Home News Development fees are the new barrier for prospective homebuyers

Development fees are the new barrier for prospective homebuyers

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Add dramatically higher development costs to the list of things that make buying a home in Austin so expensive.


According to a study by the Texas A & M University Real Estate Research Center, Austin’s price per newly developed unit was 187% higher than Dallas, Houston, Fort Worth, and San Antonio. The suburbs aren’t that cheap, as Austin’s development costs per unit are still 127% higher.

According to ABoR CEO Emily Chenevert, the city’s high development costs have raised concerns about resolving the city’s ongoing housing crisis.

“This report confirms that people in the real estate industry have known for a long time,” says Chenevert. “Austin’s development costs are significantly higher than most other cities in central Texas and the major metropolitan areas of Texas. This is a major barrier to housing construction and housing supply throughout the region. It’s a serious concern given that we are facing a crisis. “

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According to reports, the Austin Round Rock Metro costs 80.4% for suburban units, about $ 8,000 more than the other five largest metros in Texas. Similarly, infill units (new homes in areas already developed) are 186.8% higher in Austin than the Texas average.

These figures account for 3.4% of the median home price of 2021 at $ 536,331 per suburban unit, or 7.7% per infill development unit.

What does that mean for buyers?

High rates can push up resident costs and have a significant impact on first-time buyers. According to a study, the average Austinite, who earns a median household income of $ 54,871 in 2019, can pay a mortgage of $ 204,556, of which development costs account for about 20%.

The median home price for Austin Round Rock has not been $ 205,000 since February 2013, but less than half the median of 2021. Since the survey was conducted, housing in the Austin area has increased by 22% to about $ 100,000.

“These findings are embarrassing, but not surprising,” said Taylor Jackson, CEO of the Tyler Austin Home Builders Association. “Time is important as we need to revise the course on how the city of Austin handles housing construction.”

Do renters need to worry?

Brian Carberry, editor-in-chief of Rent.com, said the lessor market tends to follow the housing market, albeit with a few months delay. According to Carbury, not only did Austin have less inventory of apartments in May 2022 than in May 2021, but people are still price cuts as most new complexes are being built in high-demand areas. I am.

“Most of it is because of the sheer demand for apartments, and the housing market is having a small impact on it as people are cutting prices,” Carbury said. “Young millennials looking for their first home, Gen Z, are in a situation where they can’t afford anything because prices are so high and mortgage rates are so high. , Not a sustainable option for them. Now. “

Is there a solution?

In this survey, the Austin Real Estate Agents Commission and the Greater Austin Homebuilders Association included joint recommendations for local policy makers.

  • The lack of information limits the ability to understand the full impact of development costs, increasing development cost transparency.
  • We will improve the development process by reviewing the pricing structure, setting housing approval goals, and adopting success models from cities of similar size.
  • Appropriately sized development costs that become important as Austin’s urban population grows and infill development grows.

“According to the National Association of Home Builders 2022PricedOut Index, for every $ 1,000 in home prices, 791 households, whether due to market power or development costs, are priced by the Austin Roundlock MSA.” Jackson said. .. “We urge Austin leaders to act and act now, or at risk of becoming a city that is quite affordable to build or buy a home.”

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