After years of watching home prices skyrocket out of reach for first responders, nurses, and young families, in December 2023, Austin city council voted to rewrite its zoning code. The first phase of its HOME Initiative—known as HOME-1—effectively allowed up to three homes on most lots that previously could host only one.
A year later, the results are in—and they’re stunning. Austin is finally starting to build its way to affordability.
In the year before HOME-1 took effect in February 2024 when, builders filed just 487 permits that resulted in certificates of occupancy in these single-family zones. In the year after, that number jumped to 906, an 86% increase. The difference? Builders can now make the math work by putting two or three homes on a lot instead of just one. Before, this kind of light-touch density housing was virtually banned. After HOME-1, Austin produced 238 two-unit and 261 three-unit projects in the very same neighborhoods. In a city desperate for attainable homes, that’s not just a zoning tweak—it’s a transformation.
The change is reshaping the city’s fabric. The median lot for new completions shrank from 7,800 square feet to roughly 4,000 for two homes or 2,800 for three. That means homes are smaller too—around 2,300 or 1,900 square feet, instead of the 3,000 and over square-foot behemoths that had become the norm. And with smaller lots and homes come smaller price tags. When most new homes in Austin were selling for around $1 million, with HOME-1 builders can now anecdotally hit price points below $500,000, which is within reach for working families.
For years, Austin’s housing market has failed to serve the middle. It built luxury single-family homes on large lots for the wealthy and one-bedroom apartments for younger singles in older neighborhoods—but little that appealed to families earning around $125,000 a year. These new homes on smaller lots made possible by HOME-1 fill that gap beautifully. They’re modest, family-sized with three bedrooms, and affordable enough for first-time buyers and families who want to put down roots in the city they love.
Before the reform, roughly half of all building permits in upzoned single-family zones were issued for vacant lots, while the rest replaced modest bungalows one-for-one with McMansions—larger, more expensive homes out of reach for most residents. After HOME-1, about 150 of those teardowns still resulted in McMansions, but more than 100 now produced over 260 smaller homes instead. The result: more housing, more neighbors, and a city that’s slowly becoming affordable again.
Remarkably, Austin’s housing boom happened despite macro-economic headwinds. The reform unleashed a swarm of small, local developers—much like what’s happened in Seattle and other cities—who are driving the surge in new construction. They are able to withstand high interest rates and input costs. Even the federal government’s immigration crackdown, which many feared would choke off construction labor, particularly in Texas, couldn’t slow the momentum. That’s how powerful good policy can be. When government gets out of the way, the market delivers.
Phase 2 of Austin’s reform, HOME-2, took effect in August 2024 and goes even further. It cuts the minimum lot size from 5,750 square feet to just 1,800, potentially allowing four or five homes of at least 1,650 square feet per lot. It’s still too early to gauge the full impact in the data, but by the city’s own admission, HOME-2’s rollout has been slow—hampered by technical hurdles in subdividing lots that pre-dated the law. To address this, Austin has already adopted a new Infill Ordinance, aimed at clearing those barriers and, if effective, further accelerating the production of entry-level homes.
Other cities in Texas and beyond should take note. Modest reforms can unleash powerful market forces. The question is whether we continue walling off opportunity behind million-dollar homes—or welcome the next generation of families into our neighborhoods.
