Rising rents, housing prices causing concern

To contend with the rising cost of living in Austin, reports show some residents are cutting back on basic needs such as health care, medication, clothing, food, transportation, insurance and child care.

In the past year, 22 percent of homeowners and 52 percent of renters have reduced their spending on one or more basic needs to pay for housing, according to the city of Austin's 2014 Comprehensive Housing Market Analysis released in July.

The average rent in Austin is $1,023 compared to $806 in San Antonio, $862 in Dallas and $878 in Houston, according to real estate firm CBRE Group Inc.'s most recent residential report.

A June survey conducted by the John D. and Catherine T. MacArthur Foundation—which provides grants for causes such as affordable housing and public interest media—indicates residents have reduced spending on health care, worked additional jobs, increased credit card debt, or moved into a less safe neighborhood or one with lower-performing schools to afford housing.

Residents who receive housing assistance from Austin organizations often struggle to find affordable rentals because they are scarce, and landlords often are less willing to lease to people who receive federal housing choice vouchers, said Sylvia Blanco, vice president of the Housing Authority of the city of Austin.

Housing is considered affordable when renters or homeowners spend no more than one-third of their monthly income on rent or a mortgage, she said.

In North Austin the largest percentage of subsidized housing—6 percent—is in the 78758 ZIP code, according to the housing analysis. The 78729 ZIP code, however, has zero subsidized housing, the lowest in the Northwest Austin area.

Housing Authority President Mike Gerber said many affordable housing properties were built in the area when land was cheaper to buy.

"I think there is a healthy amount of subsidized housing in North Austin," Gerber said. "It might not be as plentiful as it is in [other Austin] areas. You see a lot of Section 8 tenants that live along Rundberg [Lane]. Construction patterns in our city have been a little bit erratic, as we've seen this incredible growth. I think all of us are concerned about how do we avoid any overconcentration [of subsidized housing in one area], and how do we incentivize building [affordable housing] in higher-opportunity areas."

Rebecca Giello, assistant director for Neighborhood Housing and Community Development for the city of Austin, said25 percent of homeowners and 45 percent of renters spend more than one-third of their income on housing.

"The challenge that a lot of voucher recipients are facing is because of the tight rental market, landlords really have their pick of tenants to live in their units," Blanco said. " Because of [the] stigma of being a voucher recipient, they get turned away. A lot of times landlords require three times [the cost of rent in] income, and because voucher recipients have extremely low income, they don't have that. There are ways to discriminate, if you will."

Blanco said the Housing Authority encourages more landlords to become part of the voucher program that assists low-income families in having more choice in where they want to live.

The organization tries to dispel stigma about voucher holders, such as that they do not pay rent, do not take care of their homes or have people who are not on the lease living in the home, she said.

Need for housing diversity

As waiting lists for affordable Austin housing remain long, several local assistance programs are pushing for additional resources to create more housing opportunities.

In November 2013, Austin voters approved $65 million in general obligation bonds to fund additional affordable residential projects and maintain existing units, the majority of which are located in in Southeast Austin and in North Austin, according to the housing analysis.

"We want to offer all types of housing for all types of people in all parts of town because only in that way do you ensure that everyone has access to good schools, good jobs and good services," Gerber said.

The rental vacancy rate is at its lowest throughout Austin in recent history, driving demand for housing even higher, said Kathy Stark, executive director of the Austin Tenants' Council. Northwest Austin's apartment vacancy rate is 5.2 percent, according to CBRE.

"Rent increases have gone up dramatically," she said. "I think this is the highest it has ever been."

Some low- to moderate-income families move frequently because of rent increases, causing many children's performance rates to drop because they attend multiple schools, said Julian Huerta, deputy executive director at Foundation Communities.

"Typically families who come to us have moved around some before arriving with us, just trying to find cheaper rents or having to move if the rent at their place goes up," Huerta said. "If their kids have had to change schools, either during the year or several times during the summer, that can set them back."

Nonprofit Foundation Communities received $30 million in funding July 31 from the Texas Department of Housing and Community Affairs to build three low-income residential properties, including one in the Lakeline Mall area that is within walking distance to train and bus stations.

Foundation Communities offers housing, education and financial planning services to low- and moderate-income families. Residents who live at a Foundation Communities property make an average annual income of $25,000, Huerta said.

The Housing Authority, which owns and operates nearly 1,900 public housing units, has recently been moving people previously on the housing waiting list into homes, freeing up space for new applicants. From Oct. 22–29, people can apply online for housing vouchers, and the Housing Authority will randomly select 2,500 people to be placed on the waiting list.

Despite assistance, officials from housing programs say it is still difficult for low-income residents to buy homes in Austin. The city's housing analysis shows 66 percent of renters choose to rent and live in Austin even with its high cost of living rather than own a home outside of the city, Giello said, citing an Austin housing choice survey.

According to the city's housing analysis, Austin's top-priority housing needs include rental units costing less than $500 per month for tenants earning less than $25,000 per year. Other housing needs include affordable housing near transit for seniors and others with disabilities.

BBC Research & Consulting, the firm that compiled the city's housing analysis, also recommends establishing a citywide goal to preserve income diversity by maintaining and improving affordable units for renters earning less than $25,000 and homes to buy that cost less than $183,000.

Additional burden

Rising utility costs are also contributing to some renters' struggle to afford the cost of living, Stark said.

Austin residents could be facing increases in utility costs. Austin Energy, the city's electricity supplier, and Austin Water Utility are both proposing increases for the 2014–15 budget year.

AE is proposing rate increases that would cost the average homeowner an additional $2.72 per month if approved by Austin City Council in September. In 2012, AE increased its rates for the first time in 18 years.

Austin Water's proposal would increase monthly rates for a residential customer who uses an average of 7,000 gallons of water and 4,700 gallons of wastewater by $9.79, a 12 percent increase, according to the city of Austin's 2014–15 proposed budget.

Jason Hill, spokesman for Austin Water, said the increase will pay for upkeep of existing infrastructure such as treating waste water to be put back in to the Colorado River as well as planning for needs for 15 to 50 years into the future.

Several organizations help residents with paying their utility bills. Calling 211 or visiting www.211texas.org will direct residents to local programs based on their ZIP code.

Other organizations include the Low Income Home Energy Assistance Program to provide aid with energy bills and energy-related home repairs. The Public Utility Commission's LITE up Texas Program assists qualifying low-income families with reducing their monthly energy costs by allowing them to choose their service provider and find discounts.

"We don't just have rising rents. We have rising utilities," Stark said. "The second-highest bill most tenants pay are the utilities. That cost burden, from what I can tell, is only going to get greater for homeowners and renters."