About this series: The Cost of Living will explore how Austin became so expensive, who is being squeezed by the city’s economic boom and what local leaders are — or aren’t — doing to address it.
In 1988, Robert Thayer packed his keyboard, his cat and everything else he owned into a Ford LTD coupe and drove east from El Paso to Austin.
Like a lot of young musicians at the time, he had heard the same promise: if you wanted to make it in music, Austin was the place to be.
Within a few years, Thayer’s band — Joe Rockhead, fronted by future Austin music fixture Bob Schneider — was one of the city’s most recognizable funk acts. On Wednesday nights at the Black Cat Lounge, crowds paid $4 at the door, and the band packed the room every week.
“We did incredibly well,” he said. “I would walk out of there with $500 in my pocket and a babe on each arm.”
He and his bandmates still considered themselves “starving artists.” But in Austin, starving artists could survive. Thayer lived in an unairconditioned housing co-op in West Campus with a dozen or so roommates. He had to cook dinner for everyone on Wednesdays, but his room and board cost $205 a month.
“At the time, affordability was everything,” he said.
For about two generations, Austin’s relatively low cost of living allowed musicians, students and vagabonds to carve out lives in the city, helping shape the culture that inspired slogans like “Live Music Capital of the World” and “Keep Austin Weird.” But the economics of living in Austin have changed dramatically since Thayer arrived.
Robert Thayer, a retired Austin musician and co-founder of the former funk band Joe Rockhead, plays keyboards in the room he rents in a shared house in Southeast Austin on Tuesday, March 10, 2026.
Jay Janner/Austin American-Statesman
Rapid population growth — including an influx of high-earning tech workers — have driven up housing costs, which have far outpaced local wages and transformed what was once one of Texas’ most accessible big cities into its most expensive. Today, more than one-third of Austinites spend over 30% of their income on housing — the federal threshold for affordability — as the rising cost of child care and everyday expenses like groceries are leaving many residents financially stretched.
The American-Statesman will examine those pressures in an occasional series, The Cost of Living, exploring how Austin became so expensive, who is being squeezed by the city’s economic boom and what local leaders are — or aren’t — doing to address it.
Affordability has also emerged as one of the defining political issues of the year. From City Hall to Congress, candidates increasingly frame debates about housing, transportation and economic growth around the rising cost of living.
Mayor Kirk Watson has made affordability his top priority and says part of the goal should be making sure the city remains open to a wide array of populations, including young people who are starting lives and careers after coming to the city for college.
“My number one thing is that you have to keep Austin Austin,” he said.
Struggling to afford Austin? We want to hear from you. Please share your story with us via email at hello@statesman.com.
Silicon Hills: Where the boom began
Many locals trace Austin’s affordability crisis back to the mid-1990s, when Thayer’s music career was taking off. The tech sector also was on a major upswing, earning Austin the moniker “Silicon Hills.”
By the end of the decade, affordability was a big topic at Austin City Hall. But Watson, who first served as mayor from 1997 to 2001 and returned to office in 2023, recalls that the term itself was politically sensitive at the time.
“What was interesting is you couldn’t use the word ‘affordable,’ because if you said ‘affordable,’ people all thought you were talking about Section Eight housing in their neighborhood,” Watson said.
Still, housing costs were becoming a growing concern — particularly for musicians like Thayer who had helped build the city’s reputation as a cultural hub and burgeoning tourist destination.
Watson and the City Council passed a slew of policies during his first term meant to address the issue.
Kirk Watson, then candidate for Austin mayor, stops by the Texas Capitol for a press conference in March 1997.
ORG XMIT / Austin American-Statesman
Early efforts: Well-intentioned but ineffective?
A year after taking office, Watson spearheaded a concept he called “smart growth” that prioritized housing density to combat urban sprawl and directed development toward Central and East Austin.
The following year, Watson and the City Council created the Austin Housing Trust Fund to help address a lack of affordable housing. The program directed property tax revenue toward building affordable housing and offering rental assistance.
In 2000, the council launched another program offering developers incentives such as waiving city fees to build income-restricted units.
Separately, a mayoral “Task Force on the Economy” emphasized the importance of the “creative class” — spanning high-tech, entertainment and media, education and professional services — to Austin’s economic and cultural vitality.
According to then-City Council Member and chair of the task force Will Wynn, the effort yielded three initiatives for nurturing live music, film and technology in Austin, reducing bureaucratic hurdles for businesses and creating standardized incentives to attract major employers to the city.
Mayor Lee Leffingwell, pictured in 2014.
Laura Skelding/Austin American-Statesman
Former Austin Mayor Lee Leffingwell, who served from 2009 to 2015, said many efforts city leaders previously took, particularly in housing, were well-intentioned but he questioned their effectiveness at the time — and today.
“I just don’t think the city — and this is not casting aspersions on city staff — but city governments are not very well-equipped to manage programs that involve development and things like that,” he said. “I don’t think there was much effect — not that the programs themselves were flawed, but maybe execution.”
Brian Smith, professor of political science at St. Edward’s University, said the smart growth policy proved effective at boosting housing stock but noted much of the development came in East Austin, which had the side effect of displacing long-time residents as property values increased.
The policymaking and debate were closely chronicled in the Statesman, where headlines in the 80s and 90s frequently sounded the alarm on affordability with variations on: “Housing: Who can afford it?”
