Not much hope in Austin's 2023 forecast for homebuyers, but a city council resolution may help some
It won't be much easier to buy a home in the new year, according to a new forecast report by Realtor.com.
AUSTIN (KXAN) — "I did not think it would get this bad this quickly," said Ian Mitchell, an Austin homeowner.
He's glad he bought his home in 2018 and said monthly home payments in his neighborhood have doubled with current mortgage rates.
"It went from being principal interest, taxes out the door, $1,500 a month or less to 'you are not getting anything for less than $3,000 a month.' And that is a fundamentally different neighborhood and different city," Mitchell said.
It won't be much easier to buy a home in the new year, according to a new forecast report by Realtor.com.
"The 2023 housing market could become a 'nobody’s-market,' not friendly to buyers nor to sellers," the report stated.
The company said home buyers will face a "trifecta of budget barriers:" increasing home prices, continued high mortgage rates and incomes that won't keep up.
"We're going to see fewer transactions as home prices continue to grow, and mortgage rates are expected to remain high. So, that affordability challenge that buyers have been facing and that has been growing throughout 2022 will continue to be a pretty formidable challenge in 2023," said Realtor.com Chief Economist Danielle Hale.
In the Austin metro, home sales are expected to decline by 6.6% as prices climb by 3%.
"So, down from the 20-plus percent home price growth that we've seen in the past couple years," Hale said.
But it'll still be enough to push up rent prices as more families remain renting.
"The affordability hurdle is really biggest for first-time homebuyers, because, by definition, they haven't owned a home before, and so they haven't benefited from the run-up in prices that we've seen over the last decade," Hale explained.
Because they don't have equity, first-time homebuyers tend to take on larger mortgages, she said, and are more affected by the higher mortgage rates than other homebuyers.
"That's one of the reasons why we expect to see high rental demand and still growing rental prices and 2023," Hale said.
The company expects rents to outpace home prices and hit new highs.
"We'll see a continued loss of the people who have made Austin special, who built this community: our creative industry folks, our service industry folks," said John-Michael Cortez, board member of HousingWorks Austin, a nonprofit research, education and advocacy group.
He worries that even worse, increased rents will lead to more evictions next year
"A lot of the folks who get evicted can't find another place that's affordable to live, and they end up… unhoused," Cortez said.
One possible solution ahead
That's why HousingWorks supports Council Member Paige Ellis' new resolution to streamline the review and approval process of "missing middle" housing.
"The intent is to make it easier for different kinds of housing that are generally more affordable to be built in our city," Cortez said.
The different kinds of housing — other than single-family homes or large apartment complexes — include things like triple or fourplexes. It's housing that's also known as "the missing middle."
According to a statement from Ellis, the housing would be geared toward moderate-income families and people at-risk of being priced out of Austin's housing market.
"These types of housing use land very efficiently. They generally result in housing that you can purchase or that you can rent at a more affordable rate than those large, single-family homes that would likely otherwise be built on those lots," Cortez explained.
He said you can see it in some older Austin neighborhoods, like Hyde Park and Clarksville, but the diverse housing hasn't been built enough for the last couple of generations.
Ellis' resolution states the city's current code has a simpler review process for single-family and duplex homes, but projects with three to 16 units have a more "complex, expensive, and time-consuming site plan process" that's required for large multifamily and commercial projects.
The resolution calls for amendments to the city code to change, specifically to:
- Add Triplexes and Fourplexes to Residential Review: Establish that the City will review developments of three or four residential units in the manner the City reviews developments of one or two residential units, where no site plan is required.
- Create “Site Plan Lite” Review for Missing Middle Housing: For developments of five to sixteen residential units, create a site plan review process that is tailored appropriately for missing middle housing, with fewer requirements than that of full site plan review.
Cortez said his group also wants to make sure affordable housing is built in all parts of the city.
He points to this city map, which shows almost all of Austin's affordable housing is built east of MoPac, indicated by the little yellow houses.
"That restricts the opportunities in those neighborhoods, the good schools, the shopping, the jobs, the amenities. It restricts it; it makes it inaccessible to everyone," Cortez explained.
According to the resolution, if city council members approve the resolution at Thursday's meeting, the city manager would need to start meeting with affordable housing stakeholders on the possible code changes needed, then hold discussions with boards, commissions and the broader public.
The resolution calls for the city manager to bring back city ordinances for city council members to consider for item no. 1 above by March 9 and for item no. 2 above by June 1.