Public Notice: Market Forces vs. Residents – No Surprise Who's Ahead

Austin is headline news in a recent report from the industry website Rent.com

What's new in Austin's housing crunch? On a very slim positive note, the Austin Business Journal reports the market "shows signs of cooling," with the highest available housing inventory (2.1 months' worth) since 2019. On the downside, local nonprofit HousingWorks cites a recent National Association of Realtors' study showing that over 40% of homes sold in Travis County last year were snapped up by companies and corporations paying in cash, clearly outstripping the abilities of many first-time buyers to catch a break.

And of course, the extreme inflation in real estate over the last year has been experienced in different ways by different groups of people. For renters it's just meant rising costs – a recent study from Rent.com showed Austin with the largest year-over-year increase in one-bedroom rent prices in the nation at a staggering 108%, more than double the rate in any other city. Homeowners have seen big cost hikes in their property tax bills as well, though they're softened by various exemptions and offset in the long term because their property is getting more valuable. Investors, however, get the best of both worlds: Their property is getting more valuable, and they don't have to pay the cost increases, because that's baked into the rental prices, so renters get to pay for the increased operating expenses as well.

Meanwhile, the city's effort to phase out non-owner-occupied Type 2 short-term rentals (STRs) – a move that could potentially make thousands of rental units available to Austin residents – ran aground in the Texas 3rd Court of Appeals. As a result of that court's 2019 ruling, the city now allows the renewal of existing Type 2 licenses in residential and commercial zones, but will only issue new Type 2 licenses in commercial zones. Last we heard, the case was still awaiting a final judgment, with attorneys for STR investors insisting the ruling requires the city to issue new Type 2 permits in residential areas, too. (Regs for Type 1 STRs, where owners rent out their own homes or other units on a homesteaded property, were never at issue and remain unchanged.)

Then there are the Type 3 STRs, which are apartments in multi-unit buildings. For residential buildings located in commercial zoning districts, the city still inexplicably allows up to 25% of apartments to be taken off the market as full-time STRs. In residential zones, that number is capped at 3%, so it's a mystery why the city thinks a 25% giveaway remains good policy in commercial districts, especially amid a widely acknowledged housing crisis.

How many units are we talking about overall? A 2019 city-contracted study found close to 11,000 STRs in Austin, with less than a quarter of these licensed to comply with city regs or deliver hotel occupancy tax dollars. While these numbers were not broken out by type, the missing HOT funds are a big deal. Not only do they help support local arts, music, and cultural endeavors, but a city memo that same year estimated that STRs cost the city $2.9 million just to regulate and enforce, including almost 36,000 staff hours. And the unit numbers for STRs may actually be an undercount. The Hostaway website, which specializes in a practice it calls "rental arbitrage," claims there are over 9,000 STRs in Austin's central ZIP codes alone. Meanwhile InsideAirbnb.com, which collects data on dozens of cities and countries around the world, lists over 15,000 units in Austin, and also at least five "hosts" with well over 100 units each, and about 40 outfits that have at least 20 units.

But if it makes you feel any better, it's not just Austin residents forced to grapple with market forces beyond their control. A recent report shows New York City now has more STRs than actual apartments for rent, with Airbnbs making up the majority of the city's rentals. Good luck, residents.

All attention at City Hall is on the budget, but there's also an extra-long 167-item agenda for Council's meeting next Thursday, July 28, that includes placing a $300 million affordable housing bond proposition on the November ballot, creating an East Sixth Street Local Historic District that would cover the properties Stream Realty wants to redevelop there, and the second and third readings on the Statesman PUD at 305 S. Congress, which is among the 40(!) zoning cases on the agenda, each of which includes a public hearing.

The Call for Nominations is now open for the 2022 Austin Green Awards – in its seventh year of highlighting "outstanding accomplishments in the broad arena of sustainable design and innovation" in the five-county Central Texas region. See more info and submit an application through Sept. 16 at atxgreenawards.org.

Austin FC and Q2 are hosting a blood drive benefiting We Are Blood at Q2 Stadium in the Captain Morgan Club next Wednesday, August 3, from 10am to 6pm. Donors get a custom T-shirt, and a chance to win match tickets every hour. Preregister at weareblood.org, though walk-ups are also welcome.