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In a precursor to Austin’s HOME housing deregulation reforms, the Austin City Council passed a 2021 resolution directing city staff to study loans, grants, and tax breaks to help lower-income people build “mother-in-law” accessory dwelling units (ADUs) in their yards to accommodate more family members or generate income to help them remain in their homes.
“Our middle-income earners, they’re going to win the most here,” the Austin Monitor quoted District 1 Council Member Natasha Harper-Madison as saying. “But I also think this makes housing attainable across the city for our lower-income earners.”
Since then, the Austin City Council has passed two rounds of “Home Options for Mobility and Equity” (HOME) housing deregulations to make it easier for local residents to build more housing on smaller lots. Yet city staff have concluded that “an ADU financing program is unlikely to effectively serve low-income households,” which “prioritize property tax relief, home repairs, and utility savings over ADU construction.”
That leaves an unresolved contradiction at the heart of HOME. Austin has made it substantially easier to build more housing on residential property, but the homeowners most vulnerable to displacement may be among those least able to afford to take advantage of the new rules.
City officials have spent years studying whether public financing could bridge that gap, only to conclude that loans or grants for new construction may not address what lower-income homeowners say they need most.
The Austin Free Press recently reported the city had received 1,108 “final” or “active” HOME applications to build 1,108 new housing units, according to records obtained through the Texas Public Information Act. Forty-five percent of those units are concentrated in Council Member Harper-Madison’s District 1 and José Velásquez’s District 3. Both districts are in East Austin, where large populations of African Americans, Latinos and lower-income residents live.
The uptake was rapid: City records show HOME-related residential applications climbed from just 24 in 2023 to more than 300 in both 2024 and 2025.
The permit data can show where HOME has been producing housing. It can’t make clear which homeowners can afford to participate, or who will be able to take advantage of the tapestry of new development rights.
Credit: Charles McCoy
Back to the beginning
First, some history. Before the city council approved the first phase of HOME in late 2023 and its 2024 expansion, the council directed staff to recommend ways for such reforms to benefit lower-income residents. In response, the Housing Department reviewed homeowner surveys, financial modeling from University of Texas researchers and financing programs in other cities. The conclusion surprised some advocates of expanded accessory dwelling unit (ADU) development.
“Based on previous findings, peer city models and updated financial analysis, staff finds that while moderate-income homeowners may benefit from assistance, an ADU financing program is unlikely to effectively serve low-income households,” stated a June, written city response to Austin Free Press questions.
Although the city made it significantly easier to build additional housing units on many residential lots, records suggest the main ADU stumbling block for lower-income residents is the total cost, which building professionals say can easily top $300,000.
Pricey HOMEs
Staff estimated that launching even a small pilot program to help lower-income residents finance ADUs would require roughly $1.46 million, including a $1 million revolving loan fund, outreach efforts and staff support.
Mark Rogers, former executive director of the Guadalupe Neighborhood Development Corporation, said the Housing Department’s dire conclusions match what affordable housing organizations have found in trying to help longtime homeowners build smaller homes on their properties.
Rogers pointed to the Alley Flat Initiative and other efforts to make backyard homes financially feasible. He said that they repeatedly discovered construction costs overwhelmed the households the programs were intended to help.
“That approach has been tried … with the secondary apartment and now with HOME. It’s been vetted,” Rogers said. “I think they’d be wasting their time. It’s just not the right way to go about giving homeowners relief. Tax relief makes a lot more sense to me.”
That doesn’t mean Rogers thinks HOME has failed completely.
He said the policy is accomplishing one of its primary objectives by generating additional housing throughout Austin. But he says there’s a big difference between increasing the city’s housing supply and preventing the displacement of longtime homeowners with limited financial means.
“One of the objectives of HOME was simply to get more units of housing … so it’s going to do that,” Rogers said. But he added HOME could increase property values over time, thereby posing a greater displacement threat. “I’d be shocked if it ends up doing what it was supposed to do.”
Council Member José Velásquez has pushed the city to study ways to make HOME more accessible to lower-income homeowners. He said he doesn’t view the Housing Department’s findings as a reason to abandon those efforts.
Before joining the council, Velásquez worked with East Austin residents facing displacement pressures. He said many of those residents saw the opportunity to build a second home as a way to create long-term financial stability.
“What I have seen on my side, from boots-on-the-ground work, the work that I was doing before I got to city council, was that folks always want to have that option,” he told the Austin Free Press. “So whether it is utilized by 100% of the folks that want an ADU or not, they still need to have that option because everybody else does.”
Velásquez said his office continues to work with city staff to explore partnerships with credit unions, modular-home builders and nonprofit organizations to make smaller residential projects more affordable. He said that work will continue, even if the city doesn’t pursue publicly funded HOME-related financing programs.
“I’m not going to be content until the folks that I intended, the low-income folks, are able to benefit from these programs,” he said. “The one thing that has happened traditionally in the city of Austin is that we come up with new tools and new ideas, but the low-income folks or the folks that have been longtime residents of the city are left out of that conversation.”
Chad Swiatecki is a 30-year journalist who relocated to Austin from his home state of Michigan in 2008. He most enjoys covering the intersection of arts, business and local/state politics. He has written for Rolling Stone, Spin, New York Daily News, Texas Monthly, Austin Monitor, Austin Business Journal, Austin American-Statesman and many other regional and national outlets.
