INTRODUCTION
Homeownership affordability in the Austin, TX metro
This interactive tool examines how building more starter homes could expand Latino homeownership across 16 U.S. metro areas. Austin is shown here as one example, but the same framework can be used to identify the relevant income range and home-price opportunity threshold in other metros. The tool focuses on households in their primary homebuying years (household heads ages 20–59) and identifies the income range where Latino homeownership increases most sharply as household income rises and the home values typically purchased by recent Latino buyers in that range. The figures below provide context on metro affordability and define the key concepts used throughout the analysis.
Housing affordability: Austin, TX metro
Why this metric matters — read more
The typical home in the Austin, TX metro is worth 4.7 times the typical household's annual income. The median price-to-income ratio across the 16 metros studied is 4.9.
The median home price-to-income ratio is a helpful shorthand for evaluating the health of a community’s housing market. AEI Housing Center research finds that the median home price-to-income ratio is not only important for new homebuyers, it also explains 89% of the variation in homelessness rates in Continuums of Care—the local areas the federal government uses to track homelessness—with more than 1 million people.
Housing pressure is relatively low when home prices are around three times household income but becomes serious as the ratio approaches five. It is classified as severe above five. At seven, which is classified as extreme, the expected homelessness rate is about four times higher than at a ratio of 3.
For more, see AEI Housing Center, Good Neighbors: What We Have Learned Regarding Housing Supply and Housing Displacement.
Key terms
Data definitions — read more
ACS homeownership and income
2020–2024 5-year American Community Survey.
Recent Latino buyers
Latino buyers who moved within the past three years.
New homes
Homes built from 2015–2024.
Home values
Current estimated values as of December 2025.
THE OPPORTUNITY
Which home-price range offers the greatest opportunity for expanding Latino homeownership in the Austin, TX metro?
Latino homeownership, ages 20–59, by household income: Austin, TX metro
Note: Values are smoothed across $10,000 household-income bins.
The income range of starter-home-ready Latino households—where Latino homeownership increases most sharply as household income rises—is $80,000 to $130,000 in the Austin, TX metro. Recent Latino buyers in this income range typically purchased homes valued up to about $340,000, which we define as the Latino home-price opportunity threshold.
The next section asks whether the Austin, TX metro is building homes at or below the Latino home-price opportunity threshold.
WHAT GETS BUILT
Is the Austin, TX metro building homes in the Latino home-price opportunity range?
The distribution below shows where newly built homes fall relative to this threshold.
Distribution of current estimated values of new homes built 2015–2024: Austin, TX metro
Note: Upper tail omitted for readability.
Only 23.9% of new homes built in the Austin, TX metro are valued at or below the Latino home-price opportunity threshold. More than three-quarters (76.1%) are priced above it.
BUILDING AT ATTAINABLE PRICES
How does the Austin, TX metro compare with other metros on new-home production?
Metros that build more housing overall also tend to produce more homes priced below the Latino home-price opportunity threshold
The comparison shows which metros are building more homes overall and producing those homes at prices that can meaningfully expand Latino homeownership.
Each dot represents a metropolitan area. The Austin, TX metro is bolded. Other metro areas in TX are colored dark blue.
Metro key
Out of the 16 metros, the Austin, TX metro ranks 1st in overall new-home production and 3rd in the share of new homes at or below the Latino home-price opportunity threshold.
POLICY IMPLICATIONS
What policies would help the Austin, TX metro and other metros build more starter homes to expand Latino homeownership?
Latino demand for starter homes is substantial: 66% of Latinos say having more affordably priced starter homes in their community is extremely or very important.1
The goal is not simply smaller housing, but family-suitable starter homes—modestly priced detached homes or townhomes with enough bedrooms for a household to start or grow a family.
As a benchmark, the AEI Housing Center generally considers homes priced below four times household income to be starter homes. The thresholds identified here are not based on that benchmark; they are estimated from where Latino homeownership increases most sharply as household income rises and the upper end of prices paid by recent Latino buyers at those incomes.
“Starter-home-ready” refers to households that appear to clear the income hurdle for homeownership. Other barriers—such as credit, down-payment, or debt constraints—may still apply.
New construction can help in two ways. Building homes at or below the Latino home-price opportunity threshold directly expands the supply of homes within reach of Latino starter-home-ready households. Somewhat higher-priced homes—in the Austin, TX metro, up to about $470,000—can also help by enabling existing homeowners in lower-priced homes to move up, freeing those homes for other buyers, including starter-home-ready Latino households.
Make starter homes legal to build
In many communities, minimum lot sizes and related zoning rules effectively ban starter homes by making modestly priced homes difficult or infeasible to build. Ending the ban on starter homes means allowing smaller lots, which lets builders spread land costs across more homes and use less land for a given amount of housing. Metros can also expand the supply of developable land where land is relatively inexpensive.
Cut unnecessary per-home costs
Review regulations and requirements that add unnecessary costs, including minimum home sizes, architectural and aesthetic mandates, permitting and impact fees, infrastructure requirements, and site-development standards. These costs can be especially burdensome for lower-priced homes because they represent a larger share of the final sales price.
Make approvals faster and predictable
Make approvals faster and more predictable when proposed housing complies with established rules. Lengthy or discretionary approval processes increase financing and carrying costs and add risk. This ultimately makes it harder for builders to produce lower-priced homes.
For examples of state legislation that would advance these reforms, see the AEI Housing Center’s Housing Supply Reform Tracker. Where applicable, the tracker identifies specific bills addressing minimum lot sizes, permitting, fees, and other barriers to starter-home construction, and estimates their potential housing-supply impact.
Regulation can materially affect home prices.
The National Association of Home Builders estimates that regulation accounts for roughly one-quarter of the price of the average new single-family home nationally.2 The local effect varies widely, but the estimate illustrates the potential importance of regulatory costs—especially for lower-priced homes, where fixed costs represent a larger share of the final sales price.
AEI Housing Center analysis finds that in Texas, within the same census tract, a 10% smaller lot is associated with approximately 3.7% lower values for newly built homes.3 This would amount to approximately $15,000 in savings on a $400,000 house and suggests that allowing smaller lots can help bring more new-home prices below the Latino home-price opportunity threshold.