Austin’s new HOME code amendments are a major change to our city’s zoning code. The new code allows for more density and flexibility, and it will have a significant impact on our local real estate market.
HOME Code: Reduced Minimum Lot Sizes
The most significant change in the new code is the elimination of minimum lot sizes. We can now build homes on smaller lots. Previously our development code was much stricter, requiring a 5,750 square foot lot to build almost anything. Our new minimum lot size is only 1,800 square feet.
In theory, a typical 7,000 sf city lot could be divided into 4 lots. The practical problem is that subdivision is still a very expensive process. An alternative is to use a condo conversion to separate a single lot into condo units that can be built, developed, and sold separately, without the expense and time commitment of subdivision.
HOME Code Change: 3 Units Per Lot
Austin’s new HOME code also allows for more flexibility in the types of housing that can be built. Our old code required 7,000+ square feet to fit even 2 units on one lot. The revised code allows 3 separate units on almost any lot and the units can be detached, which is a tremendous advantage for marketability compared to attached duplex homes.
Other Recent Changes: No Parking Requirements
Unrelated to the HOME changes, we’ve also waived the parking requirements that used to be very restrictive. Until last year, most developments required 1.5 parking spots per bedroom. We’ve finally realized that not every resident needs or wants to park a vehicle (or multiple vehicles) and abandoned the parking requirements.
HOME Code Creates New Options for Sellers
Austin’s new HOME code amendments will open some interesting new options for long-time homeowners in Austin. With land values exceeding $1MM for an average-sized lot in many central Austin neighborhoods, property tax has become very burdensome for a lot of owners. Instead of selling their whole property, they could sell off a portion of their backyard and potentially stay in the home longer than they could afford to otherwise.
What Hasn’t Changed
There are still 2 critical obstacles to development that have not changed. Those are impervious cover and Floor to Area Ratio, known as FAR. Impervious cover is how much of the land you fill up with non-pervious things, such as buildings, driveways, sidewalks. Decks also count as 50%. Maximum building coverage is 40% and maximum impervious cover is 45%.
FAR is the ratio of the house size (all enclosed space – so this includes garages and more) to the lot size. Our maximum FAR is 0.4, so a 10,000 square foot lot could accommodate up to 4,000 sf of construction. New developments will have to find a way to navigate the new HOME code in conjunction with the impervious cover and FAR requirements.
Austin’s new HOME code revisions are a major change to the city’s zoning code. The new code is expected to have a significant impact on the city’s real estate market, both for local real estate investors and for homeowners.
The new code is still in its early stages. There may be some changes or clarifications made to the code in the future. However, the overall direction of the code is clear. The new code is designed to make it easier to build more dense housing in Austin, which is good news for real estate investors.
Resources
Little City Investments finances land, construction, rehab, or even a combination if you want to exercise the new density options available with these HOME code amendments. We are fast: we aim for term sheets in a few hours, closing in a few days. Start here to get financing with Little City for your Austin real estate investments.