By the numbers

Austin Board of Realtors statistics show the median price for a home in Central Austin was $460,000 in June.

The Real Estate Center at Texas A&M University defines the average budget of a first-time Texas homebuyer as $150,000 but said rising land and development costs have made it almost impossible to build a traditional single-family home in Texas for under $200,000.

In fall 2016, data from Payscale, an online salary, benefits and compensation information company, showed the average Austin millennial's annual income was $48,700.

Forbes named Austin the second best U.S. city for young professionals in 2017, estimating a median recent graduate salary of $51,800 and a projected annual job growth of 2.97 percent.

Meanwhile, the Austin-Round Rock Metropolitan Statistical Area’s average student debt was $16,324 as of December 2015, according to the National Federal Reserve Bank of Dallas.

‘Millennials aren’t buying’

Mechele Dickerson, a University of Texas professor who teaches a class called "America’s Struggling Middle Class," said buying a home is particularly hard for students who took out a loan but did not complete college.

Young professionals are also deterred from buying because, according to Dickerson, they don’t save money.

“It’s hard to save when you have this huge debt hanging over you,” she said. “If you don’t have any savings, you’re not going to have [enough for] a down payment.”

An Apartment List survey released in May showed an Austin millennial needs to save for nearly 21 years in order to afford a 20 percent down payment on a median-priced condominium based on a of monthly down payment savings of $140.

Survey results from the apartment search website put Austin in line with the California metros of San Francisco, Los Angeles, San Diego and San Jose, where average savings time is 20.8 years.

“Millennials aren’t buying,” Dickerson said. “The ones that are buying are the very high-income millennials,” or those making $100,000 or more annually, she said.

What millennials want

ABoR President Brandy Guthrie said young professionals are interested in smaller homes with less upkeep in locations that allow for easy commutes to work.

But that kind of housing is not available in locations desirable to millennials at their preferred price ranges, mainly in the urban core, she said.

Drew Johnson, who caters to first-time homebuyers through his business, Austin Craft Realty, is more optimistic.

“It's not as insurmountable as people think [to buy a home],” he said, adding millennials are looking for flexible floor plans, community spaces and a central location.

According to Johnson, homebuyers should put at least 5 percent down on a home. For a $460,000 Central Austin home, that is a $23,000 down payment.

Challenges for builders

[caption id="attachment_260803" align="alignright" width="131"] The U.S. Bureau of Labor Statistics estimates that for every $1 saved on housing costs, a family spends 77 cents in added transportation costs.[/caption]

Geoffrey Tahuahua, the vice president of policy and government affairs for the Real Estate Council of Austin, said builders struggle to keep housing costs down because of the unpredictability of Austin’s permitting process.

“A lot of times what ends up happening is once the developer starts working with the city, there’s a lot of [additional] costs the developer [incurs during] that process,” he said.

In an ideal world, developers receive comments or approval from the city’s development services department within 30 days, Tahuahua said. In reality, the site plan goes through several departments, such as Austin Water and the Austin Fire Department, which raises building costs, he said.

“That’s where the timelines exacerbate and pile up on top of each other,” he said.

Builders exasperated with Austin’s process are heading to cities such as Leander, Dripping Springs and San Marcos where the permitting process is more predictable, he said.

“The cities have figured out that they can benefit from Austin’s affordability problem and make the process more efficient,” he said.

O’Grady said those areas are becoming the region’s hottest markets.

“I think when you talk about Austin as being a great place to live, you have to start thinking about Austin as Jarrell to San Marcos and Dripping Springs to Elgin,” O’Grady said. “You have to start thinking of it less as a city and more as a region.”