How Lack of Affordability is Killing Austin
Austin is no longer a stepchild to Dallas or Houston. And its closer neighbor, San Antonio, barely registers on the national radar compared to Austin. The Capitol City now boasts F1, the X Games, South By Southwest, and a booming economy that appears unstoppable. But wait: Can a city experience too much of a good thing? Could Austin somehow become a victim of its own success? Not only is such a scenario possible, but many observers find it to be frighteningly probable. By reviewing numerous published articles, editorials, and data, both local and national, one can find compelling evidence that Austin is becoming so unaffordable so rapidly that we may be headed for another boom-and-bust cycle.
While that may sound like a strong statement to make, consider this. Austin has risen from the nation’s 17th largest city in 2000 to 11th in 2012, according to U.S. Census figures. The explosive growth has brought crushing demands on infrastructure and public services, along with a seller’s market for housing. Property taxes rose 38% from 2003 to 2013. Rents rose 49%. The median sales price for a home increased from $159,000 to $225,000 in the same period. These figures do not take into account that many Central Austin neighborhoods have seen home prices well above $300,000 or higher since the late '90s. And yet median income in Austin, adjusted for inflation, has stayed virtually flat since 2000.
Here’s the bottom line. The Travis County budget increased a whopping 81.1% in the 10 years from 2003 to 2013, going from $449.5 million to $814.2 million. The City of Austin budget has skyrocketed 73.7% from 2004 to the proposed 2014 budget, going from $1.9 billion to $3.3 billion. How many friends do you have whose paychecks have gone up by those percentages?
Both Forbes and Bloomberg have recently named Austin America’s current top boomtown. But boom-and-bust cycles are all too familiar to anyone who lived in Austin during the 1980s. We remember the savings-and-loan collapse and subsequent real estate crash. Residents who moved into suburban municipal utility districts (or MUDs, as they were called) found themselves in a financial quagmire. In the heyday of speculative land-flipping, some lots were bought and sold more than once in the same day. But once the market crashed, many homeowners owed more on their home loans than they could get from trying to sell. So quite a few simply went to the loan office, laid their keys on the table, and walked away.
- See more at: http://www.austinpost.org/article/why-lack-affordability-killing-austin#sthash.PDqTKQoN.dpuf