An open letter to Brigid Shea (and other aspiring city council members):
Dear Ms. Shea,
I applaud you for focusing your mayoral campaign on affordability. The Austin American-Statesman is right to push you and Mayor Leffingwell for specifics on how you would make Austin more affordable, but I’m hopeful that you are up to the task. I’ve lived in Austin since 2002, and I’ve heard nearly every city council candidate in my ten years here talk about affordability, but I haven’t seen too many serious proposals that cut through the talking points to the core of our affordability challenge. But given the jobless recovery we’ve experienced over the last few years, and the growing income inequality that’s finally gaining traction in the mainstream media, maybe this time will be different.
Ms. Shea, I’m sure you’ve been doing your homework as you prepare to take on Mayor Leffingwell. So none of what I’m about to lay out here is going to surprise you. But here’s the affordability challenge as I see it:
Let’s start with what people are calling the jobs/housing balance. Below is a map comparing home prices to wages in the Austin area. Specifically, it shows the “median multiple,” which in this case is the ratio of the median residential sales price by zip code for the first seven months of 2010 and the median wage for all jobs at businesses located in the same zip code. In other words, can workers afford to live near their jobs? I apologize for not updating the data, but things have been a little crazy since I created this map for a Leadership Austin event way back in October 2010.
Historically, the ratio of home prices to household income has been around three-to-one (e.g., $150K home value to $50K annual income). As the map indicates, there are quite a few areas around Austin where the ratio far exceeds 3:1 and workers would find it very difficult to afford a home anywhere close to their jobs. Most of central Austin is in the 4.8 to 8.9 range and some areas to the west of MoPac can even get up to 14.3. I doubt many people older than high school working in the Hill Country Galleria call Bee Cave home.
So you’ll need to update this map with current home sales and wage data, and I’d also recommend accounting for rental units somehow so you capture both sides of the housing market, but you get the general idea here. Affordability is as much of an economic development issue in terms of where jobs are located as it is a community development issue in terms of where affordable homes are located.
We also need to talk about Austin’s changing demographics.
Austin is getting wealthier, or at least some people are. In 2000, 13.6% of households in Austin had at least $100,000 in annual income. In 2010, it was up to 20.1%. The very top is growing even faster. In 2000, 2.8% of households had at least $200,000 in annual income. In 2010, it was up to 4.9%. I know 4.9% doesn’t sound like much, but it’s about 16,000 households–more than double what we had here in 2000. And while I’m sure many of these highest-income households still prefer Loop 360, a growing number are choosing downtown and other central neighborhoods, and I expect that will continue.
The Statesman is correct in pointing out that real median household income has lost ground over the last ten years, but that’s not the whole story. Total inflation-adjusted household income in Austin grew by approximately 12% between 2000 and 2010. That’s roughly $2.4 billion added to the local economy fueling demand for housing, shopping, and apparently new restaurants and bars. Austin, as a whole, is getting wealthier.
So, Ms. Shea, if you are truly serious about tackling affordability, and you are facing growing demand from very high-income households, I’m afraid the law of supply and demand puts you in a tough spot. Whether it’s through density changes or creative housing forms, any serious proposal to improve affordability in Austin must start with increasing supply. I assume many of your campaign supporters live in central Austin, and have likely been participating in the Imagine Austin process, so I’m sure you’re surrounded by people with ideas for how to make that happen. I look forward to hearing your proposals.
You’ll also need to tackle the jobs issue. While I’d be interested in your views on a living wage policy, my guess is that’s a political non-starter in Austin. So the only other way I know of to increase wages for the 80% of households not making $100,000 or more is to focus on education and workforce training. Here’s what you’re up against: nearly four out of five new high-wage jobs (pay > overall median wage) projected for 2010-2020 will require a postsecondary degree, from a one-year certificate to a Ph.D. Here’s the race/ethnicity breakdown for people age 25+ in Austin who have a postsecondary degree: Asian 71%, White 54%, Black 31%, and Hispanic 21%. Keeping Austin affordable for everybody will require closing these gaps. We need to rethink our education and workforce systems to make sure we are preparing people to succeed in today’s economy, and get serious about the investment required to do it. I’m sure you agree.
We also need to get serious about recognizing what it really costs to get by in Austin. According to the Center for Public Policy Priorities, assuming employer-sponsored health insurance, a family of two parents and one child requires approximately $40,000 in annual income to make ends meet. Now, you’d need to separate out the students from this group, but the Census Bureau estimates that we have about 137,000 households in Austin earning less than $40,000 per year. Put another way, that’s 42% of all households in Austin that can’t afford to sustain a family of two adults and only one child. This is what we’re up against when we’re talking about affordability in Austin.
Ms. Shea, I realize this is a lot, especially for my first letter to you. But I want you to have some data to work with as you roll out your proposals to keep Austin affordable. Hopefully you’ll be able to pin down other people when they offer the usual platitudes without ever taking the time to truly understand the affordability issue here.
Good luck with your campaign.