In last week’s post, I broke down some of the newest Austin housing market stats. I mentioned at the end of the post/video that I was going to write a post devoted to affordability in Austin. Check out the video below where I interview (briefly) Chris Scott of The Paperless Agent/GoodLife Realty on the topic.
(SPOILER ALERT!) Prices are higher than ever in Austin. That’s a fact. On one hand, there’s really nothing we can do about it. It’s simple supply and demand: There is very little housing inventory available to buy yet tons of people are moving here. That’s going to drive prices up. Everyday, a single-family home in Austin is becoming more rare relative to the people that are here.
On the other hand, in my option, there are some things that can be done to improve the affordability problem we are facing:
- Ease the building permitting process: As discussed in the video below, we simply need more housing in Austin. Check out the video for some elaboration.
- Ease the property tax burden: (Not addressed in the video) As you can see in the picture above, if one were to purchase a home in Austin for $300,000 with 20% down (to avoid mortgage insurance), your total house payment would be about $2,082/month.
- First, I want to point out that you would need to bring $70,828 to closing to be able to afford some decent in Austin anywhere close to downtown. I don’t know many people with that kind of money lying around.
- Secondly, you would be paying about $750 monthly in property taxes (36% of your total payment). That’s insane to me. That’s $9,000 every year paid to the government for property that you own. What do you think about this? Of course, there are areas of our country where property taxes are much higher. Still, I don’t think that makes it right. I have had many close friends who have had to move out to the suburbs (or even out the region completely) because of the property tax burden. I have spoken with countless families- specifically in east Austin- who’s relatives have been in the area for generations. They want to stay and raise their families here but cannot live affordably because of the magnitude of property taxes.
Of course, many will say that lowering property taxes is a bit of a catch-22. I would agree. Many of the things that attract people to our great city (and we current Austinites get to enjoy) are paid for by property taxes. For example, public parks, schools, pools, roads, libraries, public safety, etc. We love having access to this stuff! Would they disappear if we lowered property taxes drastically? I don’t think so.
Let me know what you think!