How Austin’s housing crisis has shaped the race for a new mayor

Austin mayoral candidates state Rep. Celia Israel, center, and former state Sen. Kirk Watson, right, debate on ATX Decides, hosted by PBS Austin, at The Texas Tribunes Studio 919 on Monday, Dec. 5, 2022. (Azul Sordo/The Texas Tribune, Azul Sordo/The Texas Tribune)

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In the race for Austin’s next mayor, the capital city’s dire housing affordability crisis has taken center stage.

Virtually no corner of Texas has gone untouched as rents and home prices surged amid the COVID-19 pandemic. But no major Texas city felt the crunch as acutely as Austin, where record demand sent already rising housing costs sky high.

The two remaining mayoral candidates — state Rep. Celia Israel and former state Sen. Kirk Watson, who are in a runoff — have put forth lengthy platforms for how to tackle the city’s housing problems. While both have acknowledged the magnitude of the crisis and have diagnosed similar issues, they’re approaching it through different philosophies: Israel is looking to enact sweeping reforms to alleviate Austin’s housing shortage and Watson is trying to balance the need for more housing with neighborhood interests.

Early voting ends Friday, and Election Day is Dec. 13.

As housing costs rise across the state, the race between Israel and Watson is something of a test case in how the state’s housing crisis might shape the political landscape in major Texas cities, observers say.

“This is going to be the new status quo,” said Ben Martin, a senior research analyst for the nonprofit advocacy group Texas Housers. “The challenges and suffering that were occurring for people with the lowest incomes is just now continuing to climb up the income ladder and being felt more directly by a broader swath of residents.”

And in a city where new housing often encounters heavy opposition from neighborhood leaders and environmentalists, local housing advocates see the mayoral race and prevalence of “pro-housing” City Council candidates in this year’s elections as a potential pivotal moment for how the city acts on affordability.

“We’ve gotten to a place where you can no longer pretend that there’s not a crisis happening and expect to be a viable candidate,” said Zach Faddis, president of the Austin urbanist group AURA.

During a candidate forum hosted by Austin PBS on Monday at The Texas Tribune’s offices, Israel sought to paint the city’s growing unaffordability problems as the product of decades of city leadership that was largely resistant to new housing.

The city’s development code — which governs how land is used, including what kind of housing can be built and where — hasn’t been updated since the 1980s. Every attempt to update the code and allow for denser housing development has been met with intense neighborhood opposition and ultimately failed.

“I believe strongly that the housing crisis that we're in is brought on by ourselves,” Israel said. “I’m not content with the fact that, for those who take care of our children and take care of our loved ones in the heart of our city, their only recourse is to go home at night to Bastrop.”

Watson, who served as Austin mayor from 1997 to 2001, has sought to convince voters that it’s possible for the city to produce more housing while also letting neighborhoods control the pace — and location — of new developments.

“There is no question that we are in a cost-of-living emergency in this town,” Watson said Monday. “We have to get past the stalemate that we have been in for the last eight years to a decade in terms of being able to move forward and get more housing on the ground.”

Record demand for homes in the Austin-Round Rock metropolitan area amid the pandemic — marked by fierce bidding wars among potential homebuyers — elevated the affordability crisis to a new level for renters and would-be homeowners.

The typical rent for a two-bedroom apartment within Austin city limits grew from $1,351 in March 2020 to $1,805 in October this year, according to estimates from Apartment List — a 37% increase.

Meanwhile, a single-family home has grown increasingly out of reach over the years.

The median sale price for a home in the Austin-Round Rock area peaked in May at $550,000, according to data from the Texas Real Estate Research Center at Texas A&M University. That figure has since fallen as rising mortgage rates forced home-sellers to cut their price tags but is still significantly higher than before the pandemic. As of October, the median sale price for a single-family home sits at $474,990 — about 44% higher than in March 2020, when that price was at $330,000.

For Austin-area renters, it’s grown more difficult to transition to homeownership. According to a recent analysis by the Real Estate Research Center, nearly half of the Austin-Round Rock region’s renter households in 2011 made enough money to qualify for a 30-year fixed-rate mortgage on a median-priced home. At the end of September of this year, that percentage was dramatically lower — about 12%.

Israel and Watson both agree on what they believe are necessary, fundamental changes. They have proposals intended to boost housing construction, which they say is crucial for the city to start digging itself out of its price crunch. And both say the city should overhaul the way it reviews and approves new residential building permits so new housing becomes available more quickly.

Beyond that, Israel’s proposals include allowing houses and apartment buildings to be built with less parking so that the extra space can be used to build more housing units, and using publicly owned land to build “workforce” housing affordable enough for teachers, nurses and firefighters.

Under Watson’s plan, individual City Council districts would get to adopt their own code reforms and set their own requirements to boost the local supply of housing. Districts that adopt “pro-housing” reforms, in return, would receive tax revenue generated by the resulting developments to put toward things like parks, libraries and rental assistance.

That idea has drawn criticism from housing advocates who say such a setup would let some council districts exempt themselves from new development altogether. In a campaign email, Israel blasted Watson’s proposal as a “return to redlining” — referring to a 20th century federal practice that made it more difficult for people to access housing loans in Black and Hispanic neighborhoods, a key driver of racial segregation in U.S. cities.

Watson has defended his idea, asserting that City Council districts would still have to abide by citywide housing reforms. He couched the proposal as a way to break decades of gridlock on revamping the city’s development code.

“For us to achieve this goal, we’re going to need to listen to the people,” Watson said Monday. “They’re going to be able to tell us where greater density can be used.”

While the two candidates’ housing proposals share some elements, the approaches are different in tenor.

To former Austin City Council member Bill Spelman, Watson is trying to take a more cautious approach to addressing the city’s housing woes after decades of city leaders trying to get sweeping reforms passed. Israel’s approach may risk further entrenching the citywide stalemate on housing, he said.

Watson is “trying to nibble around the edges rather than a full frontal attack on the problem by completely revising the code and the rules,” said Spelman, a professor at the LBJ School of Public Affairs at the University of Texas. “He’s going to try and make a change here and make a change there in ways we haven’t tried yet.”

“Celia may be right that there’s enough of a head of steam behind affordability that you can actually pass some of this stuff we’ve been talking about for the last 25 years,” Spelman added, though he believed it might be safer to first “gauge how much opposition [there] is going to be to making the changes that need to be made.”

But to Faddis, the AURA president, Watson’s plan would not go far enough in alleviating the city’s housing crisis and is designed to “piss off the least amount of people.” Israel, who AURA has endorsed, is pitching a plan that is “a lot bolder” and would be more willing to spend political capital on housing reform if elected, he said.

“She wants voters to know that, ‘you are making a choice here on housing, that’s the main choice that you're making between the two of us: Who do you want to be able to live in Austin? Who is it for?’” Faddis said.

Disclosure: Texas A&M University and University of Texas at Austin - LBJ School of Public Affairs have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.