Austin, Texas, added 120,000 new homes in the decade from 2015 to 2024, and that growth in supply led to a substantial drop in rents.
That was because of policy changes that started in 2015 to address a surge in demand as the city became a tech hub. The city saw a 93% increase in the average rent from 2010 to 2019.
But policy shifts led to results. According to the Pew report: “In December 2021, Austin’s median rent was $1,546, near its highest level ever and 15% higher than the U.S. median ($1,346). By January 2026, Austin’s median rent had fallen to $1,296, 4% lower than that of the U.S. overall ($1,353). This decline occurred even though the city population grew by 18,000 residents from 2022 to 2024.”
According to Alex Horowitz, Pew’s housing policy initiative director, those successes came from a wide variety of zoning reforms, policy changes, and investments within city government that made the city far more affordable for the average person.
“Austin took three steps to make it easier to build subsidized housing, housing that is set aside for people with low and moderate incomes,” he told WHQR.
That included a $250 million housing bond in 2018 that supported affordable housing construction. On top of that, “Austin offered generous density bonuses, so builders were allowed to build taller buildings, and some requirements were relaxed if builders included below-market-rate units as part of the developments.”
Horowitz said builders took advantage of those bonuses because the incentives were generous enough that building affordable housing was profitable.
The third tact, he said, was deregulation.
“Multi-family housing apartments, whether they are market rate or whether they're subsidized, really face most of the same regulatory barriers in getting built. Heavy parking mandates, discretionary or conditional zoning and slow, cumbersome permitting processes. So making it easier to build apartments, even if they were market rate, really took a lot of the difficulty out of building subsidized housing as well,” he said.
A variety of housing types
Horowitz said the steep increase in market-rate housing also helped calm the overheated market. Austin made it easier to build: they reduced parking requirements, allowed for taller buildings, and allowed for more units per acre, especially when there’s affordable housing involved.
In Austin, large apartments made up half of the new units constructed, with a third coming from single-family and townhomes. But accessory dwelling units made up 7%, thanks to policy shifts that allowed them on smaller lots and with less parking.
Smaller apartment buildings were also key. Horowitz said there’s an easy reform that can make small-scale apartments easier to build: allowing them to only have one staircase. A bill in the state senate last year would have legalized such small-scale apartments, but it died in committee. Horowitz said that kind of reform would go a long way for infill development.
“Allowing one stairway for small apartment buildings that allows more traditional, smaller apartment buildings that fit over individual stores and fit better into existing neighborhoods,” he said.
Arguments against housing development
Many opponents to new housing are concerned about impacts like traffic, school overcrowding, and environmental concerns.
Horowitz says for schools, enrollment is actually down, which means the needs aren’t as severe as you might expect with the population rising.
“School enrollment is declining because the population is aging, and so in most of the US, we are seeing declining school-age populations, and that's projected to continue, because the population under age five has been shrinking as well,” he said.
There are more school-age children in fast-growing Wilmington, though. Schools are facing overcrowding across the New Hanover County Schools district, though the issue is more acute at certain campuses. But at the same time, enrollment is down by more than 1,000 students since 2022 – although there’s debate about whether this should be attributed to declining birthrates, a nationwide issue, or the growing popularity of private-school vouchers as the state ramps up funding. Still, it’s clear that school districts and county governments need to plan for students if they want to incentivize growth.
As for the traffic concerns, Horowitz says the placement of added density really makes a difference.
“In a place like Austin, which doesn't have the transit infrastructure of some of the larger cities in the US, it was really important to make it easier to build near the places people go every day to shorten their commutes," he said.
Wilmingotn's traffic has been a perennial issue, especially on some of the city's thoroughfares, like Market and College, which have numerous unsignalized entrances and exits, which can exacerbate drive-time congestion. And, like Austin, Wilmington has limited public transportation. But Austin solved many of its problems by increasing housing supply in already developed areas that are already served by infrastructure.
“Taking advantage of that existing infrastructure by allowing more housing near the places people go every day has been the, really, the key ingredient for [the] success of housing reforms,” Horowitz said.
But that means pushing past the expectation that established neighborhoods can’t change: infill with taller, denser buildings in existing neighborhoods, rather than placing hundreds of apartments on the outskirts of town. Wilmington's quasi-surburban sprawl has often looked like the latter, as the downtown skyline remains relatively modest. In fact, many new developments are being proposed outside of Wilmington in the unincorporated areas of New Hanover County, where there's more available land.
“More housing can either add traffic or it can reduce traffic,” Horowitz explained, “It depends where it's built. When it's built near commerce and transit, it reduces traffic. When it's built further out, it increases traffic.
That also addresses environmental considerations: infill on already developed lots can mean replacing parking lots with housing, rather than cutting down trees. Horowitz said Austin facilitated infill by getting rid of or reducing parking requirements for many of its buildings.
Slowing permits
Pew found that the reforms in Austin led to significant drops in the average rent — not just the asking price for new buildings, but also for older apartment buildings that are often naturally lower in price. Rents declined about 11% in older non-luxury buildings that cater to lower-income renters, according to the report.
Still, that construction boom has slowed, perhaps because supply is meeting up with demand — at least at the current cost of construction.
“Permitting has slowed down in Austin,” Horowitz said. “Once housing production slows down, to get affordability to keep improving, it's necessary to lower the cost to build in ways that don't negatively affect tenants. It's not appropriate to do anything that would compromise safety or well-being. But there's a lot of low-hanging fruit.”
Some of those construction costs are outside the purview of local government — like interest rates, tariffs, and other national or international economic policies. But local governments can pull certain levers: zoning reforms, simplified and predictable permitting, and lower system development costs for buildings in areas with existing infrastructure. Some of that includes slightly higher density in existing single-family neighborhoods, like duplexes, townhouses, triplexes, and even single-stair apartments. That’s how a city can continue to gain ground on affordability, even under more volatile economic conditions, the report argues.
State governments can have a role as well, by legalizing more diverse housing types, or allowing for more opportunities for housing.
“We've seen 15 states around the US pass laws to allow apartments on commercially zoned land. North Carolina is not one of them,” Horowitz said.
