 1 million more people have moved to Texas from other states than have left.
As an economist and a libertarian, I have become convinced that whether they know it or not, these migrants are being pushed (and pulled) by the major economic forces that are reshaping the American economy as a whole: the hollowing out of the middle class, the increased costs of living in the U.S.’s established population centers and the resulting search by many Americans for a radically cheaper way to live and do business.
To a lot of Americans, Texas feels like the future. And I would argue that more than any other state, Texas looks like the future as well — offering us a glimpse of what’s to come for the country at large in the decades ahead. America is experiencing ever greater economic inequality and the thinning of its middle class; Texas is already one of our most unequal states. America’s safety net is fraying under the weight of ballooning Social Security and Medicare costs; Texas’ safety net was built frayed. Americans are seeking out a cheaper cost of living and a less regulated climate in which to do business; Texas has that in spades. And did we mention there’s no state income tax?
There’s a bumper sticker sometimes seen around the state that proclaims, I WASN’T BORN IN TEXAS, BUT I GOT HERE AS FAST AS I COULD. As the U.S. heads toward Texas, literally and metaphorically, it’s worth understanding why we’re headed there — both to see the pitfalls ahead and to catch a glimpse of the opportunities that await us if we make the journey in an intelligent fashion.
1. There are several examples of people moving to Texas from California or the Northeast and finding that they really like Texas. But, the examples tend to emphasize Austin, a city known for plenty of cultural amenities. With its culture, UT-Austin campus, and tech companies, Austin looks like a cool place for the creative class. What about the other major areas in Texas? Why not stories about moving to Houston and Dallas, bigger cities and metropolitan areas with their own industries (oil, etc.)? How representative of Texas is Austin?
2. There is little discussion in the story about Latino residents. The primary focus in on Americans who have moved to Texas from other states but what about the influx of immigrants from Mexico? How are they doing? Are there some differences in their experiences as a whole versus those who are held up as successes in the article?
4. The story plays out Texas’ connections to the American pioneer and frontier story. This works but there is also a different culture and set of social norms in Texas. Even if business is thriving and people are moving in, does this necessarily mean many Americans would want to act or live like Texans? Is it all simply about a decent job and affordable housing? Yes, everyone may be American but outsiders and Texans themselves will tell you that the state is a land onto itself.
Google said Tuesday it plans to bring its ultra high-speed Internet and television service to Austin, Texas, next year, prompting AT&T to reveal its own plans to follow suit — if it gets the same terms from local authorities.
AT&T appeared to be making a political point to highlight the heavy regulations that encumber traditional phone companies, analysts said.
Google promised to begin connecting homes in Austin by the middle of 2014 with a 1-gigabit-per-second Internet service, roughly 13 times faster than the speediest service AT&T had previously committed to offering and about three times faster than the zippiest available from Verizon Communications…
While James said he did not know what the terms of Google’s Austin deal were, he pointed out that Google received various benefits in Kansas City, including preferential right-of-way access, access to data centers, and reduced pole access rates.
The news reports I’ve seen have tended to emphasize the Internet speed that would be possible with these changes and how this might change how we use the Internet. But, I think it is also interesting to consider “why Austin?” Austin is well-known these days for its population growth, its ability to attract high-tech and educated workers and companies (related to the presence of UT-Austin), and its cultural scene, complete with SXSW. In other words, this is a “cool” middle-America city, exactly the kind of place Google might want to expand this product.
I hope we will hear more about the deals Austin might make with Google to help this project move forward. Just how much should Austin give up? I suspect residents would be more in favor of these kinds of deals or tax breaks when it involves Internet services (it is infrastructure after all) versus tax breaks for big box stores or corporate headquarters…
The next logical question: after starting in Kansas City and then moving on to Austin, what city/metropolitan area is up next for Google’s high-speed service?
Law firm Bowman and Brooke LLP [website] is vacating its current location at 600 Congress Ave. and heading to more suburban digs southwest of downtown [about 6 miles away, map here]….“Yes, price was a consideration but we’re not getting a tremendous difference in rent costs. There are other things that entered in like tenant improvement costs, and parking had a significant impact,” [Michelle Bailey, chief of operations] said.
The company had no parking allocation downtown and at its new location it will have 96 complimentary spaces for 44 employees — more than enough.
The article notes that “finding large blocks of office space [in downtown Austin] is somewhat akin to going on a treasure hunt” and suggests that lawyers “are now being challenged for territorial rights by emerging technology and energy firms.” In other words, plenty of businesses still want a downtown presence, and rents are being bid up by new entrants. This sounds more like a story of urban revival than suburban sprawl to me, though the two are clearly linked here.
Perhaps a more fascinating revelation, however, is Bowman and Brooke determination that it “wasn’t necessary for its attorneys to be downtown, close to other law firms and courthouses” because “[w]e tend to be a national firm with our attorneys flying all over the country” and “we don’t have a lot of local interaction.” What does it mean to practice law without significant local interaction, especially when one is “a nationally recognized trial firm that defends corporate clients in widely publicized catastrophic injury and wrongful death claims“? While simply having a downtown (rather than a suburban) office location may do little to humanize a corporate law firm, it seems telling that Bowman and Brooke seems to place such a low priority on engaging its local community.
Legally Sociable 