By Shaina Mishkin
Something unusual is happening in Austin, Texas. As home prices across the country remain near record -- and often unaffordable -- levels, Austin has been dealing with something of a housing crash. What's even more unusual is that it's all going according to plan. Unlike most of the U.S., the city's housing market is no longer being held back by a lack of supply.
A decade of policy changes in Austin, including zoning rule amendments and fewer requirements for some developments, set the stage for a multiyear construction boom as the population expanded. The result is that supply has increased, prices are down, sales are up, and buying costs have shrunk. For other cities, such as Salt Lake City, Dallas, and Columbus, Ohio, Austin's challenges and successes are providing a road map.
America's housing affordability issue reached crisis levels following the Covid pandemic and has been slow to improve. The problem is largely caused by a dearth of building in the wake of the 2008-09 financial crisis. Homeowners who scored historically low 30-year mortgage rates are staying in place, and the rapid rise in both rates and prices is keeping would-be buyers out of the market. State and local building restrictions in many parts of the country have stymied construction of smaller, cheaper homes.
The result is that the monthly cost to own a home has soared 71% since 2020. Many younger adults can no longer afford to make a purchase, eliminating a historical pathway to wealth accumulation and financial stability.
Politicians, housing advocates, and municipalities have been searching for solutions. A May 20 report by the Department of Housing and Urban Development offered regulatory guidelines for local governments to promote construction -- among them, remove restrictions to unlock available land. A bipartisan bill to alleviate housing costs by reducing federal regulations was passed by the House of Representatives on May 20 and is still working its way through Congress.
While the nation tries to figure it out, Austin is reaping the spoils of its housing overhaul. A dramatic pandemic surge in prices was reversed as developers ramped up construction. "This additional inventory has finally improved the match between what's available on the market and what local households can actually afford," says Nadia Evangelou, director of real estate research for the National Association of Realtors.
The city's regulatory changes, passed in pieces by Austin's city council over several years, overhauled zoning laws to allow more homes on one lot, removed certain regulations in exchange for more-affordable units, and simplified the permit approval process. These changes combined have contributed to a roughly 19% decline in rents and home prices since 2022.
It wasn't always this way. For decades, Austin was an outlier in construction-friendly Texas. The city's land development code dates to 1984, when Austin was home to about a third of the just over a million residents it had in 2025. Rules required minimum lot sizes of 5,750 square feet for single-family homes, and strict single-family zoning ordinances were criticized for creating sprawl.
Meanwhile, tech titans like Apple, Amazon.com, and Alphabet's Google established or ramped up their presence in the area. The supercharged tech employment combined with limited housing stock pushed buyers as far as San Antonio, 80 miles away, as builders responded to the surge with even more sprawl.
"Before Covid, Austin was already getting overpriced," says Tommy Tucker, president of the board of directors for the Home Builders Association of Greater Austin. "Covid literally blew the top off of housing affordability."
Austin has long attempted to thread the needle on development with neighborhood and environmental preservation. The city spent more than five years beginning in 2012 on an overhaul of its regulations called CodeNEXT. Advocates said it would clear the way for mixed-use developments with more small-scale homes and multifamily construction.
But the proposal was unpopular. Leading the opposition was Leslie Pool, the council member then representing Austin's North Central and North East neighborhoods. "I had been skeptical of developers coming into Austin and building so rapidly, and so many apartments, over the years, because it wasn't necessarily targeted to families or to lower-income folks," she recalls to Barron's.
CodeNEXT was revised three times before dying in 2018 after a petition to force a vote on the project collected thousands of signatures. Yet the population was outgrowing its code, and housing demand soared. That became apparent when Austin's median home sale price rose by over 70%, to $555,000, from spring 2020 to 2022, according to Redfin.
Pool became one of Austin's biggest housing advocates. During the pandemic, "it became really clear to me that we had to take big steps and break the logjam on what had been going on with housing," she says.
Pool in 2023 co-sponsored the Home Options for Mobility and Equity, or HOME amendments, which retooled single-family zoning to allow for up to three units on one lot and cut the minimum lot size to 1,800 square feet from 5,750. "The idea was to find ways to insert new homes in existing neighborhoods without disrupting the feel of the neighborhood, but providing lower-cost housing," she says. The construction of more than 600 of these homes has been approved , city data show.
HOME isn't Austin's only swing at updating the code. In 2019, the city's Affordability Unlocked program waived requirements for developers to build a certain number of parking spaces if they earmarked at least 50% of the project as affordable. It also increased a building's maximum allowable height. Nearly 8,000 units have broken ground or been completed through the program.
