Austin’s surge of new housing construction drove down rents

https://www.pew.org/en/research-and-analysis/articles/2026/03/18/austins-surge-of-new-housing-construction-drove-down-rents

by matthest • 4 months ago

815 974 4 months ago

pew.org

nemomarx2• 4 months ago

Good news - experimental verification of the law of supply and demand!

I'm sure the analysis is welcome though and I hope policy makers try to learn from this. We could densify most american cities quite a lot more.

seanmcdirmid8• 4 months ago

Developers not recouping their investment will discourage less housing in Austin in the future and it will become expensive again. A lot of our current housing shortages are from the build up in 2008 and an implosion of the entire industry (so that crafts people did not really exist for the next need for housing).

nemomarx2• 4 months ago

They can recoup the investment with volume (especially apartments) I would think? Sell 10 houses at 2 million each or 30 at 1 million each or however it breaks down.

atomicnumber3• 4 months ago

So, do we just need to nationalize housing construction? If the free market apparently just can't handle it?

postflopclarity2• 4 months ago

just because rents fell doesn't mean developers couldn't recoup their investment. 2008 was completely different.

standardUser• 4 months ago

It's a balancing act. Build too much and developers make less money. Build too little and poverty and homelessness shoot up. Which side do you want to err on?

JumpCrisscross9• 4 months ago

Developers not recouping their investment

Last time I did the back-of-the-envelope math, financing permitting delays in San Francisco added 10% to the cost of new housing [1]. (Note: not the cost of permitting. Just the cost of financing the delay.)

This is deadweight loss that everyone in the transaction wins from eliminating. One could absolutely see lower prices and higher developer margins if this waste were cut.

[1] https://news.ycombinator.com/item?id=38664780

nzeid• 4 months ago

What evidence is there that developers won't break even or profit? The demand is clearly there, it's a seller's market.

amelius2• 4 months ago

What if the people in power don't want prices to go down?

cg5280• 4 months ago

The problem isn’t the powers that be. A lot of regular homeowners fight new developments tooth and nail. And many blue states unfortunately give them a lot of tools to do so.

TulliusCicero5• 4 months ago

It's typically local residents who fight this. There's a "fuck you, got mine" tendency to pull up the ladder once you've made it.

lo_zamoyski2• 4 months ago

Trump explicitly said he wants to keep prices high [0]. This is the problem with a culture that views housing not as a need or a home, but as an investment. Pathological.

[0] https://www.pbs.org/newshour/politics/watch-trump-says-he-wa...

BurningFrog• 4 months ago

After a few decades in California, I'm pretty sure there are no "people in power".

There are a lot of people with some power, which they use as they see fit. It all adds up to marginal and pseudo-random changes, as the state drifts toward... wherever it's going.

pibaker2• 4 months ago

Over 60% of Americans are homeowners. In any functioning democracy, they ought to be the people in power.

gknapp• 4 months ago

Well, it's easy! Just get the majority of voters to hate each other enough that it's a moral boundary to vote together on any law, effectively limiting any meaningful change.

mountainriver6• 4 months ago

We could but it’s not always just “good” to make things dense.

My hometown has had a huge push to add more housing to make things more affordable. What happened? Rents went down for a couple years then right back up. Except now the city has a bunch of more soulless condos and is horribly congested.

Sometimes preserving things and keeping them nice and simple even if it’s costs a bit of a premium is better.

orangecat2• 4 months ago

Rents went down for a couple years then right back up. Except now the city has a bunch of more soulless condos and is horribly congested.

So there were a bunch of people who wanted to live there and now can.

ajross2• 4 months ago

now the city has a bunch of more soulless condos and is horribly congested

The first bit is a taste thing; obviously lots of people view modern sprawl as "soulless" too.

But the latter point is just plain wrong. Dense housing IMPROVES traffic congestion and shortens commutes, always, everywhere, markedly. And it's for a bleedingly obvious reason: pack people in closer together and they don't have to travel as far to get where they're going. QED.

What you're imagining is some kind of fantasy hometown, which never increased in population and whose economy never developed. I mean, it's true. Forgotten ghost towns have very little traffic and quirky soulful architecture, c.f. Detroit. Everyone agrees that's a bad thing, though.

