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Austin among most expensive cities in Texas for building new homes, report says

Both development fees and infill development are higher in Austin than in other large Texas cities.

AUSTIN, Texas — Austin ranks as one of the most expensive cities in Texas for building new homes based on "the amount of development fees charged by local municipalities," according to a new report.

Each unit of "a suburban style development" in Austin charges $18,168 in development fees, which is over $8,000 higher than average per-unit fees for the same developments in the state's five biggest cities.

“This report confirms what those in the real estate community have known for a long time,” said Emily Chenevert, CEO of the Austin Board of REALTORS (ABoR). “Although there was little existing data prior to the report being conducted, we now can show that development fees are drastically higher in Austin than most other cities in Central Texas and major metro areas in Texas. This is a huge barrier to building homes and a significant concern considering we are in a housing supply crisis across the region.”

The ABoR and the Home Builders Association of Greater Austin (HBAGA) requested the report from the Texas Real Estate Research Center at Texas A&M University.

The report also stated that infill development, which the National League of Cities says "implies that existing land is mostly built-out and what is being built is in effect 'filling in' the gaps," is more expensive in Austin. Compared to Dallas, Houston, Fort Worth and San Antonio, Austin's average infill development fees are 187% higher.

   

“The National Association of Home Builders 2022 Priced Out Index reports that for every $1,000 increase in the price of a home, whether it be from market forces or development fees, 791 households are priced out of the Austin-Round Rock MSA," HBAGA CEO Taylor Jackson said. "We urge Austin’s leadership to act and act now or we risk becoming a wholly unaffordable city to build or buy a home in."

"We're navigating a land development code that was last adopted in 1983. So, it's nearly 40 years old at this point with amendment after amendment," Chenevert said. "That's a difficult process in and of itself and something that the City has tried to tackle and is currently caught up in a legal fight."

The report recommends that local policy leaders increase transparency regarding development fees. ABoR would also like to see established development process improvements and the existence of right-size development fees.

"The other thing we'd like to see are improvements to the development process itself. So, how efficiently can we build housing? How quickly can we get it on the ground so that we can meet the growing demand that continues to rise here across central Texas?" Chenevert said. 

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