Opinion: Minimum Lot Size Reform CAN Make Austin’s Housing More Affordable

Next week, Austin City Council will consider policy that would reduce the city’s minimum lot size requirements. These choices will determine how Austin manages its rapid growth, what kind of housing can be built, and who can afford to call Austin home. Austin, a city synonymous with live music, lush green trails, and vibrant culture, has also been defined by skyrocketing housing prices. The Austin metropolitan area has earned the title of the fastest-growing area in the nation for 12 straight years. This rapid growth has contributed to soaring housing costs as the supply of available housing has struggled to keep pace with rising demand. While prices have slowly begun to cool in the last few years, Austinites still need to earn about $150,000 to afford a mortgage for a median-priced home; a first-year teacher in Austin earns about $55,000 a year.

Austin’s median rent has jumped by over $275 per month since 2018, hurting vulnerable communities the most, including those in Austin’s “Eastern Crescent,” historically home to Austin’s most under-resourced communities. This pushes poorer residents farther and farther from the city center and forces them to drive long distances to jobs and amenities.

For too many Black and Hispanic Austinites, high costs can mean homeownership and even rent are no longer affordable in the city. While the city of Austin has grown as a whole over the past decade, Austin’s Black population dropped from 8% of the population in 2010 to 7% in 2020, and the Hispanic population dropped from 35% to 32%.

While Austin’s population has boomed, its supply of housing has not kept pace. Simple economics tells us that when demand shoots past supply, prices go up. What’s the key culprit for sluggish supply growth? Restrictive zoning laws. These cumbersome regulations have made it difficult for Austin to build enough housing that is attainable for low- and middle-income households. Most notably, Austin’s minimum lot size requirement is 5,750 square feet. That requirement means that even a starter home or smaller house that older Austinites are downsizing into sits on a large, expensive piece of land. Increasingly, those smaller homes don’t even exist anymore, because in Austin’s expensive housing market, builders are tearing down existing affordable homes and building McMansions in their place. If we do not enact minimum lot size reform, Austin loses out on potentially 34,000 homes on empty lots converted to McMansions. In lieu, 10,000 McMansion homes will be built, according to AEI Housing Center. That means 24,000 families without an opportunity to call Austin home.

Austin does not need to look far to see the success of minimum lot size reform in lowering costs and reducing displacement of vulnerable populations. Houston reduced its minimum lot size from 5,000 to 1,400 square feet in the central city in 1998 and expanded the policy to cover the entire city in 2013. Houston’s changes meant that people weren’t forced to buy more land than they wanted or could afford and made the smaller lots viable for townhouses. The result? A surge of over 80,000 new townhomes that were largely affordable to middle-income families. The townhouses developed following lot size reform had a median assessed value of $340,000 for those built to replace single-family homes, considerably more affordable than the $545,000 median value of new single-family homes in Houston.

Pew’s research finds Houston’s smaller lot sizes may have contributed to middle- and high-income residents finding homes in high-demand neighborhoods without decreasing racial and ethnic diversity in Houston overall. From 2000 to 2021, Houston’s Black and Hispanic populations grew by 4% and 40%, respectively. In contrast, the other largest American cities experienced declines in their Black populations and smaller increases in their Hispanic populations during the same period. Minneapolis’ housing reforms demonstrate the same result.

Simply, reforming minimum lot size mandates reduces barriers to homeownership and opens up opportunities for low- and middle-income earners to remain in urban areas.

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Dr. Jake Wegmann is a UT-Austin associate professor and graduate adviser for community & regional planning, and Michele Anderson is the CEO of Austin Habitat for Humanity.