CyberDildonics5• 4 months ago

more soulless condos

If you want soul move to New Orleans. Meanwhile people need comfortable places to live that don't make them indentured servants for the rest of their lives. I'll take a neighborhood with walkability and density over an old drafty brick building with no grocery stores any day.

pottertheotter2• 4 months ago

I just hope that people remember this is just one factor affecting quality of life and making a city work.

"Density at all costs" ignores a huge set of tradeoffs that are equally as damaging to a city. Things such as urban form, street experience, long-term adaptability, integration with existing fabric, economic resilience, etc. These are the things that make a city work in the long term.

I’m a big proponent of building more housing. But a lot of it is being doing in very short sided ways that lead to huge externalities.

CyberDildonics5• 4 months ago

Things such as urban form, street experience, long-term adaptability, integration with existing fabric, economic resilience, etc.

I have no idea what any of this is supposed to mean as a negative to people being able to walk around their neighborhood for essentials. It sounds like a classic vague "what about culture" argument that can't be explained.

kristopolous2• 4 months ago

No it's not. It's 2 cherry picked data points with a sample size of 1 of a complex system with multiple confounding factors such as a pandemic

You can look at other neighborhoods such as palms in Los Angeles, which has the most aggressive housing build out in all of California. Median rent has increased - sometimes more housing can create more demand

mactrey• 4 months ago

Did rents in Palms go up because they built housing or because it's a great location in a city with increasing rent almost everywhere?

Or in other words, is there any econometric evidence that building housing increased rents in Palms, or could we be confusing correlation with causation?

riknos314• 4 months ago

So glad we don't need to re-write the first chapter of almost every economics 101 textbook!

tkel4• 4 months ago

They also teach you about elasticity in econ 101. It's foolish and anti-intellectual to insist that the housing market has only two factors, while simultaneously condescending about your understanding of economics shows that you really don't understand economics, it's more about your ego.

JumpCrisscross9• 4 months ago

It's foolish and anti-intellectual to insist that the housing market has only two factors

Elasticitiy moderates the effect. It doesn't reverse it. Increasing housing supply decreases housing costs. A lot of people are venally or ideologically motivated against accepting this. Our housing crisis is a political choice. (Note: I'm a homeowner.)

Aurornis• 4 months ago

The parent comment never claimed that the housing market only has two factors. You’re arguing against a strawman of your own creation.

malkosta• 4 months ago

Yes, it describes human nature better than psychology. We can’t fight even knowing about it.

muyuu2• 4 months ago

it's crazy that people nowadays seriously question basic market pressure being a thing

lesuorac3• 4 months ago

Eh, people really need to be questioning econ 101 more often.

It's built upon untrue assumptions

- infinite buyers / sellers

- perfect information

- no switching / transaction costs

---

The article itself has 3 different year ranges provided so I'm not sure how you can use it as evidence. Plus overall the rent is still up by a lot since 93% - 4% is still at least 80%.

- Rents increase by 93% from 2010 to 2019

- Housing increase from 2015 to 2024 (this overlaps with when rents increased ...)

- Rents fell from 2021 to 2026 by 4%

varenc• 4 months ago

I'm with you, but many people still question this. Here's a recent pre-print paper that was in the news arguing that inequality, not lack of supply, is the real source of housing affordability: https://osf.io/preprints/socarxiv/95trz_v1

datsci_est_20155• 4 months ago

Who are the people that “seriously question basic market pressure being a thing”? Am I missing something?

terminalshort10• 4 months ago

Housing and immigration are two areas where people just can't accept basic economics. You can see some olympic level mental gymnastics routines all over this comments section.

callamdelaney2• 4 months ago

They are often happily blinded by ideology. Try to tell someone in Britain that wages have been seriously suppressed due to mass immigration and most of them will look at you like you’re stupid.

kevstev2• 4 months ago

I think the issue is that we have under built so much for so long, that it often feels futile to build more. NYC can feel like this, because due to zoning and general difficulties in building, all that seems to happen is a new building goes up and drives up rents. But if we built 20x more of those and sated demand, we would. On a micro level though, it can appear that "new building makes rents go up."

