Rental homes becoming unaffordable

Rental homes becoming unaffordable Central Austin rental facts[/caption]

Single-family rental homes are becoming increasingly unaffordable for Central Austin renters, forcing more moderate-income residents into apartments—or outside the central core entirely.

The average Central Austin rental home costs $2,232 per month, according to 2015 first-quarter MLS Listings data. During that same three-month timeframe, apartments were leased for $1,137 per month on average. Rental homes and other non-apartments made up only 1.5 percent of the 28,061 Central Austin units leased during that time.

The average Central Austin renter earns approximately $33,827 annually, or nearly three times less than homeowners living in the same area, according to American Community Survey five-year research data. That makes most Central Austin homes and apartments out of reach for the average renter, according to the U.S. Census Bureau, which measures affordability by whether a resident is “housing cost burdened,” or someone who spends 30 percent or more of his or her income on housing.

The debate on market-rate affordable housing was recently revived as part of an effort to reduce regulations for accessory dwelling units, or secondary units built on single-family properties. Mark Rogers, executive director of the Guadalupe Neighborhood Development Corp., sounded the alarms during an April 14 panel discussion about ADUs.

“The danger I see in Austin, single-family homes are going extinct in Austin very quickly, and the low- to moderate-income [residents] are disappearing in the city,” said Rogers, whose organization helps East Austin residents obtain affordable housing. “It’s a crisis, in my mind.”

He touted ADUs as a viable, more affordable option for renters. They are also better alternatives than living in large-scale apartment complexes, Rogers said in a followup interview.

“Living in a home represents the essence of what Austin is, and we need to try to maintain that,” he said.

However, members of the advocacy group Austin Neighborhood Council have voiced opposition to relaxed ADU requirements. ANC President Mary Ingle, who also spoke on the April 14 panel, later said that smaller units only serve developers and not residents who need affordable housing.

“People who already live here need to stand up,” Ingle said. “This city is being built for the people who are moving here—and not for the people who live here now.”

Meet in the middle

City of Austin renters are nearly two times more likely than homeowners to be housing cost burdened, based on data released in May from Community Advancement Network, or CAN, a nonprofit coalition that tracks Austin’s social issues. That difference could be attributed to rising rental rates, which increased 50 percent between 2004 and 2013, according to the Real Estate Council of Austin, while median annual family incomes increased only 9 percent.

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The ongoing CodeNEXT process seeks to allow more “missing middle housing” by rewriting Austin’s land development code. The missing middle housing concept was coined by Dan Parolek, principal of OpticosDesign, the consulting firm hired by Austin to rewrite the code.

His new website outlines the duplexes, triplexes, fourplexes, courtyard apartments, bungalow courts, townhomes and live-work units needed to help fill the housing gap between detached single-family homes and mid-rise apartment complexes.

“Missing middle housing types may likely end up being rentals to help meet that local demand,” Parolek said.

But the CodeNEXT process risks ruining years of effort by 30 neighborhood planning teams that created their own development standards, ANC Vice President Joyce Basciano said. For example, her Bryker Woods neighborhood plan took 3 1/2 years to complete, she said. Basciano also said she is reluctant to further densify Central Austin, recommending instead the city draw inspiration from New York City and other places that have multiple high-activity points.

“Otherwise, we wind up with the core of the city being as expensive as Manhattan,” Basciano said.

The focus should be less on density, Parolek said, and more on neighborhood compatibility. The code rewrite process will still offer neighborhoods the tools needed to ensure only compatible housing is constructed, he said.

“Some communities fear a blanket application of all missing middle types to all neighborhoods, but that won’t be the case,” Parolek said. “The process will be much more targeted.”

Parking problems

Neighborhood advocates also expressed discomfort with relaxed parking requirements proposed for ADUs. A city proposal would reduce ADU parking requirements from two to one off-street parking space—and zero should the unit be 550 square feet or less. Similarly, Parolek said no living unit should be required to have more than one-and-a-half parking spaces, on average, and ideally no more than one space.

“Parking is going to be controversial—reducing parking always is,” he said. “We would have to spend a lot of time with communities educating about the pluses and minuses of keeping parking requirements high.”

Unfortunately, most Austinites still live in car-dependent households, said Mandy De Mayo, executive director of housing advocacy group Housing Works and a CodeNEXT advisory group member. Development regulations could help change that habit, she said.
“Parking is a major cost in any development,” De Mayo said, suggesting that cost gets passed to the end user. “It’s frustrating because we’re trying to get to a place where we’re a more walkable city.”

Ingle and Basciano said any reduction in parking requirements will not deter residents from using vehicles. Ingle cited her own experience managing an ADU.
“My garage apartment tenants always say they have one car and then show up with two cars every time,” Ingle said.

Other barriers to ADUs

ADUs can also increase property values, both on-site and for surrounding homeowners, according to the Travis Central Appraisal District. That has caused a great deal of angst among neighborhood residents, De Mayo said.

“People are very interested in ADUs theoretically,” she said. “But when they realize [ADUs] would be in their immediate neighborhood, then it just really riles people up.”

During an April 28 city of Austin Planning Commission meeting, multiple speakers voiced opposition to ADUs and asked to have their neighborhood “opt out” should any decreased regulations gain approval. However, city staff said  they were against that idea.

“Each neighborhood area that has a neighborhood plan—about 30—would have to go through the process and decide yes or no, and then the neighborhood plan would have to be amended to include this option, and all 30 of those would have to go through City Council,” said Ming-ru Chu, the city’s urban planner who drafted the proposed ADU regulations.

The Planning Commission on May  26—after Community Impact Newspaper’s print deadline—considered regulations that would enable neighborhoods to opt out and would limit Type 2 short-term rentals, a prohibition Chu said she embraces. The proposal, which comes to City Council on June 18 for a potential vote, also requires space for one additional vehicle regardless of the size of an ADU.

Only 240 ADUs were constructed between 2007 and mid-2014, according to Chu, despite more than 46,000 zoned properties that are potentially eligible.
“I think reducing the parking and getting rid of the driveway requirement would free up a whole lot of people to build ADUs,” Chu said. “The problem is I don’t know how they would finance it.”

Ingle said the revenue made from her garage apartment is sometimes not enough to pay off her property taxes. Most property owners would need a loan to afford construction costs, Chu and Ingle agreed. Some ADU advocates have proposed creating a city-funded financing program to encourage construction of the secondary units.

“I think we should at least start having those conversations if we really want to build ADUs,” Chu said.


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