Community

‘I think I almost cried.’ Above-average rent increases pricing renters out of Austin

AUSTIN (Texas) — For the last five years, Linda Lee’s apartment has been her sanctuary. Green, potted plants fill the corners and adorn each table. Spaces on the wall are covered in her art pieces.

“I had a lot of time on my hands,” she said, explaining how she turned to art and journaling during quarantine.

Lee said her favorite part about the south Austin apartment, however, is its proximity to her family. For the first time since retiring, Lee lives just a few minutes down the road from her daughter, and she can’t imagine being any farther away.

That’s why she said she nearly cried when her apartment complex offered her a lease renewal for next year with a nearly 35% increase in price.

“It was up over $400 — just like that,” she said, snapping her fingers. “My income is not going up 400 dollars a month!”

At almost 70 years old, Lee said she considered coming out of retirement and searching for a part-time job, in order to stay put.

“We’ve all looked at other apartment costs, and they are all like this. It’s not like, ‘Oh gee, there’s a cheaper place around the corner,’” she said.

Linda Lee sits at her desk and works on an art project
Linda Lee calls her south Austin apartment complex her “safe space,” especially as COVID-19 continues to pose a threat to someone her age. She was shocked to learn her rent will increase nearly 35% next year. (KXAN Photo/Avery Travis)

KXAN Investigators have received several tips over the last month, detailing rent hikes as high as 30% and 40%. One viewer said their apartment downtown was asking for $1,200 more a month — a nearly 47% increase from last year.

Experts with the Texas Real Estate Center at the University of Texas said those instances were far above their estimate of a 9% average rent increase in Austin over the last year.

“What is unique is the circumstances that have led to those rent increases,” said executive director Mark Roberts. “Not only just the pandemic, but also the freeze.”

He explained the pandemic slowed down construction of new rental units, along with the permitting process since those city employees were working virtually. Then, February’s winter storm further impacted the supply chain for new apartments and buildings.

“Simply because homes were damaged, and they needed to get repairs, so plumbing parts and labor — all those things were very scarce,” he said.

For instance, their data shows only 700 new units became available in the last year. Meanwhile, the center tracked 16,000 renters coming to Austin in need of a place to rent, compared to the previous average of 12,000 new renters a year.

“In the midst of a pandemic, when we’re not able to build as many units or the construction progress has slowed down because of supply chain issues, you have that same pool of people looking to rent an apartment with a more scarce stock of apartments.”

MARK ROBERTS, EXECUTIVE DIRECTOR OF THE TEXAS REAL ESTATE CENTER

Roberts thinks hope is on the horizon, however. They project 26,000 to 30,000 new apartments will be developed over the next 12 to18 months.

“You’re going to see that those increases in rent start to taper a little bit,” he said, noting that increasing supply is the best fix for the affordability crisis.

Rent control

For now, renters are left feeling the pinch, and many are asking whether these hefty hikes are legal.

“What if they do something similar next year? Then, I don’t know what I’ll do,” Lee said.

Texas law prohibits rent control or any caps on rent increases, and economists generally agree.

“Be careful about what you ask for. On the face of it, rent control can seem like a good deal, but it’s a good deal in the short run,” Roberts explained.

He calls it a vicious cycle, with unintended consequences, that begins when landlords don’t have enough income to keep up with the costs of building maintenance and improvements. Then, property values may decrease. When cities cannot collect a certain amount of property taxes, they may opt to increase income taxes instead — decreasing affordability for these same renters.

Experts with the Texas Real Estate Center explained why most economists agree on the unintended consequences of rent control. (KXAN Graphic)
Experts with the Texas Real Estate Center explained why most economists agree on the unintended consequences of rent control. (KXAN Graphic)

“That process takes a long time, but that’s generally what you see,” he said.

“But, fortunately, the competitive advantage that Texas has over a lot of these other cities is that we do have an abundant amount of land, and we do have good infrastructure. We do have good jobs growth,” Roberts went on. “So, it’s just going to be a matter of time.”

Keeping up

Advocates with Building and Strengthening Tenant Action said they are working to help renters in complexes where rents are spiking, but tenants are not seeing improvements to their living conditions or upkeep to buildings.

“Somehow, magically, rents have gone up, up, up, up, up, but the number of maintenance people on staff has decreased, and they have seen the property deteriorate,” said BASTA’s project director Shoshana Krieger.

Dina Jo Thomas shows where water is leaking through her ceiling at her southeast Austin apartment. (KXAN Photo/ Avery Travis)
Dina Jo Thomas shows where water is leaking through her ceiling at her southeast Austin apartment. (KXAN Photo/ Avery Travis)

For instance, Dina Jo Thomas said she was shocked to hear about rents going up hundreds of dollars at her apartment in the Montopolis neighborhood, after dealing with water leaks and other maintenance issues for three years.

“It ended up showering a gaping hole on my grandson. He was going to that restroom, and Pow! It just collapsed,” Thomas said, pointing to a portion of the ceiling.

Thomas said she’s decided she will likely have to leave Austin and go live with family, but she’s been meeting with a group of residents at the property who are asking their complex to reconsider the rent hikes.

“I ain’t ever seen anything like this,” she said.

Krieger said their group was particularly keeping a close eye on government subsidized properties and low-income housing, where there are certain renewal and rent protections.

“We have seen, at BASTA, landlords trying to do things that violate subsidized-housing rules,” she said.

  • RESOURCES: Looking for affordable rental housing in the City of Austin? Search the city’s Affordable Housing Online Search Tool here

Krieger also pointed out another recent policy change that has affected affordability in Austin.

Earlier this year, the Austin City Council approved a proposal provide property tax relief to homeowners by increasing the residence homestead exemption for city property taxes from 10% to up to a maximum of 20%, in accordance with state law.

“So, then the tax burden shifts. Where does the tax burden shift? That shifts to commercial and rental properties, largely.”

SHOSHANA KRIEGER, BASTA

Krieger explained that when these properties she increased property taxes, the landlords often have to pass the cost along to their tenants — who she noted are largely lower income. According to BASTA’s data, 75% of Austinites who earn less than $75,000 a year are currently renting.

Still, Roberts thinks increasing the supply of new units will help stabilize the market. For now, he estimates the average monthly rent in Austin at $1,572 per unit — right on pace with the national average.

Roberts compared that with around $1,370 and $1,400 in Dallas and Houston, respectively. He also noted that Dallas saw a 10% increase over the past year.

Linda Lee said she’s hearing about more and more of her neighbors moving out.

“If I’m careful with my monthly income, I’ll be okay,” she said. “I could see why some people might end up not having a place to live.”

Written by Avery Travis

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