AUSTIN (KXAN) — The Austin Board of Realtors recently released a report examining the second phase of Austin’s HOME Initiative, saying that the impacts could potentially help alleviate the strain on housing affordability in the city.
HOME, an acronym for Home Options for Middle-income Empowerment, is a series of proposed changes to Austin’s land development code — and other incentives for creating or preserving housing. The first phase of the initiative rolled out earlier this year after being passed in December following nearly 12 hours of public comment at a council meeting.
City Council is set to vote on Phase 2 next month. The phase would reduce the minimum lot size for single-family lots in Austin. The idea is that smaller lots will allow for the creation of more housing.
Right now in the City, most single-family lots are zoned so that you need a minimum of 5,750 square feet to build a single unit. The city is proposing that be dropped to 2,000 square feet — something officials with the planning department say is consistent with the policy outcome passed in phase one of HOME.
Ahead of City Council’s vote, the Austin Board of Realtors, or ABoR, released a research report focusing on the potential effects that could come with the change. You can read the full report below.
ABoR noted that the report identifies two primary ways reducing minimum lot size could help address affordability challenges:
- First, the board said that by allowing larger lots to be subdivided, “we could effectively lower the cost of land for new homes, leading to lower home prices and more attainable housing options for buyers.”
- Second, they said the change can “potentially increase our housing supply by allowing more homes on existing lots, further alleviating the strain on affordability.”
ABoR said in a release its analysis estimated that “between 87 and 871 new homes could be built annually as a result of reducing the minimum lot size by allowing two homes to be built instead of just one on current lots.”
“The analysis shows that a $540,000 home – Austin’s median sales price in 2023 – could have an estimated $477,313 sales price ($62,687 lower than the original price) if the home is allowed to be been built on a smaller 2,000-square-foot lot instead of a 5,750 square foot lot,” ABoR explained in its release. “Even greater savings could be realized if both the lot size and the size of the home are reduced.”
ABoR’s report was produced using housing market statistics from Unlock MLS, the National Association of Homebuilders (NAHB), the City of Austin, Freddie Mac, and Federal Reserve Economic Data (FRED).
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