SXSW panel looks at national housing shortage – and how Austin is responding

Cities across the nation are facing the same housing crunch that Austin has spent recent years trying to correct, with a new report from Realtor.com showing a gap of 3.8 million houses and apartment units across the country. Those findings served as the jumping-off point for Monday’s South by Southwest panel discussion that included Mayor Kirk Watson sharing some of the policies and administrative steps the city has enacted around housing.

Danielle Hale, an economic researcher with Realtor.com, said the undersupply of housing has stifled the creation of new households and caused a gap that will likely take at least a decade to solve.

“That 3.8 million number is comprised of not just the homes that haven’t been built relative to the households that are formed. That’s 2.2 million of that 3.8 million. We’re also looking at how the lack of affordability from high home prices, high rental prices and a shortage of homes on the market for sale means that people decide not to strike out on their own,” she said, adding caution that the aggressive building of recent years is expected to trail off. “Builders are really trying to build, but the challenge is the progress is so small that if we kept at that pace, it would take seven and a half years to close the existing gap.”

Watson cited improvements in the city’s permitting process and the passage of the two HOME initiative policy packages as helping to spur more housing construction since his election in 2022. After spending close to a decade making incremental progress in planning and development, he said the city is becoming more able to meet the demand caused by college students who want to stay in the area along with newcomers from across the country.

“Every year, we have thousands of new people coming in with new ideas, new thinking, new music, new culture, greater diversity. And then what happens is they say ‘I never want to leave’ and they stay. That change is what has kept Austin being Austin,” he said. “We were facing a problem of creating intergenerational unfairness. For decades we were able to have people be able to say, ‘I never want to leave’ and stay here and make those kinds of changes that have made Austin a focal point in a worldwide economy. But if we don’t have the housing supply, they will go elsewhere or they won’t come here in the first place because they know they’re not going to be able to stay. They’ll go someplace else.”

Watson said the city has been working productively this year with state legislators who want to address housing demand across the state and see promise in some of the steps Austin has taken. He said he expects to see helpful legislation on allowing more well-planned housing in commercial areas, making more progress in what’s allowed in local building codes, and allowing third-party permitting services to further speed up plan approvals.

At the national level, concerns are already taking hold in Austin that proposed cuts to federal housing agencies could reduce funding for affordable homes and other assistance programs. Mary Cunningham, senior vice president for research management and program development at the Urban Institute, said states and cities will continue to play a role in questions around planning and zoning policies, but the expected lack of federal support for new home and multifamily construction will make it difficult to meaningfully add supply in regions like the Midwest and Northeast that already have a slow construction pace.

“There is no entity except for the federal government that can really fund in the way that we need to have and address this national housing crisis,” she said. “States and localities are major players. You all hold the local zoning and land use levers and after you really reform your land use and zoning codes, then you really need to think about what does planning look like, what does neighborhood planning look like, so that people are getting the type of housing that they want and that they want to see in their neighborhoods and that they are supportive of.”

The Austin Monitor’s work is made possible by donations from the community. Though our reporting covers donors from time to time, we are careful to keep business and editorial efforts separate while maintaining transparency. A complete list of donors is available here, and our code of ethics is explained here.