And this pattern repeats across the US. Add in the fact that people want to freeze the area they moved to in time (like suburbs refusing to increase density, even urban yet car reliant neighborhoods panicking if a single parking space is removed: https://hudsoncountyview.com/outraged-jersey-city-residents-...) and we get constant blockers to housing supply growth we so desparately need.

Its been frustrating watching the half baked measures to make housing "more affordable" by making mortgages cheaper when really they need to stimulate the supply side. It seems like an easy political win IMHO as long as you can sell it up front- stimulate GDP by juicing house building, and everyone gets cheaper housing. Just keep it under control lest you end up in a China type situation.

ghostly_s• 4 months ago

the snark is quite rich when reading beyond the headline makes clear this was anything but a free market solution.

mgfist• 4 months ago

OP wasn't talking about free markets but supply and demand.

thesmtsolver22• 4 months ago

You should read again. The reforms made the market more free.

tkel4• 4 months ago

There's loads of other inefficiencies as well. Moving is a huge hurdle. It's difficult to find housing that meets dozens of conditions, and even then you don't respond to supply + demand imagined equilibrium, you pay more or pay less to live near friends or family. It's something you only do a handful of times in your whole life. Trying to use the same analysis as for buying a can of beans is absurd. You might need to take econ 201 before you understand why econ 101 is wrong about housing.

paulnpace2• 4 months ago

I'm not clear: does Econ 201 inform us as to how demand and supply are not related to price?

triceratops22• 4 months ago

It's difficult to find housing that meets dozens of conditions

Correct. That's why when there's more housing you're more likely to find what you need.

kortilla3• 4 months ago

“People like to drink certain kinds of beer” and “some people don’t drink beer often” are not arguments against supply and demand driving beer prices.

bluGill4• 4 months ago

False. Even if you don't move, people move all the time and that moves the needle for everyone.

thesmtsolver22• 4 months ago

You need Econ 301 and stats 101 to see Econ 201 is wrong.

svpk2• 4 months ago

Not really, it used to be the case that a full third of Americans moved every year. Obviously life is more complicated than econ 101, but it's also obvious that a current undersupply of housing is one of, if not the primary, drivers of home pricing. Admittedly other factors like the governments interference in the home loan space have also had large effects on the market over the last century.

https://www.theatlantic.com/magazine/archive/2025/03/america...

cm11• 4 months ago

I don't think this is simple econ 101. Yes with more houses we should expect lower prices, but also with high prices we should expect more houses produced. All that is econ 101, but that second econ 101 prediction isn't happening. I would guess that some will chalk it up to vaguely (though not necessarily wrong) jerks/idiots blocking it. Whether it's because nimbyers want to keep their home values (what we should expect from econ) or it's broken city politics, there are lots of things going on here. It's more complicated.

xwowsersx• 4 months ago

You mean to tell me that increasing supply lowers price? Fascinating.

dietr1ch• 4 months ago

Who would've thought?!

TulliusCicero5• 4 months ago

Unfortunately, there's a lot of people -- especially further left -- who fight this kind of reasoning. They insist that the housing market is different, and that just building more private housing won't help.

No amount of evidence will convince these people, because they already made up their mind ahead of time: their ideology says the market can't help, so the market can't help, period. Any evidence to the contrary is a plot by billionaires or something.

lanfeust62• 4 months ago

The populists on the right share a similar view, but mostly blame immigration.

hnthrow0287345• 4 months ago

Their core argument is that we could increase supply but choose not to, and that we should be maximizing supply (as an ethical and moral mandate, but that is not a tenant of capitalism really) because housing is an essential thing like food and water. FWIW we don't maximize food/water production either for various reasons, which would also drive food/water prices down.

Maximizing supply can mean other things than building like taxing unoccupied homes by large amounts making them unpalatable to own as a second (or higher) home, thus putting them back on the market. However these aren't all good because obviously our economy deals with more effects than just simple supply and demand, like maximizing the amount of loans given to people wanting housing regardless of the ability to repay is known to be a bad idea.

If you throttle the supply you can clearly control the price and the people you're talking about believe there is a concerted effort to control that supply. This can happen directly (choosing not to build as soon as land is available to build on) or indirectly (e.g. politics, mass media influencing people to vote to not increase supply).

