People want to live in the center of the city because they are fed up with sprawl, said Glen Coleman, an urbanist and owner of South Llano Strategies, an advocacy firm that specializes in land-use policy.

“Is the rate of demolition good or bad? That’s value-neutral,” Coleman said. “If we are systematically bulldozing affordable houses in favor of unaffordable housing, then that’s bad.”

The data points to such a trend. Smaller, more affordable single-family homes are often demolished and replaced by larger, more expensive ones. This has caused the value of neighborhood lots, most of which are zoned for single-family homes, to rise, increasing property tax bills and forcing longtime Austinites out of once-affordable neighborhoods.

The neighborhoods

Bruce Wiland, chairman of the Zilker Neighborhood Association’s zoning committee, said he has lived in his one-story bungalow on Oxford Avenue since 1978. He said the spike in demolitions does not surprise him—the evidence surrounds him. His neighborhood block has had five new homes replace bungalows over the past 10 years. Another freshly cleared lot sits across the street, primed for construction.

Wiland said his property taxes today are nearly 20 times what he originally paid for his principal, interest, taxes and insurance combined. He admits to being cynical about where the city is headed.

“I’m not many years away from when I’ll have to leave the city because I can’t afford to live here anymore,” Wiland said. “The reason people came here originally was because of the character of Austin, and that’s changing.”

Single-family zoning and dated housing stock—one-story, often two-bedroom, one-bathroom starter homes built between 1930 and 1960—have characterized central neighborhoods such as Zilker for decades, but the functional minimum­­­­­ bedroom-to-bath ratio for single-family homes has changed.

According to Brandy Guthrie, president of the Austin Board of Realtors, when people get their tax bills, it is usually the land—not the structure on it—that is appreciating in value. At a certain point, it is no longer practical to pay property taxes on a $500,000 lot for a modest starter home.

The developers

Guthrie said this dilemma has turned into a business model.

According to Scott Turner, owner of Riverside Homes, an urban infill construction company, the city has hit a critical point.

“People can’t afford to stay in their neighborhoods, but the demand for land is such that something’s got to give. So what’s giving? The houses are giving,” Turner said.

This is where developers come in. Turner said his company purchases the properties, demolishes the old homes and builds anew.

“That’s essentially the flow of demolitions that is happening,” Turner said. “Because of the functional obsolescence of the house itself, the complexities in the city’s permitting process and the cost, adding onto a home is a lengthier, more risky and more expensive process than just tearing down and starting from scratch.”

Turner said the city’s zoning regulations intensify the issue. The code in many neighborhoods makes it difficult to build anything but a single-family home on the lot. The lot is expensive, and the developer needs to build a home that attracts a buyer, often resulting in larger, more modern structures. The lot sells for a higher price, which further pushes the market value for the property and neighborhood. 

Turner said this creates a self-sustaining affordability crisis. The construction of larger, more expensive single-family homes increases land value of surrounding properties. This increases property tax bills and causes economic turmoil for longtime property owners who struggle to pay the increased taxes. This forces them to sell their lot, but because the lot is so expensive and the house does not balance the price tag, the only willing buyer is a developer who then tears down the home, and—in order to sell it—builds a larger, more expensive single-family home.

[caption id="attachment_224748" align="alignnone" width="220" class="initial"] District 9 Council Member Kathie Tovo[/caption]

“If we have an agreement on council that [the demolitions are] not in the best interest of the city … we can look for policy solutions that might help.”

—Kathie Tovo, District 9 Austin City Council Member

Policy perspective

District 9 Council Member Kathie Tovo said this is a “terrible trend” from a community perspective.  Demolition of traditional housing stock, she said, deteriorates the city’s “historic fabric.”  Tovo said she is focused on slowing the demolition rate.

“It’s very difficult to influence the market,” Tovo said. “What we can have sway over is the city process. If we have an agreement on council that [the demolitions are] not in the best interest of the city … we can look for policy solutions that might help.”

The historic preservation office reviews all demolition applications for homes over 50 years old. If historic value is found, staff recommends the Historic Landmark Commission place historic zoning on the property. If the property owner objects, which often happens because historic zoning impacts the high-priced property’s market value,  but eight of 11 commissioners incorporate a supermajority for approval, the case goes to city council. If that supermajority is not reached, staff releases the demolition permit.

A supermajority has proven hard to come by for the commission, a group with a history of attendance issues. Earlier in February, Tovo sponsored council action that works toward eliminating the supermajority clause in favor of a simple majority, paving an easier path for council to decide historic zoning cases.

Coleman said policy towards a demolition moratorium would only divert the economic pressure.

“The only solution I can see is either a recession, which does not sound very pleasant to me,” Coleman said. “Or, what sounds very pleasant to me and plausible is let’s have a dramatic increase in housing stock throughout the city. More multifamily, more missing middle, more single-family when it’s available and more condos and more sky-rise. We’ve got to figure out how to get more density per lot, or else these demolitions are going to accelerate.”