Austin’s Housing Boom Leaves Homeless People Behind

lack of affordable housing amidst Austin housing development boom

Despite Austin’s booming housing market and efforts to improve affordability, housing opportunities for homeless people remain scarce. While the city has implemented incentives for affordable housing development, rising home prices and stringent financing challenges hinder progress. Despite nonprofit efforts and philanthropic funding, the gap persists, highlighting the need for sustained advocacy and support to address homelessness effectively.


The Urgency of Affordable Housing: Austin’s Homeless Crisis Worsens Amidst Housing Boom

Austin has been one of the hottest housing markets in the country over the last couple of years. However, the activity doesn’t seem to have created more housing opportunities for people experiencing homelessness despite the city’s focus on improving affordability.

Like many other cities in the U.S., Austin has created several incentives for developers to build affordable housing. These policies include programs like Affordability Unlocked, which waives some building restrictions in exchange for units affordable to single people earning up to $86,000 per year, as well as slashing parking minimums and approving sweeping zoning reforms.

This activity is happening at a time when the city’s median home price has increased by more than 15% up to $550,000 since March 2020, when the pandemic began. The city’s median rent has also increased by a staggering 34% over the same time, making it much more difficult for low-income earning families to afford housing.

Data from the National Low Income Housing Coalition shows that 86% of low-income renters are “cost-burdened,” meaning they spend more than 30% of their monthly income on housing expenses.

Austin policymakers have tried to respond to the city’s swelling home prices by incentivizing affordable housing projects. Over the last two years, the city has built roughly 6,100 affordable homes out of nearly 28,000 issued building permits, city data shows. But the sharply rising tide of unsheltered homelessness in the city suggests that this homebuilding activity is not meant to help the people who need it most.

Challenges in Financing Affordable Housing

One possible reason Austin struggles to provide homes for its unhoused people is that financing for those projects is more difficult to attract.

Most homes built for people experiencing homelessness are developed by nonprofit organizations, which need to go through a much more deliberative process to raise capital than comparable for-profit entities. This process takes more time and can make it more expensive to develop an affordable property.

Philanthropic organizations like Austin Community Foundation (ACF) have stepped in to create a $15 million affordable housing fund for nonprofit developers. The fund has already dispersed more than $4.5 million to support permanent supportive housing projects like the 100-unit Cady Lofts in north Austin.

ACF CEO Mike Nellis said the funds will be used for pre-development operations like land acquisitions and gap financing.

“All of the developers we talked to concluded that they needed really fast, very flexible, very cheap loan capital that they could access over and over again to really either get their projects unstuck or to move them forward towards the finish line,” he said.

Nonprofit Developers vs. For-Profit Entities

These nonprofit developers are also competing against for-profit entities in one of the country’s top markets for multifamily investors, according to figures from CBRE.

In 2023, investors ranked Austin second behind only the Dallas/Fort Worth area as the most attractive investment market because of its strong job and population growth. This can make it difficult for nonprofit developers to acquire the land and other assets needed to build supportive housing within their budget.

“There’s a very strong interest in our market and a lot of dry powder waiting to be deployed,” said CBRE Austin Vice Chairman Charles Cirar.

Building affordable homes also takes a long time. The Cady Lofts went into the entitlement process in 2020 and didn’t receive approval from Austin’s planning board until two years later. The complex isn’t expected to open until 2025 at the earliest, according to ACF.

Other nonprofit developers like Mobile Loaves & Fishes are working to expand their affordable options. The nonprofit has built roughly 1,400 tiny homes for people experiencing homelessness over the last two years. But the number of people experiencing homelessness in Austin has increased by 53%, or roughly 1,600 individuals, up to more than 4,800 people since 2022.

Regulatory Challenges and Future Implications

There is also evidence that developers are skirting Austin’s affordability regulations, which could impact future developments.

Mandy DeMayo, interim director of Austin’s housing department, told the Austin Monitor in March that there were several instances where developers “abused” the city’s affordability programs to build homes “without a commensurate public benefit.”

How You Can Help

The pandemic proved that we need to rethink housing in the U.S. It also showed that we need to increase the supply of affordable housing. Experts agree that building housing is the best way to end homelessness once and for all.

Demand your representatives support keeping many of the pandemic-related aid programs in place for future use. They have proven effective at keeping people housed, which is the first step to ending homelessness.


Robert Davis

Robert Davis

Robert is a freelance journalist based in Colorado who covers housing, police, and local government.

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