How Austin Became One of the Least Affordable Cities in America

AUSTIN — Over the last few years, in one of the fastest-growing cities in America, change has come at a feverish pace to the capital of Texas, with churches demolished, mobile home parks razed and neighborhood haunts replaced with trendy restaurants and luxury apartment complexes.

The transformation has perhaps been most acutely felt across East Austin and the neighborhood of Montopolis, a 2.5-square-mile patch southeast of downtown, where unobstructed views of the ever-expanding skyline have made the historically Black and Latino neighborhood a sought-after community.

And the momentum is nowhere near abating. These days, construction sites and cranes feel more like permanent fixtures across the neighborhood, where longtime residents have watched with growing anxiety as chic coffee shops, yoga studios and pricey bars have inched closer and closer.

“We knew it was coming,” said Francisco Nuñez, who for nearly two decades lived at the Cactus Rose Mobile Home Park until it was sold to a developer to make way for amenity-rich apartments that now fetch more than double what he once paid in rent.

A decade ago, Austin, the capital of Texas often deemed a liberal oasis in a staunchly conservative state, was among the most affordable places to live. Now, according to a forecast prepared by Zillow, a real estate company that tracks affordability, the Austin metropolitan area is on track to become by year’s end the least affordable major metro region for homebuyers outside of California. It has already surpassed hot markets in Boston, Miami and New York City.

With an average of 180 new residents moving to the city every day in 2020, housing inventory is very low, realtors said. Multiple offers, bidding wars and blocks-long lines outside open houses are commonplace.

Home sale prices in the city of Austin skyrocketed to a record median of $536,000 in October, up from about $441,250 a year ago. And they have more than doubled since 2011, when the median sales price was $216,000, according to the Austin Board of REALTORS, a trade group. Rentals, too, have surged, with the average cost of an 864-square-foot apartment now $1,600.

“Austin is the worst-kept secret,” said Job Hammond, a secretary-treasurer with the board.

With the University of Texas flagship campus, gentle rolling hills and a vibrant music scene, Austin has long been an attractive place to call home. But surging prices have created a brewing housing crisis that is reshaping the city of nearly 1 million people, and pushing mostly low-income Black and Latino residents like Mr. Nuñez away from cultural centers, transportation hubs, grocery stores and other amenities that come with urban living, activists said.

The lack of affordable homes has been underscored by the relentless sight of homeless encampments outside City Hall and under busy highways. (The city recently began efforts to clear them after voters approved a public camping ban this year.)

In 2018, while already experiencing explosive growth, at least 35 Austin neighborhoods were undergoing some stage of gentrification. Another 23 neighborhoods were at high risk of following suit, according to a study commissioned by the city and conducted by researchers with the University of Texas.

The numbers are likely higher today, said Heather K. Way, a law professor at the university and one of the study’s authors.

“You drive down a street one day and all of a sudden you’re thinking, ‘What happened to the apartment building that stood there last week?’” said Ms. Way, referring to the rapid demolition of older housing occurring in some Austin neighborhoods.

The displacement of low-income residents, in a city where about 13 percent live below the poverty line, has concerned Austin officials to such a degree that a grass-roots movement led them to hire the city’s first displacement officer this year. Nefertitti Jackmon has been assigned the challenging task of preventing widespread gentrification even as cranes continue to dot the skyline and new structures climb ever higher.

Ms. Jackmon said that while plans remain in flux, her office will be allocated about $300 million over the next 13 years to be spent on addressing displacement, such as securing more affordable housing in affected neighborhoods. She doesn’t mince words when describing the challenges that lie ahead.

“In Austin, Black and brown neighborhoods have been marginalized and underinvested,” Ms. Jackmon said. She also said she wants to expand participation of local residents in the early process of new developments. “We are saying development can happen without displacement.”

But not everyone is convinced a new displacement office will have a significant impact.