What people generally hate is production of essentials not being maximized which would give us the actual lowest price, and maybe we as a society should be maximizing that supply to arrive at the lowest cost for a given house with given features.

And then the rebuttal to that is usually "tough shit lol" which is why people coming out with simple supply and demand replies are generally seen as derisive.

Tiktaalik4• 4 months ago

There's a lot of talking past each other on this issue. Sure there's probably clueless people out there, but a lot of left wing housing activists that are skeptical of free market housing liberalization understand very well economics and the benefits of housing supply, but are concerned about the time horizons involved and concrete near term impacts on low income residents.

It is of overall net benefit over the long term to raze a small three story walkup apartment and build something denser, overall increasing the amount of housing.

However, in the short term it's immediately quite (sometimes existentially) bad for affordability if existing affordable housing is destroyed and replaced by brand new (and thus inherently luxury) housing.

So accordingly we naturally see low income housing activists push back against some redevelopment and ask why development is not occurring in wealthy single family home areas where the amount of people impacted is less and class those that are not remarkably negatively impacted.

Personally I think the data shows that in general it is still really beneficial to build out as much housing as possible and avoid the negative impacts of a shortage, but I do think there are people validly pointing at a real problem of displacement.

bell-cot• 4 months ago

"It is difficult to get a man to understand something, when his salary* depends upon his not understanding it!" - Upton Sinclair

*Nothing changes if you replace "salary" with "financial interests". Or "social interests". Or other interest near & dear.

clamprecht• 4 months ago

At a glance, I'm a bit skeptical. It looks like they're cherry picking the high point for rent (the COVID spike).

"Rents fell. In December 2021, Austin’s median rent was $1,546, near its highest level ever and 15% higher than the U.S. median ($1,346)."

Of course having more housing should, all things equal, lower rent. But all things certainly weren't equal, especially during this time period.

scarmig2• 4 months ago

In December 2021, Austin’s median rent was $1,546, near its highest level ever and 15% higher than the U.S. median ($1,346). By January 2026, Austin’s median rent had fallen to $1,296, 4% lower than that of the U.S. overall ($1,353).

For comparison, in San Francisco December 2021, the median one bedroom was $2810. In San Francisco March 2026, it was $3597, an increase of 28%.

darth_avocado3• 4 months ago

It is well known that there was a brief moment in time when people were abandoning San Francisco and “moving to Texas” (mostly Austin) that coincides when the rents peaked in Austin. I’d be not surprised if that was also the time when San Francisco rents were down.

We’re seeing a reversal in trend when SF is hot again and Austin is not. So not exactly a straightforward comparison. It could explain the SF-> Austin and back trend.

dmoy• 4 months ago

Idk about rent, but even as of a year or two ago, Austin metro housing index was lower than its 2016 level. Rent following a similar trajectory wouldn't be super surprising to me.

TulliusCicero5• 4 months ago

If you just compare it to other cities you can see that Austin did much better in prices.

Tade0• 4 months ago

Here's a chart that presents some context:

https://www.reddit.com/r/texas/comments/1grxqur/the_austin_t...

This appears to be a correction to an unsustainable market.

lifeisstillgood• 4 months ago

>> The city changed zoning regulations to allow construction of large apartment buildings, particularly near jobs and transit. In 2018, voters approved a $250 million bond measure to build and repair affordable housing. Permitting processes were reformed to speed development and reduce costs.

All three of the five things most economists say about house building - and each one will hit house owning voters hard making it hard to replicate.

But none the less a triumph of common sense :-)

cheriot2• 4 months ago

and each one will hit house owning voters hard making it hard to replicate

In a negative way?

maxerickson3• 4 months ago

As a homeowner, I want number to go up.

These things push against that.

Really, I'd prefer not having policies that tend to push up housing prices or discourage people from moving, but here we are, those types of policies are common.

bombcar9• 4 months ago

As a home owner I don't really care about number go up. I'd rather it go up than down, sure. But staying level would also suit me fine.

Going down might be nice, perhaps I could buy the neighbor's house and combine the lots and make a nice set of row houses ...

House go up being important is really only needed if I'm using it for leveraged appreciation and doing something like dragging the cash out like a piggy bank; but that's a tiger that will have to be dismounted eventually.

tasty_freeze• 4 months ago

If you are in your terminal home, then yes, selfishly one would want the value to go up. But if you ever plan on moving to another home, sure dropping prices mean you get less, but it also means you pay less for your next purchase.

