Five people are running to be Austin’s next mayor. The candidates include a former City Council member, a business owner, two nonprofit leaders and the current mayor.
Last month, the candidates met for a debate hosted by the UT Austin LBJ School of Public Affairs and KLRU, Austin’s PBS station. As KUT’s housing reporter, I was paying close attention to two questions moderators asked about housing.
The candidates’ answers were lengthy, so I pulled major points, added context and fact-checked responses (where appropriate). Click here to watch the full forum.
Question 1: Recent changes to the land development code, known as HOME Phases 1 and 2, were meant to increase density and lower housing costs while avoiding displacement of historically underserved communities. Will the new policy help reduce the cost of housing and for whom? What steps should be taken to protect middle- and low-income families from the negative impacts of gentrification, including displacement?
Before we get to how the candidates answered, let’s define a few terms. HOME Phase 1 refers to zoning changes council members made last year. The changes allow property owners to build three homes on pieces of land where historically they could build only one or two.
HOME Phase 2, in theory, builds on this revision. The policy, which council members adopted earlier this year, lowers the city’s minimum lot size. For decades, the city required property owners who wanted to build one home to have at least 5,750 square feet of land to do so; in May, the council lowered that significantly to 1,800 square feet.
Elected officials and supporters of these policies have said the intent is to make it possible to build more homes in central neighborhoods. Opponents have argued that making it easier to build more in these neighborhoods could lead to the displacement of current residents.
Kathie Tovo: "There was no provision within it for affordable housing, not even an affordable housing contribution. … You'll see that some of the permits that are being pulled are resulting in the demolition of the existing structures and the construction of new housing …”
Tovo’s first point is correct. Nothing in HOME Phases 1 or 2 requires property owners to build income-restricted housing or housing set aside for low-income residents. (When politicians and policymakers say “affordable housing,” this is often the kind of housing they’re referring to.) It’s important to note that the vast majority of Austin residents live in market-rate homes or homes that are not income-restricted.
To Tovo’s second point: Have these new policies spurred the demolition of current homes? It’s hard to know. HOME Phase 1 went into effect in February. According to data shared with KUT in May, 7 of 62 applications to build under these new rules included the demolition of a home. In other words, roughly 10% of applicants proposed demolishing a house.
At the same time, demolitions of single-family homes across the city have not risen since HOME Phases 1 and 2 went into effect. So far this year, property owners have applied for 318 permits to demolish single-family homes, which is far below the average of 648 applications per year over the past decade, even when you consider there are about two-and-a-half months left in the year.
Kirk Watson: “We're also doing a great deal in terms of what I would call ‘big A affordable’ … and we've been working on that consistently for the past 21 months.”
KUT confirmed with Watson’s campaign manager that he’s using the phrase "big A affordable" to mean income-restricted housing.
The mayor is correct to say the city has been doing a “great deal.” When controlled for population, more affordable homes have been built in 2024 than any year in the past two decades, save for 2020.
Jeffery Bowen: “But the negative impacts are still there because there was no affordability in either one of those. Just for HOME 1, the act of being able to put an ADU in your backyard, nobody really knows how much it's going to cost …”
Bowen reiterates something we tackled in Tovo’s response.
Doug Greco: “I do think the land use code needed to be updated. We need more housing at all levels of income. I would have fought for more antidisplacement measures and curbing the role of institutional investors that buy 40% of homes in Austin.”
KUT asked Greco for a source for the 40%, and he sent a link to a Fox News article. The article references a report from the National Association of Realtors (NAR). The report was taken offline recently because the organization is issuing a new report for 2023.
KUT was able to read the report before it was taken down. In it, NAR found that institutional investors accounted for 41% of single-family home purchases in Travis County in 2022.
Investor interest in the single-family home market seems to be falling. Updated numbers shared with KUT by NAR show that institutional investors, as the group defines it, made up 32% of single-family home purchases last year in Travis County.
Other organizations define institutional investors more narrowly and report much lower percentages of home purchases by these investors. For instance, real estate data firm ATTOM defines it as companies that buy real estate on behalf of a group of investors – as opposed to, say, an individual buying up properties. In 2021, ATTOM found that just under 10% of homes sold in the Austin area were to institutional investors.
Overall, the percentage of homes owned, not just bought, by investors in Austin is relatively low. According to John Burns Real Estate Consulting, 2% of homes in Austin are owned by institutional investors, which the firm defines as companies that own at least 1,000 homes nationally.
