Austin Real Estate Market Trends:
Articles By Roselind Hejl

Austin attorney, Chris Bradford, published an interesting article about Austin’s demographics entitled, How Austin’s Rise Became a Tale of Two Cities.  He shows census data that reveals that households with children are more concentrated in the suburban parts of the Austin area.  The reason, he says, is simply that people can get larger, cheaper, and newer homes in surrounding suburbs than they can in central Austin.  I would like to add to his piece with a story from our own experience.    

A family relocating to Austin from another city tells us that they can afford up to $500,000, and would like to live in one of Austin’s central neighborhoods.  We show them homes in our older central areas with their eclectic mix of homes and tree lined streets.  Slowly, they become aware of the degree of remodeling necessary to make these homes suitable for their needs - a daunting task for most folks.

For example, in one area (W of Lamar; E & N of Lake Austin; S of 2222) the average home between $300,000-500,000 may be described as follows:

Price - $415,975
Bedrooms - 3
Baths - 2
Built - 1952
Size - 1,583 sq feet
Garage - 0 to 2

Even though they are older, these neighborhoods are suburban in nature, built around the use of a car.  Yet, often the garage has been taken in by prior owners for extra interior space.  Perhaps a carport and some storage could be added, my clients say.

Next, we consider the house.  What can be done to make the structure better fit their needs?  Should they budget $85,000 to remodel and add on?  This will bring them to the upper end of their range for a home.  Will $85,000 be enough?  No, it will not.  Another 1,000 square feet would bring the size up to 2,583.  At $200 per square foot, this will come to $200,000. 

And what about the nearly sixty year old foundation, plumbing, wiring, duct work, and roof?  What about the new code requirements since 1950?  What about the amateur remodeling done in the 70’s and 80’s?  What about that silver wallpaper, popcorn ceiling, and vinyl siding that made so much sense at the time?  Remodeling is a tricky business that takes skill and experience.  Is this relocating family up to the job?  Or will they burn up a lot of money trying to renew an old structure, and find that their investment has burned up in the process?   

Perhaps this house should be considered a tear down.  Now we are up to $450,000 for a lot, including the demolition.  The usual rule of thumb is to allow about 25 – 30% for the land out of the total budget.  This calls for a $1.5 – $1.8 million total cost package.  

Perhaps a suburban neighborhood around Austin would be a better fit for our relocating family at this time in their lives.  There are plenty of choices. Some suburban neighborhoods are quite close-in, others belong to a small satellite city.  Their choice is to adapt to a much smaller home in central Austin than they would like, or to move on to greener pastures - to a suburb on Austin’s perimeter. 

We bought our first home in central Austin as college students years ago - the only young people on the block.  Over the years we have witnessed the central neighborhoods of Austin evolve.  A variety of people – from singles, to couples, to large family groups - moved in and improved or expanded their homes. Remodeling and revitalization was constant.  Demand was steady and prices moved up.  

Today, more than ever, the entry level budget for a home in central Austin is high.  But, many people would like to do as we did years ago.  They would like to buy a house with the idea of saving for a remodel and addition in the future.  They get their foot in the door, and figure out how to improve the house later.  It is a risk they are willing to take.

In 2006, moving to central Austin got a lot harder.  The McMansion Ordinance added a new level of difficulty to an already expensive and risky process.  The word McMansion conjures up a cheaply made extra-large house that that is devoid of architectural integrity.  Ironically, this does not describe the mostly modern, craftsman, or prairie style homes built on expensive lots in central Austin in recent years. 

Under the Ordinance, homes are restricted to either 40% of the lot size or 2,300 square feet.  An expert is needed to figure out if your remodel plan complies with this law.  Does your house plan stay within the virtual three-dimensional envelope?  What about the side wall articulation (think of a 10’ chunk carved out of your dining room)?  Can you squeeze bedrooms into an attic or basement that does not count as living area?  And the carport – counted as living area if there is interior space above it, or not counted if free standing.  Do you have the presentation skills to ask for a variance?  How many billable hours will it take to figure out what you can legally do?   

Austinites have lived with this ordinance for three years.  Perhaps it is time to take a look at how these rules are working for homeowners.  Are people happy with it, or are they giving up in frustration on remodeling projects?  Have we weakened demand for central Austin neighborhoods?  And, could this ordinance lead to some unintended consequences, as Chris Bradford points out?