If you are in your terminal home, you also want low prices until the week before you eventually sell your house, as Texas has a high property tax rate to make up for the lack of state income tax.

01100011• 4 months ago

As a homeowner I have zero objections to apartments built near jobs and transit (which also means away from my house). I also don't think apartments directly compete with single family housing. Like, they do, but only in certain situations and at certain levels of occupancy and the economy.

I am strongly opposed to building homes in stupid places, worsening traffic or overburdening infrastructure. This is why I tend to strongly oppose ADUs. If you want to turn my neighborhood into a dense urban environment, fine, but buy my house and my neighbors' houses, bulldoze them, and build proper urban density.

I also have a lot of skepticism regarding our housing shortage. You can go find people making the same arguments about housing shortfalls in 2006(underbuilt for years, new family formation, prices will remain high...). But then something happened, and it wasn't that 10% of Americans suddenly died. Suddenly we had more homes than we needed. Why? Because housing demand is related to economics. Now that we're slowing down reproduction and kicking out or scaring off immigrants we're likely setting ourselves up for another round of oversupply. "Good!" Well, tell that to the soon to be unemployed home builders.

Gigachad3• 4 months ago

Same has been happening in Melbourne, Australia. The state government has basically steamrolled the boomers and allowed highrise construction next to existing train stations. Despite having huge population growth, rents are some of the most affordable in the country.

servo_sausage2• 4 months ago

One of the things I like about the reporting in this Austin article, is they break down by building class.

In Melbourne I've never found a good source for this, only general averages; and my suspicions are that we just build shitboxes and claim the rent is lower on average, capturing something like shrinkflation rather than affordability.

bombcar9• 4 months ago

You should be able to identify properties and track them over time; and then even if you argue that "brand new condo" vs "same condo 10/20/30 years later" aren't directly comparable; well you can start to compare other metrics.

nmfisher• 4 months ago

I was apartment hunting in Melbourne in 2015 and I was appalled at the quality of most inner-city apartments. Tiny shoeboxes, no sunlight, paper thin walls.

At the time I didn't think they should have been allowed to be built. But looking back, they probably did keep a lid on rents. A bad roof over your head is better than no roof.

rconti7• 4 months ago

Meanwhile, California is also trying to build housing near transit, but Menlo Park wants to preserve the character of downtown by preserving dirty, cracked, flat, surface-level parking lots like it's 1950.

strbean3• 4 months ago

To be fair, parking structures always look and feel pretty distopian.

I like the approach of making downtowns walkable and having a bit of parking at the periphery of downtown, along with good public transit. Encourages people to use public transit to get to town in the first place. Downtown residents can use transit or a zipcar or equivalent when the need to get out of town, instead of devoting a ton of space downtown for storing their cars.

Not sure if that approach is really practical, but if it can be made to work it is much nicer.

rconti7• 4 months ago

Well, in Menlo Park they're just flat surface parking lots, not even multi-story structures. The planned development is multi-story housing with parking underneath.

To be fair, I am boycotting the (similar) underground garage over at Springline because they're clearly made only for people in Range Rovers or whatever. They have those AWFUL ticket machines, set too far back (to avoid getting hit) and too high to access from a normal car.

QuiEgo3• 4 months ago

To be fair, parking structures always look and feel pretty distopian.

What a lot of the new buildings in Austin are doing is putting an attached garage directly behind a 4 + 1 mixed use development - the street-facing facade is the apartments and shops, and the garage is directly behind (and usually attached) to the apartments. You basically never see them.

alephnerd5• 4 months ago

Menlo Park isn't comparable to Austin though - Austin's equivalent of Menlo Park would be a country club CDP in the Austin Hills like Rob Roy.

A better comparison would be ATX against San Jose.

Just like how the "rich" residents of Santa Clara county know that you want to live in Campbell, Los Gatos, Menlo Park, Los Altos, Loyola, etc, similarly rich Texans and Austinites live in the Hills.

The reality is the residents of Menlo Park and Rob Roy don't want your type, and in a lot of cases tend to be the same people as there aren't many places left where you can trail run, bike, eat Michelin star ramen, and not pay income tax.