Reforming Austin's permit process was a key priority for Mayor Kirk Watson, he tells Barron's. The approval process required over 1,470 separate steps, with a majority of reviews lasting longer than a year.
"There is no way you can tell me that 1,500 steps is necessary to approve a site plan," Watson says. "We kept saying we wanted to address affordability, but yet we were getting in our own way of doing that because the regulatory red tape was adding so much time."
For builders waiting for permits, that extra time and uncertainty adds to holding costs, says Keith Mars, who became director of Austin Development Services in 2025 and is working on simplifying procedures to speed things up. "Time matters, and predictability of the process matters," he says, adding that those higher costs are passed to consumers.
The city's supply of new units, both rental and for sale, more than absorbed demand reduced by the macroeconomic shock. The typical Austin household can afford 74% of listings, nearly on par with 2019 levels, and a dramatic improvement from the same month in 2022, when the figure was less than 60% of listings, according to Realtors' association data.
The adjusted prices have given the market new life. "There's a ton of buyer demand," says local real estate agent Jeremy Knight. Home sales in the city of Austin in April rose 8.5% from one year prior. Pending sales, a precursor to closed sales, were up 20%, according to data from Austin's multiple-listing service.
Neighborhood groups have criticized Austin's approach. The city's changes to neighborhoods primarily benefit high-income earners, "abandoning their legacy as places for working families to raise their children," wrote the Austin group Community Not Commodity in a March blog post.
The city's price correction, along with a broader run-up in inventory in Texas, has detracted from Austin's near-term appeal to builders, many of whom offer buyers incentives at the expense of their margins. Housing research firm John Burns Research and Consulting recently upgraded market conditions for builders in Austin to "slow" from "very slow."
Yet Austin has found a balance that other U.S. locales haven't. The metro had a stronger sales increase in April from a year ago than any other large metro, Zillow says.
Now that home prices have adjusted, buyers and sellers can more easily come to terms. "If you were to tell a seller two years ago to price [lower], they would have looked at you like you were crazy," says real estate agent Knight. "You're seeing a little more realistic listing prices."
That is not the case elsewhere in the U.S. Home prices nationally remain expensive. In many metros, property owners with hefty piles of home equity and no reason to relocate are still sitting it out, giving buyers few options. In the suburbs of New York City, "inventory is just about as tight as it's ever been," says Jonathan Miller, an adjunct professor at Columbia University and the CEO of appraisal firm Miller Samuel. Demand is strong but supply isn't. Prices in Long Island's Nassau County rose 7.6% on average in the first quarter, according to Miller's latest report.
In the majority of the nation's largest metropolitan areas, typical buyers have significantly fewer options than they did before the pandemic, with the share of listings considered in reach shrinking by nine percentage points since 2019 .
Not so in Austin, where price drops roll on. "The correction had to happen," says Tucker of Austin's home builder association. "As a real estate developer, I don't like to see that," he adds. "But at the same time, as a representative of the home-building industry -- it had to happen."
To be sure, Austin's price decline was helped by one of its most important assets: available land for construction. "Replicating the geography of Texas is not something you can recommend," says Robert Dietz, the National Association of Home Builders' chief economist.
Nevertheless, cities trying to tame housing costs look to Austin. Its building surge and rent decline demonstrate that more construction leads to lower costs, said New York City Mayor Zohran Mamdani in a May speech introducing the city's housing plan. In Salt Lake City, where home prices were 3.5% higher this spring than a year ago, Austin "gives us a good idea of what we might be facing as we continue to grow," says Nick Norris, director of the city's planning division.
In Columbus, Ohio, officials pointed to Austin as an example illustrating the city's own growth challenges so it could "pivot quickly...and make that intervention early," says Erin Prosser, the city's deputy director of housing strategies. Austin was the inspiration for some changes in developer requirements in Dallas, says Dallas City Council member Chad West.
Many growing cities can look at Austin and find a solution that suits them, says Jeanna Kenney, an assistant professor of economics and real estate at the Villanova School of Business in Pennsylvania. "They have really nailed that aspect -- that you want to pull all these different levers if we want to make an aggregate change that we can really see."
-- Additional reporting by Elijah Nicholson-Messmer
Write to Shaina Mishkin at shaina.mishkin@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
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May 31, 2026 03:00 ET (07:00 GMT)
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