Carmen Llanes Pulido: “You have to look at submarkets, and if we actually let people in, we could craft these policies in ways that bring us real, affordable housing. We have plenty of units that are too expensive for people.”
Llanes Pulido is right to say that housing is too expensive for many people. A study from Harvard University’s Joint Center for Housing Studies found that nearly half of all renters in Austin live in housing they cannot afford.
Question 2: What can be done to … make more affordable housing for more low-income families available in Austin?
Llanes Pulido: “We have been politically peddled an argument that we need more housing supply with no qualifier, but we're not looking at the affordable units that we are losing in that redevelopment and the fact that if we destroy our affordable units of housing or pass policies that drive speculation to increase their land value, we actually set the goalpost farther away and just building more supply doesn't actually make anything more affordable.”
Llanes Pulido is right that sometimes housing that is affordable to low-income residents, often because it's old and poorly maintained, is razed and replaced with new, more expensive housing.
But she’s incorrect to say that building more housing does not bring down prices. A trove of research shows that building more homes either slows the pace of rising rents or brings rents down. Recently, Austin has seen a surge in apartment building and rents have been falling for more than a year.
Tovo: “One of the projects that I helped lead on was HealthSouth. We've got an incredible opportunity downtown with this piece of downtown land to create workforce and affordable housing and potentially to reserve some of it for city employees and others in the area.”
Here’s some additional context: The City of Austin has owned about 2 acres of land downtown since the 1970s. The council has spent years deciding the future of this property, since a rehab center located on the site closed in 2016.
The city entered an agreement with a developer to build a 36-story residential tower, where about a fourth of the apartments would be set aside for people earning low incomes. But this plan recently fell through.
Watson: “Austin needs to get out of its own way when it comes to permitting and site plans. The City of Austin was adding a huge amount of cost when I first came into office because it was so hard to get through the permitting process and get a site plan. We brought in a consulting firm and said – 'Scrub it top to bottom and tell us what we need to do' – and then we're having them implement it.”
Before you start building anything in Austin, you need a permit. And often you need a permit for various stages of the building process, from demolishing a home to installing water lines.
Builders have long lamented the cost and time it takes to get permits in Austin. In 2022, the Austin Board of Realtors and the Home Builders Association of Greater Austin published a comparison of the fees charged by cities during the building process.
The organizations found that a developer trying trying to build in a central neighborhood in Austin would pay $41,303 in fees per house (this excludes the actual price of construction). By their estimate, that is nearly 187% higher than the average permitting cost in other big Texas cities.
Watson is right that the City of Austin hired the consulting firm McKinsey & Company to audit the city’s permitting process. Here’s what it found. Last year, the City Council agreed to pay McKinsey $2.5 million to try and fix some of the problems highlighted in the firm’s report.
Last week, the city announced it would begin using artificial intelligence to evaluate building plans, a move it says should speed up the process.
Bowen: "We do have this fee-in-lieu which, as far as I'm concerned, probably the price on that needs to be jacked up in order to make sure that the number of affordable units that are being proposed ... developers are coming with. So, that you actually have some leverage on that, either it cost you too much for this or you're going to put some affordable housing in."
Bowen is referring to deals the city often brokers with developers. In exchange for allowing developers to build more than typically allowed, they either have to set aside a certain portion of the homes they're building for low-income families or pay into a pot of money used for affordable housing. This is called a fee-in-lieu.
The numbers vary — typically, it's a dollar amount per additional square footage a developer is allowed to build — and some city programs don't allow for the fee in place of building affordable housing.
Greco: “Mayor, I started high school teaching that the same year you started your first term as mayor in 1997. But since that time, we're not only the fastest growing city for millionaires, our income inequality has continued to increase, and our percentage of Black and Latino residents has continued to decrease. We have lost our working class.”
Greco is correct that Austin is one of the fastest-growing cities for millionaires. The number of people worth $1 million or more living in the city doubled between 2013 and 2023, according to data published by the consulting firm Henley & Partners. That makes us the fastest-growing city for millionaires in the country.
Greco is also correct that Austin’s percentage of Black residents has declined since 2000, from 9.3% of the population to 7.9%. But he’s not correct to say that Austin’s Latino population has declined. The percentage of residents who identify as Hispanic or Latino has risen from 28.2% to 32.5% of the city’s population, according to census data.
Support for KUT's reporting on housing news comes from the Austin Community Foundation. Sponsors do not influence KUT's editorial decisions.
