Jul 7, 2022 - Real Estate

Home building fees soar, report finds

Illustration of a plywood house that is also an upward arrow.
Illustration: Maura Losch/Axios

It's become a lot more expensive to build a home in Austin than elsewhere in Texas.

State of play: A new report from the Texas Real Estate Research Center at Texas A&M University found that Austin's development fees make home building especially costly here compared to other cities in Texas.

Why it matters: Austin is becoming increasingly unaffordable.

  • Since 2021, home prices have already increased 22% across the Austin-Round Rock MSA, according to the Austin Board of Realtors.
  • For every $1,000 increase in the price of a home, 791 households are priced out of the Austin-Round Rock metro area, according to the National Association of Home Builders.

The big picture: Infill development — or the building of additional housing into already-approved developments — is a critical component to delivering more housing inside Austin's city limits.

Yes, but: Infill development is "exponentially more expensive" for homebuilders in Austin, with per-unit fees that are 127% higher than suburban development and 187% higher than average infill development fees across the five largest metro areas in Texas, according to the report.

By the numbers: Austin's housing development fees are roughly $41,303 per unit — more than 2.5 times the average fee for infill housing in Central Texas.

  • Fort Worth, Houston and San Antonio set minimum and maximum fee ranges, but Austin and Dallas do not.

Of note: The fee analysis was requested by the Austin Board of Realtors and the Home Builders Association of Greater Austin.

What they're saying: The two groups recommend cities increase transparency in development fees, review and reform their development processes, and ensure appropriate fees are charged for different-sized developments.

  • "This report confirms what those in the real estate community have known for a long time," said Emily Chenevert, CEO of Austin Board of Realtors. "This is a huge barrier to building homes and a significant concern considering we are in a housing supply crisis across the region."

The bottom line: High housing development fees translate to more expensive home prices and rising mortgages.

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