Austin American-Statesman headlines from the 1980s and 1990s frequently sounded the alarm on affordability.
Austin American-Statesman
‘Every discussion is about affordability’
Concerns continued to intensify over the next several years, including during the late-2000s recession when many tech workers lost jobs or saw salaries cut.
Still, Austin’s housing market proved more resilient than many others. While cities like Las Vegas and Phoenix saw home values fall by 64% and 56%, respectively, Austin’s fell by only 8.5%.
That stability created a foundation for Austin’s rapid growth. From 2010 to 2015, Austin’s population grew by 17%.
By 2016, Thayer found himself living in a $1,200-a-month roach-infested apartment.
“It was ridiculous,” he said. “It was eating up all my savings.”
Former Austin City Council member Delia Garza, who now serves as Travis County attorney, at a press briefing Sept. 17, 2024.
Jay Janner/American-Statesman
Around that time, then-City Council Member Delia Garza pushed to create a regional affordability committee bringing together leaders from Austin, Travis County, nearby suburbs and local school districts. But the effort struggled to gain momentum and eventually fizzled.
“Honestly, I feel like what I learned pretty quickly is that every discussion at City Council is about affordability, so it did feel like an extra thing,” Garza said. “I think we had some good discussions.”
Growth continued largely unabated, briefly slowing during the COVID-19 pandemic before accelerating again. From 2023 to 2024, the Austin metro area was one of the fastest growing in the country.
That growth has been evident in the high-paying tech sector. University of Texas associate professor of finance, Michael Sury, said those workers have added to the competition for housing and goods, increasing prices across the board, and creating a sense of wealth inequality.
The “growing tech and non-tech divide” drives “perceptions of feeling financially stretched, because you’re not doing as well as your neighbor is,” Sury said.
By some measures, Austin is thriving.
It is the wealthiest large city in Texas with a median household income of $90,430 — about $8,000 higher than the next wealthiest, Fort Worth. The poverty rate is also among the lowest of large Texas cities.
Yet many residents say the city feels less affordable than ever.
Housing is the biggest factor, with child care also topping the list for many families.
Austin now has the highest median housing costs among large Texas cities, and home prices have grown far faster than incomes.
“If the things that you buy — housing, childcare, entertainment, those kinds of things — if that’s rising faster than your income, you can actually feel poorer, even if your income went up,” Sury said.
The U.S. Department of Housing and Urban Development considers housing affordable when costs do not exceed 30% of a household’s income.
In Austin, the average mortgage payment was $2,955 a month in 2024, according to Redfin. Under the 30% rule, a household would need to earn more than $118,200 annually to afford a typical home — nearly $30,000 more than the city’s median household income.
“What matters isn’t just your income; it’s what you can do with that income,” Sury said. “That’s what economists call purchasing power, and the purchasing power in Austin has definitely declined, especially when it comes to housing.”
According to census data, nearly half of renters and nearly a quarter of homeowners in Austin spend more than 30% of their income on housing.
At a February housing committee meeting, Erica Leak, the city manager’s affordable housing policy lead, said the greatest need is for housing that is affordable to households earning under $60,000 a year.
“Wages are stagnating for essential workers who keep Austin running while the percentage of very high earners continues to grow,” Leak said.
Thayer has since found a more affordable housing situation, not unlike the co-op he started out in nearly 40 years ago. He rents a small room in a southeast Austin home for $680 a month, utilities included.
“That is affordable,” he said. But living on Social Security and odd jobs leaves little room for extras.
Car insurance has become one of his biggest expenses.
“Insurance used to be $18, $20 a month,” he said. “That’s what I paid for years, and now they want to charge me over $200, and I’ve never even had an accident or gotten a parking ticket.”
Robert Thayer, a retired Austin musician and co-founder of the former funk band Joe Rockhead, walks out of the shared house where he rents a room in Southeast Austin on Tuesday, March 10, 2026.
Jay Janner/Austin American-Statesman
What comes next for Austin’s cost of living
City leaders say addressing Austin’s affordability crisis will require action on multiple fronts.
Council members Krista Laine and Vanessa Fuentes recently announced plans to revive Garza’s regional affordability committee with a focus on housing, child care and transportation.
Laine said bringing regional leaders together could help identify solutions.
“It can be a very powerful tool if it is set up in a way that works well for the entire universe of entities it relates to,” she said.
Travis County recently rolled out a voter-backed initiative to help lower-income families with child care — which costs $13,000 per kid annually on average in the county — but its exact impact remains to be seen.
Watson said tackling affordability will require changes to land-use rules, housing development, transportation and economic growth. He has prioritized reducing regulatory delays for housing development, noting the city’s timeline for reviewing site development plans has dropped from more than 100 days to fewer than 30.
Transportation and job growth are also part of the strategy, Watson said, pointing to initiatives like the Austin Infrastructure Academy and a recent deal with Southwest Airlines aimed at expanding employment opportunities.
“I can make something affordable in two ways,” Watson said. “One is I can reduce the price of it. The other is: I can give you more money so you can afford more.”
Still, some factors are beyond the city’s control. State law restricts the city’s ability to offer certain housing incentives and prohibits rent control.
Smith, the St. Edward’s political scientist, said local government policies can only go so far, anyway.
“The free market is going to have as much to do with the reduced cost of housing than any of the mayor’s policies,” he said.