Just because we make good money in tech, it doesn't make us "them". I highly recommend reading the works of Pierre Bourdieu with regards to cultural capital.

onlyrealcuzzo• 4 months ago

Menlo Park has a higher population density than Austin...

The majority of it is not Bel Air...

wcfrobert• 4 months ago

NIMBYism has never been about preserving neighborhood characteristic, or noise and traffic concerns. Menlo Park is not Big Sur. Sure, some concerns are reasonable and should be investigated, but most of the time they're bureaucratic distractions that's been weaponized by people who want to delay progress and protect their investment.

For most Americans, A house is their primary savings account, retirement plan, and probably where they keep majority of their wealth. We don't build new housing in old neighborhoods because it would de-value the investment of too many people. Until we can solve this problem (where people are incentivized to pull the ladder up behind them), we will always have housing shortages. It's just too profitable.

BenFranklin1002• 4 months ago

It’s going to take a SCOTUS decision overturning Ambler vs Euclid in my opinion.

We certainly will not see zoning reform until the Boomers die.

lurk2• 4 months ago

adrianN4• 4 months ago

I'm not sure why new housing devalues old housing. In my mind, higher density generally makes an area more desirable (e.g. because higher density enables more jobs, better infrastructure) and raises the value. Imagine as an extreme example and existing house in the middle of nowhere around which a metropolis is developed. Surely the value of the house, or at least the land it is built on, goes up, even though it loses its "cabin in the woods" appeal.

jmyeet5• 4 months ago

Fundamentally as a society we need to stop treating housing as an investment. It is and should be a utility.

Suring property prices is a relatively new phenomenon (as in, post-WW2). The true origins of NIMBYism, at least in the US, is (you guessed it) racism. Long before segregation ended, and long after, there was economic segregation. Redlining [1], HOAs [2], the post-WW2 GI Bill [3], where highways were built [4][5], etc.

In fact this is a good rule of thumb: if you're ever confused why something is the way it is in the US, your first guess should pretty much always be "because racism".

[1] https://en.wikipedia.org/wiki/Redlining

[2] https://www.furman.edu/fu/placing-furman/what-are-racially-r...

[3] https://www.history.com/articles/gi-bill-black-wwii-veterans...

[4] https://www.npr.org/2021/04/07/984784455/a-brief-history-of-...

[5] https://www.bloomberg.com/news/articles/2017-07-09/robert-mo...

danavar2• 4 months ago

For most Americans, A house is their primary savings account

This is true for California, where people (foolishly) rely on their home value as their retirement plan, which further incentivizes NIMBYism.

But in places like Texas (and other areas with affordable housing), the house is just treated as something you pay off to have a low housing cost in retirement. And your investments are your retirement+savings account.

rconti7• 4 months ago

I've never seen the evidence where density increases drive down existing land/home values.

raybb2• 4 months ago

A paper came out about this recently: The City as an Anti- Growth Machine.

Logan and Molotch's “urban growth machine” remains foundational in urban theory, describing how coalitions of landowners, developers, and politicians promote urban growth to raise land values. This paper argues that under financialized capitalism, the dynamics have inverted: asset appreciation now outweighs productive investment, and urban land is increasingly treated as a speculative asset.

https://doi.org/10.1111/anti.70145

zozbot23418• 4 months ago

For most Americans, A house is their primary savings account, retirement plan, and probably where they keep majority of their wealth.

If you allow for increases in density, that house (actually the land beneath it, but still.) becomes more valuable as it's redeveloped. So that American homeowner does benefit, by unlocking the upside of "evil gentrification" (or actually, density increase).

dan-robertson4• 4 months ago

I think there are a big range of opinions people have. There are some hardcore housing resisters whose opinions get a lot of sway because of the way processes work (public consultations, activism, etc). Lots of people are a bit sceptical because of pretty legitimate reasons – noise, traffic, disruption, aesthetics.

