ELISSA NADWORNY, HOST:
For the first time in years, the housing market is showing signs of change. The bidding wars are starting to cool off, and mortgage rates are showing signs of coming down. So we took this opportunity to reach out to listeners and readers to find out what homebuying questions they might have. And we got a lot of questions about affordability, like this one from Gabriel Visi (ph). He lives near Austin, Texas, and has adult children looking for their first home. But they're not finding anything in their price range.
GABRIEL VISI: Why can't they have the opportunity to buy the starter homes, the two-bedroom that's just what they need, instead of a three-two or four-three home for $400,000 to $500,000?
NADWORNY: Why is it such a challenge to find those starter homes right now? NPR's Scott Neuman has been covering this, and he joins us now. Hello, Scott.
SCOTT NEUMAN, BYLINE: Hi, Elissa.
NADWORNY: So, Scott, tell us about what is going on in Austin, Texas, and why it is so hard to afford a starter home there.
NEUMAN: Yeah, Austin is one of the fastest growing metropolitan areas in the country, and that's really supercharged the real estate market there. It's become sort of a poster child for a lack of starter homes. It's got a lot of expensive places, but not many that are priced for a single person, couples or a family just starting out. The median income in Austin is about $134,000. That would typically qualify you for a mortgage in that sweet spot in the starter home run of about $350,000. But that's not nearly enough in Austin. I talked to Scott Turner (ph), who's a home builder in the Austin area.
SCOTT TURNER: The city of Austin's median home price in July was 590,000. So if you're a median income earner, you know, in the region, you can't afford to buy a house in the city of Austin.
NADWORNY: What else might be contributing to this dearth of starter homes in Austin?
NEUMAN: Well, Turner says it's also about overly restrictive zoning and land use regulations.
TURNER: For a city like Austin, we have a lot of what's called exclusionary zoning, meaning you're not allowed to put housing in the vast majority of the central city. The last time Austin updated its land development code, the rules that guide where you can put housing, was in 1984.
NEUMAN: Turner says Austin has known for decades that it needed to change these rules. And they've been trying. But many existing homeowners don't want more density, especially duplexes, triplexes, fourplexes. And they've sued the city to block that.
NADWORNY: So we've been talking about Austin, but is this a nationwide problem?
NEUMAN: It is. I talked to Mike Loftin, the CEO of Homewise. They're a New Mexico-based nonprofit that helps people with buying their first home. Loftin agrees that zoning and land use are barriers, but it's also about something else. Loftin says luxury homes are much more profitable for builders, so smaller homes are just not getting built. He compares Austin to Albuquerque, the biggest city in New Mexico.
MIKE LOFTIN: Ten years ago in Albuquerque, between 2014 and '18, about 20% of all new homes built would be considered an entry-level home, a smaller, more affordable home. Today, that number is 4%. And this is true across the country. People are just not, home builders are not, building that entry-level home.
NADWORNY: OK, so what are the options for would-be first-time homebuyers?
NEUMAN: Turner says realtors have this expression, drive till you qualify. Simply put, if you can't afford a home in the city, keep moving farther out until you find something you can't afford. In the Austin metro area, there's the city of Bastrop, for example. It's a little over 30 miles southeast of Austin, and the median home price there is much more reasonable, around $350,000. That might mean a bit of a commute if you work in the city, but for a first home, it might be worth it.
NADWORNY: That's NPR's Scott Neuman. Thanks, Scott.
NEUMAN: Thank you.
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