Once a gateway for home ownership, North Austin faces affordability issues

A house in North Austin undergoes renovations.
As property investors have bought heavily in North Austin's 78758 ZIP code, the price of housing has more than doubled in the past decade. Iain Oldman/Community Impact Newspaper

As property investors have bought heavily in North Austin's 78758 ZIP code, the price of housing has more than doubled in the past decade. Iain Oldman/Community Impact Newspaper

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During her search for her “forever home,” new homeowner Jennifer Martinez said she scoured all corners of Austin to find an affordable house.

Over the past three years, Martinez looked at houses as far north as Round Rock, although she said she turned that house down due to the potential drive time to her job in East Austin.

In September, Martinez closed on a house in the North Austin Civic Association near Rundberg Lane and North Lamar Boulevard.

“I wanted to be close to the city. I wanted it to be an old neighborhood, so I feel very lucky to have found this house,” Martinez said. “It is the last affordable area.”

She paid around $300,000 for her house, a price that would fall in the lower half of all home sale prices across the Austin-Round Rock metropolitan area, according to September figures from the Austin Board of Realtors.


While Martinez’s house is affordable compared to the statistical majority of homes in the metro area, the price represents a sharp increase in an Austin neighborhood that, less than a decade ago, regularly posted houses for little more than $100,000, according to ABoR numbers. The 78758 ZIP code, once viewed as accessible to ownership for lower- and middle-income families, is now facing a cultural shift.

“We’ve seen people who have been long-term owners moving out of [78758] and moving into the suburbs,” ABoR President-elect Romeo Manzanilla said. “[The area] is continuing to grow, and you’re seeing a lot of young professionals moving to that area.”

Sticker shock

In Northwest Austin, as defined by the coverage area of •Community Impact Newspaper•, the 78758 ZIP code in North Austin—one of the last remaining affordable areas—experienced a 143.9% increase in home prices over the past eight years. The median sales price rose from $118,900 in 2011 to $290,000 in September, according to the last available data from ABoR.

Affordability problems have trickled down to leases as well in 78758, where more than 71% of all dwelling units are occupied by renters, according to U.S. Census Bureau data.

Figures from CoStar Group, a commercial real estate analytics company, show that the price per square foot for apartments in 78758 rose 62.63% since 2011, up to $1.61 per square foot. In 2011, the median asking rent per unit was $798. The median rent for an apartment so far in 2019 has jumped to $1,293, according to CoStar Group data.

Rent has become an obstacle for affordability in communities inside 78758. Census figures show 50.8% of all rental units in 78758 cost 30% or more of the total household income—the watermark the U.S. Department of Housing and Urban Development defines as cost-burdened. Throughout the city of Austin, those cost-burdened units account for 48.8% of the total population, or 92,484 units.

New faces in North Austin

Manzanilla said these changes are happening in North Austin as the neighborhoods’ workforces shift, and his claim is generally supported by census data. U.S. Census figures show the income levels in the neighborhoods have increased and added wealth.

The percentage of people who bring in a total household income of more than $100,000 per year rose nearly 6% from 2011-17, according to census data, while the percentage of households earning less than $50,000 per year dropped by 7.9%.

The area is also losing families with school-age children. From 2011-17, the number of residents aged 19 years or younger dropped by more than 1,100, census figures show.

This is happening as more young professionals in their 20s and 30s move into the 78758 ZIP code, Manzanilla said, attracted by nearby tech jobs and an increasing number of commercially developed properties, such as retail at The Domain.

The neighboring 78759 ZIP code has historically offered affordable homes for families with higher combined incomes, Manzanilla said, especially in the ZIP’s northernmost neighborhoods.

“Some of the schools 78759 feeds into are highly rated schools. It makes it attractive for young families to move into. You have nice, level lots [and] larger lots,” Manzanilla said.

But those neighborhoods have seen tremendous appreciation in recent years as well, and Manzanilla predicts that trend will only increase in the coming years.

Since 2011, median home prices in the 78759 ZIP code have climbed overall by 158.43%, according to ABoR figures. Where once, families could shop for houses with a price tag of just under $300,000, half of the homes sold in 78759 closed for $465,000 or higher in September of this past year. In the past eight years, the average number of days a single-family home was on the market dropped from 66 days to 29 days.

This partially stems from the thin stock of homes available in the market, especially in the more affordable neighborhoods.

“In the northern part of 78759, you are going to see a lot of these homes built in the 1980s that have gone untouched go through renovation. ... You’re going to see a lot of appreciation,” Manzanilla said.

Banking on a buck

In early October, the city of Austin released a draft of its land-development code, which is likely to cause home renovations and real estate investor activity to be in the forefront of discussion between residents and city officials.•Later that month, Austin City Council Member Alison Alter hosted an open house for residents of District 10—which partially envelops the 78759 ZIP code—to engage with city staff over proposed changes to the city’s land-development code. Hundreds of residents showed up to volley questions to city staff delegated to rewriting the city’s contentious land code rewrite—the city’s second effort to amend land-use zoning in as many years.

In May, Alter voted against approval of a policy document that guided city staff on the land-development code revision, and the council member remains opposed to several provisions in the city’s proposed early draft.

“I’m trying to understand the type of housing incentivized and who likely will be leading that. So, what size units does the code incentivize? Does the code prioritize investors over everyday people?” Alter asked during the open house.

The crowd of homeowners promptly and uniformly replied, “Yes.”

Residents’ concerns over accelerated investor activity in North and Northwest Austin come after an increasing number of investors have been buying homes, according to new data.

A 2018 report from property and financial analytics firm CoreLogic found 2017 and 2018 to be the two busiest years in the past decade for investor purchases in four of Northwest Austin’s ZIP codes. Data for the 78726 and 78729 ZIP codes were not available in the report.•In 78758 alone, 11.7% of all homes purchased in 2018 were bought by investment companies, according to the CoreLogic report. That was nearly double the rate across the entire Austin-Round Rock metro that year, which stood at 6%.

Residents and some city officials, including Alter, fear that rezoning single-family lots to add on “granny flats” or condos will incentivize more investors to buy properties to renovate for rental purposes.

Not everyone agrees. ABoR board member Austin Sowell argues that practical road bumps, such as utility connectivity, will act as a buffer against multifamily development in many places across Austin.

“Just because you have the zoning doesn’t mean logistically you’ll be able to put four units on the site,” Sowell said. “I don’t think you’re going to see a mass rush for people to buy single-family lots and turn them into multifamily lots.”

A changing culture

Haley Greer has lived in NACA for three years and has observed the neighborhood undergo residential changes often seen in gentrifying areas.

“If you go into the neighborhood, those houses have changed significantly. They’ve all been renovated—purchased, gutted and redone,” Greer said.•She said the neighborhood is also becoming less diverse. While the 78758 ZIP code remains a minority-majority area, the percentage of white residents has grown to 37.2% of the population in 2017, up 5% from 2011, according to U.S. Census data.

“When H-E-B started carrying ... gluten-free things [or] craft beer that I couldn’t find three years ago, that is when I knew the neighborhood was changing,” Greer said.
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