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Why Central Austin Lot Values Could Drop By 50% Tomorrow

Posted at Texas Real Estate Experts by Dee Copeland

Jun. 2, 2008

Categorized in: Austin and Hill Country

Tagged with: affordability, austin home builders, central austin, condos, design standards, duplex, east austin

If you own or recently purchased a lot in Austin with the intent to build more than one unit or a duplex, throw your current plans away. A crucial City Planning Commission vote tomorrow could drop some Central Austin land values by at least 50%.

For background, the Austin City Planning Commission reviewed changes to city design standards through a task force.The Residential Development Standards Task Force first met December 2007 and briefed Austin City Council in February.

Most guidelines are well-received, but one in particular may negatively impact Austin duplexes and infill lots, especially in East and Central Austin.

So what’s the small change with big impacts? Residential Development Standards Task Force item #23 now recommends that a common wall for a new duplex must be:

One contiguous plane.
Adjoining wall perpendicular to the front lot line or building line.
Maintain a straight line for at least 4 feet.

Current building standards for a duplex common wall is 50% of the depth of the building. The goal of the new recommendation is to ensure that duplex units side by side or top and bottom.

Have you noticed how big, boxy and “ugly” duplexes in Central Austin have become? Austin home builders and architects believe this is due to limitations of the 50% common wall rule.

Community Impact

Design Implications

“By making the common wall along the seam of the duplex, builders are limited to creating big, boxy designs,” said Glenn Reynolds of Cool River Custom Homes. “I think that’s the opposite of what neighborhoods wanted when the McMansion guidelines were originally passed.”

Affordability
Austin Home Builder James Bridges of Mantissa Development explained why duplex condos affect lot values and affordability.

From Bridge’s experience:

Builders need to acquire lots at no more than 20-30% of the value of the completed project.
The typical duplex-sized lot (7000+ square feet) in Travis Heights, Crestview and French Place sells for $200,000-250,000.
This requires a $600,000-750,000 build to minimize risk.

Sales for Austin homes above $500,000 slowed and contribute to affordability problems in Central Austin. To solve this, builders often use a duplex model of putting two condos on a single lot with an adjoining wall. “This makes homes in Central and East Austin more affordable” Bridges said, “I can build two condos for $300,000-375,000 each instead of just one luxury home.”

What’s Happens Next?
Builders believe the design changes will impact lots over 7000 square feet, but less than 100 feet wide because 100 feet of width is needed build a good-looking “side by side duplex” with “at least one unit facing the street” per the new requirements.

Any lot less than 100 feet may need be limited to a single unit, creating a necessity to either build a single home at a high price OR offer 50 or so less for the lot so the single dwelling can be affordable.

Reynolds was involved in a task force roundtable and seemed optimistic that the City Planning Commission would see long-term impacts of this proposed change at tomorrow’s meeting.