Public Notice: What Goes Up … May Go Down?

Courtesy of Bramlett Residential Real Estate

You've likely seen the headlines about the big drop in home prices over the last eight months or so. True, but it depends what you call home.

The headlines, of course, are about the sales of single-family houses, whose median price skyrocketed since the start of the pandemic – especially in Austin – then started a sharp decline last spring. Through no fault of my own, I get a lot of real estate press releases, and the Austin-related subject lines literally changed from "Guess which markets have gone up the most?" to "Guess which markets have dropped the most?" within a five-month period.

And now, in theory, we're right back where we were more than a year ago. "December is the second month of declining year-over-year values," notes a recent analysis from Bramlett Residential Real Estate, and it's also the eighth straight month of month-to-month decline. That may or may not continue, but even if we've actually hit bottom, it'll be quite a while before valuations are back up where they were at the market peak last spring.

However, it appears that housing rental rates – which ballooned along with house prices on the way up – have not followed suit on the way down, but remain near record highs. Local studies have indicated a small month-to-month drop in the last couple of months, but rents are still higher than they were a year ago. Which means renters have again gotten the worst of it: a steep hike in their housing cost last year, and no relief in the downturn. And with the large majority of the new construction being at the high end of the market, don't look for average rents to be going down anytime soon.

The average homeowner, meanwhile, may actually have seen a reduction in their property tax bill last year, and that may yet be the case again this year: While your property valuation may go up, it'll be offset by reduced tax rates, due to the unprecedented amount of new construction that's being built and swelling the overall tax base.

One of the scapegoats for housing costs in Austin, of course, is the city's red tape. And just this week, the Department of Red Tape … err, I mean, the Development Services Department released its annual report titled FY 2022: A Year of Community Investment.

It's worth running through a few numbers, because the amount of work they do is indeed daunting: DSD permitted 27,000 new dwelling units in fiscal year 2022, issued over 1,100 demolition permits, completed 21,000 reviews for commercial projects, and issued over 71,000 permits for new construction and renovations, for which they did almost 360,000 inspections. They've started some new initiatives – an Affordable Housing Office to work specifically on those projects, and several new tools that are intended to simplify processes to create a sort of express lane for the simplest projects. But, they note, "Staffing turnover continued to be a factor, and at any given point over the fiscal year, almost 1/3 of the DSD workforce was new to their role." And the bottom line is that only 48.4% of customers were satisfied with their service, per their poll results, so … Oh wait, it appears their goal was only 43%, so well done.