Thinking about turning a central Austin lot into two or three homes, or eyeing a small multifamily near a future rail stop? You are not alone. With new city rules and shifting market dynamics, the window for smart infill projects has opened, but the details matter. In this guide, you will get a clear framework to evaluate sites, understand the latest code changes, and model costs that make or break feasibility. Let’s dive in.
Read the market first
Inventory has climbed across Central Texas, giving buyers more options and price leverage. Unlock MLS reports a metro median near $430,000 in February 2025 with about five to six months of inventory. Inside the City of Austin, medians run higher and results vary by submarket. For infill, this means you should pressure‑test exit pricing and timelines by product type and location.
Know what you can build
HOME Phase 1 essentials
The City’s HOME Phase 1 allows up to three units on single‑family zoned lots and modernizes two‑unit rules. It also removes prior occupancy limits and recognizes tiny homes as an allowed type. Review the city’s summary and confirm your lot’s zoning and history before you pencil yield. See the City of Austin HOME amendments overview.
HOME Phase 2 and small lots
Phase 2 created a small lot single‑family use allowing one unit on lots as small as 1,800 square feet in SF‑1, SF‑2, and SF‑3, plus streamlined infill subdivision options. The practical takeaway is that many standard SF lots can now support more homes through re‑subdivision or three‑unit configurations. Some areas, such as the Wildland‑Urban Interface and tracts flagged for displacement risk, have phased acceptance or extra review.
Bonus programs and height
If your site is near Project Connect, the Equitable Transit‑Oriented Development overlay can unlock additional height with affordable units on site. Depending on tier and proximity to a station, heights can reach up to 120 feet with affordability and design requirements. Review the adopted overlay and tiers in Planning Commission materials. Explore ETOD and DBETOD actions.
Citywide compatibility rules were also updated. The distance that triggers many compatibility standards has been reduced to 75 feet, which changes how taller projects interface with nearby single‑family properties. See a summary of the May 2024 code changes.
Separately, the DB90 program has enabled height up to 90 feet on some commercial or mixed‑use sites in exchange for affordable units or fee‑in‑lieu. Expect negotiated obligations and long‑term affordability terms.
Model fees, carry, and soft costs
Water and wastewater impact fees
For lots platted after October 1, 2023, Austin Water’s published combined water and wastewater impact fee is about $7,700 per service unit. This is a meaningful per‑unit cost in small‑lot projects, and older plats can vary. Start with the current schedule, then confirm project specifics with Austin Water. Review Austin Water rates and fees.
Street Impact Fee
Austin’s Street Impact Fee varies by service area and land use. Accessory dwelling units on an existing site typically do not trigger SIF because they usually do not generate 10 PM peak trips. Always run the fee estimate early for your exact service area and unit mix. See the Street Impact Fee program.
Parkland dedication and exemptions
New residential units can trigger parkland dedication or a fee‑in‑lieu during plat or site plan. Income‑restricted units may qualify for exemptions. City staff reports recommend coordinating early with PARD for a preliminary determination. Example staff report discussing dedication considerations.
Flag site constraints early
Trees and layout
Protected trees are generally 19 inches diameter and up and Heritage trees are 24 inches for listed species. Removals require permits and mitigation, which can materially affect your site plan and budget. Get a tree survey before you go hard on a contract. See staff materials that reference tree protection requirements.
Environmental and equity overlays
Check for Critical Water Quality Zones, floodplains, and the Wildland‑Urban Interface, which can limit or slow small‑lot or multiunit projects. If your tract appears on the city’s displacement risk dashboard, plan for more public scrutiny or added conditions during review. View the City’s displacement risk update and dashboard.
Title and neighborhood rules
Neighborhood Plans, conservation combining districts, historic overlays, and private restrictive covenants can supersede what the base code allows. Confirm title restrictions and potential historic review triggers before closing.
Permits, process, and timing
For many small residential projects, especially four units or fewer, you can avoid a full site plan and move through building permit and residential plan review. Larger mixed‑use or multifamily typically need a site plan and interdepartmental reviews. HOME reforms also created a Site Plan Lite and an Infill Plat pathway that streamline qualifying small‑lot re‑subdivisions. Start with the City’s HOME overview.
Recent city reforms improved review times. Public updates referenced completeness checks under about 30 days, initial reviews around 30 days, and updates near 15 days, depending on complexity. Timelines still vary by project, comments, and whether you pursue rezoning or a density bonus. See the City’s Watson Wire archives for process updates.
Note a drainage nuance that affects feasibility. For small infill re‑subdivisions, streamlined standards allow no drainage review for lots created before June 16, 2025 that build four units or fewer. Newer plats or constrained watersheds may still need grading plans.
Quick evaluation checklist
- Confirm zoning, lot size, and plat date to see if small‑lot rules apply or if you need an Infill Plat.
- Estimate unit yield under HOME Phase 1 and Phase 2, then test whether a two to three unit plan beats a small‑lot subdivision strategy.
- Run Austin Water impact fees and Street Impact Fee exposure for your product mix and service area.
- Order a tree survey and budget mitigation if any 19 inch or 24 inch diameter trees affect building pads or driveways.
- Check for floodplain, WUI, CWQZ, and displacement risk overlays.
- Identify title restrictions, Neighborhood Plans, historic triggers, or covenants that could limit re‑subdivision or design.
- If targeting ETOD or DB90 height, model on‑site affordability, term lengths, and any fee‑in‑lieu.
- Map your permit path and timeline. If four units or fewer, validate whether a full site plan is avoidable.
Strategy tips for today’s Austin
- Match product to micro‑market. In higher‑cost areas, two to three well‑designed units can be more resilient than speculative larger single homes.
- Prioritize entitlement clarity. Where possible, choose paths that avoid rezoning and long public processes unless the bonus value is clear.
- Use bonus programs intentionally. Near transit, extra height tied to on‑site affordability can unlock strong land values if the pro forma supports the commitment.
- Plan for soft‑cost pressure. Carry, design iterations, and mitigation can add up, so build contingencies into your budget.
- Engage early. Pre‑submittal meetings with City Planning, Austin Water, and PARD help avoid surprises.
How we help infill buyers and sellers
You get advisory‑level representation that speaks both real estate and construction. Our team coordinates feasibility, surveys, and plan conveyance, and we market project‑ready listings with polished, video‑first exposure to reach the right buyers. With two decades of central Austin experience and complex transactions under our belt, we help you move from opportunity to execution with clarity.
Ready to evaluate a site or bring a project to market? Connect with Brian Copland to discuss your objectives and a tailored plan.
FAQs
Which Austin lots qualify for three units under HOME?
- Most SF‑1, SF‑2, and SF‑3 lots can allow up to three units under HOME Phase 1, subject to lot history, overlays, and any private covenants. Verify specifics with the City before closing.
How tall can I build near light‑rail stations in Austin?
- In ETOD areas, adopted tiers can allow increased height up to about 120 feet near stations in exchange for on‑site affordable units and design requirements.
Do ADUs trigger Austin’s Street Impact Fee?
- ADUs on an existing site typically do not trigger SIF because they usually do not generate the 10 PM peak trips threshold. Confirm for your service area and unit count.
What are Austin’s water and wastewater impact fees for small infill?
- For recently platted lots, plan for roughly $7,700 per service unit as a starting point and then confirm meter sizing and exact fees with Austin Water.
What are the biggest cost surprises on infill sites?
- Tree mitigation for protected and heritage trees, parkland fees, impact fees, drainage or grading plans on new plats, and added time for historic or neighborhood reviews are common drivers.
