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Austin's Affordable Housing Problem

Victoria Advocate

And, oh, did they come. From all over people flocked to Austin for the lifestyle, low cost-of-living and the tech boom—and in search of opportunities made possible by Texas’ low-tax and lite-regulation mindset.  

The transplants helped grow the capital city’s wealth and population to levels once unimaginable. University of Texas students used to say with a sigh that Austin sure is a great city, only you can’t make a living there. Well, you can make a living there now, but you may not be able to make a house payment. 

The median price for a single-family home in Austin is up 6 percent from last year, to $390,000, according to the Austin Board of Realtors. Compare that to the $280,000 median list price for a home in Texas, according to Zillow. 

Prices over the last five years are up 42 percent, with median income only 17 percent higher for the same period. 

What Austin’s got is a limestone-and-live-oaks version of a truly national problem. The recent revival of formerly stagnant or declining U.S. cities, under the magic touch of a hot-thinking, large-living “creative class”—urbanist Richard Florida’s term—spooks anyone concerned about “gentrification” and middle-class flight.  

A well-functioning city needs all kinds, hence the growing demand for “affordable housing.”  Austin hopes to address that problem with a $925 million bond issue, due to be voted on in November. It contains $250 million for land purchase and development of rental housing. 

It’s never a good idea to sneer at well-intended attempts to lend a hand, which is what the Austin City Council is trying to do. Like other cities, such as Los Angeles, Portland and Seattle, Austin is betting that government action can constructively address today’s housing problem. It’s a bad bet. 

A local task force believes the city is short 48,000 housing units. The estimated cost to build them is over $6 billion. It would appear the city needs something more here than $250 million. 

The urban problem is real, but recognition of reality is not necessarily a summons to government to drive up in a firetruck and put out the blaze. The federal government created various low-income housing programs decades ago. They have been an unmitigated disaster. There is no reason to think that Austin—or Los Angeles or Portland, for that matter—will do a better job. 

Austin, music capital of the state, has the Transition Blues. Skyscrapers line a horizon formerly dominated by the Capitol dome and the UT Tower. Luxury homes better characterize Mt. Bonnell than the blankets favored by romantically inclined UT couples in a long-gone era.

All over the country, such changes have taken place amid the retreat from manufacturing and its embrace of “creative” enterprises—stuff you do with your head instead of your hands. The people who work with their hands do so mostly as toilers in the so-called service industry: retail, hospitality, transportation and so forth. 

The money isn’t grand; often it’s barely adequate—$25,000 a year and up. Numerous cities feel hollowed out: rich people at the top, service workers near the bottom; no middle class to speak of. And shortages of good cheap housing. 

Life churns at a fantastic pace in the 21st century: too fast for government to figure out what’s happening, far less to lumber over and do anything useful. Far faster and more reliable—in the context of existing conditions—are the judgments and movements of the marketplace. Not infallible—just smarter and quicker.  

“The challenge,” says Aaron M. Renn of the pro-free market Manhattan Institute, “is the reinvigoration of America’s flagging middle class.” How, please?  

Renn doesn’t underrate the difficulty the problem presents—one new to our national experience. We might reduce low-skilled immigration, he says, in favor of higher-skilled immigration. He mentions the possibility of opening access to better-paying jobs—electrician, barber, taxi driver, for instance—by easing licensing restrictions. Raise the minimum wage to $15 an hour? What a great way to kill jobs worth less to an employer than $15 an hour. 

Government giveaways—large housing subsidies, say—are never a convincing substitute for government policies that reward the creation of well-paying jobs, starting with low taxes and a pro-marketplace mindset. “Keep Austin weird,” goes the famous slogan. Here’s a really weird idea for Austin: Give the marketplace as much breadth and scope as possible and prepare for an agreeable surprise.