I think there probably are balances where people could generally be happier with new construction and that opinion could be clear enough to overrule those who would never be happy with it. Things like:

- ways of having locals vote on new development with small enough constituencies that they can be paid off (ie some of the gains that would have gone to developers or other positive externalities can be captured by those who are more effected) with lower taxes or new roads or parks or whatever

- making residents vote instead of having consultations will lead to less bias in favour of the most obnoxious

- allowing apartment blocks to vote to accept offers of redevelopment (eg you get a newer apartment; more apartments are added to the block and sold to fund the redevelopment)

- having architectural standards that locals are happy with for new buildings

- allow streets to vote to upzone themselves (I don’t love this as it’s basically prisoners dilemma – if your street does it, land value increases and you gain; if every street does it land value only increases a bit but now you are upzoned)

I basically think that there are developments that can be broadly appealing and we are in a bad local minimum in lots of places of having bigger governments trying to push development on unwilling smaller governments/groups

dkarl2• 4 months ago

Anecdotally, what we found in Austin was a combination of two factors:

First, awareness of the futility and selfishness of "growth elsewhere" as a solution is much higher in younger people — and by younger, I mean currently under fifty. Generational turnover in Austin had been eating away at the NIMBY majority, and conversations about housing in Austin have long been polarized more by age than by left/right political sentiment. There's a caricature, with a strong vein of truth, of the old Austin leftist who has Mao's little red book on their shelves and thinks apartment buildings are an abomination, and Austinites of that generation are experiencing mortality. At the same time, younger people are adopting more and more urbanist mindsets compared to their parents.

However, I think a much much bigger factor was the influx of younger people, especially young people with experience of larger cities, diluting the votes of the older NIMBYs. Austin has been shaped by growth for half a century, but its "discovery" in the 2000s and very brief status as a darling of coastal hipsters (remember that term?) has had a lasting effect on Austin's popularity and its demographics. It's been twenty years since it was the "it" place for Brooklynites to visit, but in that twenty years, it's had a lot of exposure for young urban dwellers, and some of them discovered they liked it and moved here, bringing their comfort with dense living and their appreciation that growth can bring a lot of positives.

Personally, every homeowner I know in Austin has seen their houses depreciate significantly this decade, and I don't think it changed a single person's mind about Austin's housing policy. People who opposed the reforms are bitter about the outcome, and people who supported the reforms say it sucks for us personally, but it's what we set out to accomplish, and we're glad that it worked.

manquer2• 4 months ago

To be fair it is not the city/elected officials who wants to retain the parking lots. The downtown redevelopment would probably make the city a lot of money.

It is the businesses around downtown who are pushing the save downtown campaign. I imagine the businesses contribute a fair chunk of revenue to the city now and have some influence .

Relative to say parts of Redwood City, or Palo Alto. Menlo park has a fair amount of student-ish 4 Unit lots, so it not all zoned SFU.

rconti7• 4 months ago

TBF a lot of the complaints are coming from businesses that are _probably_ renting. There is absolutely the chance that their business will go under due to construction disruptions before they can benefit from the increased foot traffic once the development is complete.

And, of course, once the development is complete, and the value of their land goes up, so too does their rent....

jojobas2• 4 months ago

If you owned a 600sqm allotment in Menlo Park surely you'd want it to stay a parking lot and not become vibrant apartment blocks.

1-6• 4 months ago

I don't expect Menlo Park to keep it character for long as Silicon Valley CEOs are fleeing the state.

nout• 4 months ago

Menlo Park people are pretending that they are Atherton.

testfrequency• 4 months ago

TIL Menlo Park claims to have a personality

phendrenad2• 4 months ago

Babies throw tantrums, your job as a parent is to not give in to their demands. But California has a weakened state government due to the governor's will-he-wont-he bid for higher office some time between now and 2092, he's afraid to make waves. If it were me I'd say: you need more housing. And if the fine people of Menlo Park say no, then let them maintain El Camino Real themselves. A home depot employee will be by to unlock the shovel cage for you shortly.

KolibriFly5• 4 months ago

Austin's example shows what happens when a city actually follows through and allows density where it makes sense

lumirth• 4 months ago

I mean… duh? Genuinely baffled at people struggling to understand this. When there’s more of a thing, it costs less. Which is good when that thing is essential, like housing.

Not sure the idea of housing being an asset which endlessly accrues value is good for anybody involved, long-term. Open to disagreement, though! I’m no economist.

