Forbes article on why Austin housing cost is increasing much faster than other tex cities

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There is a similar narrative driving all four of Texas' big metros, and it is a positive one. Dallas, Houston, Austin and San Antonio have, since 2000, been among the nation's leading major metros for economic and population growth. But, surprisingly, this growth has severely influenced housing prices in only one of them. Median home values in metro Houston, Dallas-Fort Worth and San Antonio, while increasing, remain, according to Zillow, below or just above the national median of $187,300. The Austin metro, however, has median home values of $254,500, and the city proper is Texas' 2nd most expensive home-buying market, trailing only the beach town of Galveston. Austin's median housing prices have also grown far faster in net total than the others, increasing by $80,000 since 2011. Why the difference? The reasons vary, but boil down to Austin's relative unwillingness--thanks to NIMBYism and regulations--to build more housing.

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Dallas and Houston are known for their pro-growth, pro-business attitudes, highlighted by Houston's lack of a formal zoning code, and the explosive town-center growth throughout the suburban municipalities of both metros. According to data from BuildingHunter.com, the Houston metro area between 2008 and 2012 granted between 21,000 and 28,000 building permits annually, and these figures were above 50,000 before the recession. Dallas-Fort Worth saw between 14,000 and 18,000 annual building permits over that time, and was well over double or triple this before the recession. But the Austin metro area had under 10,000 permits annually between 2008 and 2012, and even before the recession, permits were well under half of either Dallas or Houston. This is despite the fact that the metro routinely ranks at or near the top in population growth rate. A local real estate group determined this May that 15,000 new units are needed annually in the city limits alone to meet this demand--something that's obviously not happening now.

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The devil of this lagging construction is in the details of how Texas' capital city is regulated. Density is limited in the interior neighborhoods through a variety of laws--such as minimum lot sizes and height limits--that prevent high-rise construction. Most of the rest of the city is dominated by single-family residential zoning that limits density even more. The Austin area also has a high intensity of preservation reserves, meaning nothing can get built in some places.

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As regulatory delays have increased remarkably since 2009, strong rent growth has compensated for this growing uncertainty throughout the Austin market. If regulatory delays are eliminated and developers receive approvals for multifamily projects within the 120 day mandate instead of the 223 day average, renters could see relief of 4-5% on their rent, or an average of $60 per month or $720 annually in Central Austin.

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This NIMBYism manifests itself via the Austin Neighborhood Council, a collection of neighborhood associations. It is particularly strong among homeowners on the northwest side, which contains some of Austin's richest zip codes. Chuck DeVore, who is vice president of the Austin-area Texas Public Policy Foundation and a fellow Forbes contributor, says this NIMBYism has--in one of the great ironies of modern urban affairs--arisen because of the city's liberal politics. While the other Texas metros are more conservative, and thus maintain a relatively hands-off approach to regulation and property rights, Austin's government reminds him of California, where he was previously a state legislator.

Between 2004 and 2013 average rents in the Austin area increased by 50%, while median incomes increased by just 9%..

“Of all major Texas cities, Austin comes the closest to imitating California’s regulatory stranglehold on housing development," he wrote by email. "This results in government-induced artificial scarcity in the housing market which drives up prices as builders can’t meet demand."

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