Yesterday, Austin City Council voted 10-1 in favor of a building code amendment that will allow single-stair apartment buildings up to five storeys and with 4 homes per floor. This is progress. Austin now joins Seattle, New York, and possibly other US cities in allowing this building type, which is a type that is widespread outside of North America. Paris, for instance, allows single-stair buildings up to 50m.

In all of these newly allowable cases, there's usually a requirement to sprinkler the building and cap the number of homes per floor, among other life safety requirements. What I'm not clear on, though, is how flexible these new codes are in allowing larger apartment buildings.

In my opinion, it's better (and hopefully more accurate) to think about unit maximums on a per stair basis as opposed to a per floor basis. Because that's how you create larger point-access block buildings: you cluster multiple blocks together, each with its own exit stair. Is that allowed in these building codes? I'm not exactly sure, but one would hope.

Regardless of this important detail, I continue to be impressed by Austin's willingness to drive positive change in its housing market. It makes you wonder: What the hell is taking Toronto so long? Single-stair buildings up to 6 storeys should already be permissible. We should be leading.

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Since 2009, policymakers in Minneapolis having been implementing land use changes to encourage more housing supply. Some of these changes have included eliminating parking minimums, encouraging multi-family buildings up to 6 storeys on commercial corridors, establishing height minimums in high-density zones, and permitting triplexes on all residential lots. It's, from what I can tell, the type of stuff that many cities have now done or are looking to do. But it seems to have worked remarkably well in Minneapolis. According to The Pew, between 2017 and 2022, the city issued permits for nearly 21,000 new homes and nearly 87% of them were for homes in buildings with 20 or more suites.

This is interesting. It tells us that the triplex policies don't seem to be doing all that much, but that the market has certainly taken to larger multi-family projects. This is an accomplishment. Even more importantly, though, is that it seems to be having a measurable impact on average rents. During the same time period as above, Minneapolis increased its housing stock by 12% and average rents increased by only 1%. Whereas the rest of Minnesota only increased its housing stock by 4% and, maybe as a result, average rents went up by 14%. Changes in homelessness also look dramatically different.

It looks to be a similar story to what's playing out in Austin: increased housing supply is tempering rent growth. (Okay, in the case of Austin it seems to be causing rents to fall.) What I would be interested in seeing now is a further breakdown of this 87% share. Because 20 suites is a different kind of build than 300 suites. It's different for developers and it's different for cities. And I'd like to know if the market is favoring one over the other, or if it's building apartments at all scales. If the city is in fact building lots of new apartments at multiple scales, then this is even more of an accomplishment. It means there might be no "missing middle."

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Nowhere in the US are apartment rents declining as fast as they have in Austin. Average rents are down 22% from their August 2023 peak. This is according to Bloomberg. What seems to have happened is this: Lots of people started moving to Austin during the pandemic, rents jumped up dramatically, and so the city enacted policies to encourage more housing supply. Developers responded as they do and, between 2023-2024, well over 50,000 apartment suites were completed in the city. Now landlords have very little leverage in the market, and so rents are naturally dropping. It all makes perfect sense, but I will say that I'm surprised by the chronology. Apartment rents jumped 25% in 2021, there was a pro-development policy response, and then increased supply started flooding the market in 2023. How? Then again, Yahoo Finance is reporting that "builders [in Austin] typically take two years to go from buying land to welcoming tenants." That's development magic and I'd like some of it.

Cover photo by Carlos Alfonso on Unsplash