“It’s an aspirin for cancer,” said Fred McGhee, a local historian and longtime resident of Montopolis, a neighborhood once home to formerly enslaved people and Mexican migrants who came to work in cotton fields.

On a recent day, Dr. McGhee walked out from his home and pointed in several directions, toward construction sites or newly built luxury buildings. “Not long ago these used to be all wetlands,” Mr. McGhee said. “Now all you see are new developments or plans for one.”

The East Vue Ranch is one of them. On the land that was once the Cactus Rose Mobile Home Park, the luxury complex has a sleek swimming pool, game room and enclosed dog park. Nearby, another apartment complex now sits on land once occupied by a historical Black church. Another Black church, built in the 1860s, was demolished to make way for a road to accommodate all the new traffic. And a neighborhood hair salon was replaced with a trendy South American bakery.

“This has become the tale of two Austins,” said Susana Almanza, a longtime activist. “The rich keep building in our neighborhoods and the poor keep getting displaced. It doesn’t end.”

From March 2020 to February 2021, despite the pandemic, Austin nearly led the nation in new construction, with close to 42,000 new residences, according to a housing report by Rice University’s Kinder Institute for Urban Research.

Much of the city’s expansion has been attributed to the recent arrival of tech titans, including Apple, Amazon and AT&T — and more recently Tesla, whose chief executive Elon Musk, already a resident with a rocket site in South Texas, said that the company would move its headquarters from Palo Alto, Calif., to Austin.

Those big moves — joining other major tech companies, like Dell and IBM, already fixtures in the region — have meant an infusion of a younger and more affluent population, giving rise to the city’s new moniker of “Silicon Hills.”

The high-paying jobs have accelerated the area’s economy. Over the last 10 years, jobs in high-tech, which tend to pay in the six figures, rose nearly 62 percent in the Austin metropolitan area, for a total of about 176,000 positions, accounting for 17 percent of all jobs and far surpassing the growth of all other industries, according to the Austin Chamber of Commerce.

And since 2010, the median household income has jumped from $55,744 to $80,954, according to the chamber.

Those high salaries have pushed up the price of housing, including rentals, the cost of which surged 38 percent over the last decade, more than other fast growing Texas cities like Dallas and San Antonio, according to a 2020 Root Policy Research housing market analysis.

The city, which saw an increase of nearly 160,000 people over the last 10 years, “can’t build homes fast enough,” said Rob Gordon, manager and real estate agent with the realty company, JBGoodwin.

In the neighborhood of Northwest Hills, about 20 minutes northwest of downtown, where Mr. Gordon does a majority of his business, 18 of the 19 homes on the market this spring sold for more than the asking price, an average of a 113 percent spike, Mr. Gordon said. One home, listed at $975,000, was sold for $1,395,000 after a grueling bidding war.

Jon Kniss, a photographer from Nashville, took desperate measures to find a home when he moved to Austin last year. For months, he blanketed his new neighborhood with letters of cash offers.

Nine months and more than 200 letters later, the Kniss family moved into a three-bedroom house in an affluent community northwest of downtown. “We wanted to see if we could get a little advantage,” Mr. Kniss said. “Great weather, quality of life, the schools. Everybody wants to move here.”

That feels especially true in Montopolis.

For those who left the neighborhood, many wonder whether they will be forced to uproot from their new homes yet again, as new developments continue to be approved and built in even more remote pockets of the city.

Maria Garcia de la Luz, 68, a former Cactus Rose resident who now lives next door to Mr. Nuñez, said she misses the proximity to shops and access to public transportation that she had in Montopolis. Not long ago, she hurt a knee in an accident and had no way to go get treatment after her husband, Magdaleno Garcia, 77, also fell ill and was unable to drive her.

“It really affected me. I feel trapped here,” Ms. de la Luz said. “In the end, it is us, the poor people, who end up getting hurt. Who’s to say they won’t kick us out of here too?”

Susan C. Beachy contributed research.

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