Gigachad3• 4 months ago

I guess the confounding factor is that the population isn't fixed. Greater construction could result in population growth which cancels out the gains from greater supply. You'd have to build faster than population growth to lower prices. And generally developers aren't looking to do that.

jakelazaroff• 4 months ago

Sure they are. What developer wouldn't rather rent out ten apartments for $2k/mo than two apartments for $4k/mo?

CBLT• 4 months ago

People are quick to point out that induced demand exists - especially people that aren't fond of change.

Very broadly speaking, people mis-estimate effect sizes in economics by orders of magnitude. Induced demand is just their foothold to claim an effect exists, before they go about claiming the effect size they want to see.

bombcar9• 4 months ago

I love induced demand. I'm going to use it to get rich - buy up some abandoned town somewhere, and then pay to run a 100 lane superhighway to it; induced demand means the town will fill up instantly and be hugely valuable!

tialaramex• 4 months ago

How would induced demand work for housing? I understand it for say transit use or car travel or like Facebook visits, but when there's twice as much housing do I... buy another home? Buying extra houses as "an investment" in a culture that is hell bent on depreciating my investment by building more housing is one of those "r/WallStBets" crazy plays, if I'm wrong I will lose my shirt and everybody will laugh at me.

Also, even if that were a problem, which seems dubious, you can regulate it. Massive tax hikes for second and subsequent homes are a thing in some places.

epistasis9• 4 months ago

If you try to take any local action that might lower housing prices or even keep them steady, you will likely be stymied by a large contingent of people that deny that new housing could ever raise rents.

The idea that supply and demand don't apply to housing is quite popular:

https://www.jstor.org/stable/27397156

And the very few academic articles that try to refute housing supply lowering prices get a lot of press:

https://hellgatenyc.com/take-that-ezra-klein/

Even when it's not peer-reviewed and contradicts a ton of more serious research attempts, a bid of research which rarely gets popular press coverage.

It's like climate denialism, there's huge demand for denialist positions and very little research to back it up, so the press does not reflect the research.

cyberax5• 4 months ago

When there’s more of a thing, it costs less.

Yeah, and when we add lanes to roads, the average speeds increase and commutes get shorter. Right?

Also, if the government gives me $1 billion, then I'll be rich. But what happens if the government gives everyone $1 billion? Everyone will be rich, right?

svpk2• 4 months ago

... Your examples seem to undercut your point if I'm understanding what you're trying to say.

In your first example the "cost" in the form of traffic etc. was reduced so more people "buy" in the sense that they go on the road until you reach a new "cost" equilibrium. In practice that equilibrium is quite close to the original cost so it doesn't fix the issue traffic. But if that same number of people had driven before the high way expansion traffic would have been way worse; the cost would have been too high so they previously opted not to drive.

In your second example by increasing the supply of money the money ends up costing less; it becomes worthless due to inflation.

When there's more of a thing it cost less.

To be fair, building more housing can be like highway example. If there's tons of pent up demand of people looking to move somewhere increasing supply dramatically can fail to move the needle on cost because there's many marginal buyers who all have basically the same price. If you've got a million people who want to move somewhere and are all willing to pay up to 500k for a house the price of a house won't fall under 500k until you've built at least a million more homes.

postflopclarity2• 4 months ago

how surprising, never would have seen that coming

lanfeust62• 4 months ago

Similar phenomenon in several cities: https://substackcdn.com/image/fetch/$s_!vg94!,f_auto,q_auto:...

jackconsidine• 4 months ago

Anecdote: I lived in Austin from 2017 to 2021. My rent was always very cheap (my baseline is Brooklyn which I guess makes everything feel cheap. But my rent went up $50 for the first 3 years and then down $200 during Covid and I checked recently and my aptmnt is still the same price). Around the time I left everyone was buying up houses to rent and Airbnb. Very palpably felt the growing supply when it came to bnb's (the owners having a harder time competing for renters etc). It's hard not to be surprised in spite of the tremendous growth in that city

legitster• 4 months ago

Another part of this - higher interest rates really put the brakes on home values. We own a rental property and the home value has more or less been locked in since 2022. In our otherwise hot metro area, nobody has raised their rental rates on similar properties in 4 years.

It's a win-win for our tenants. Prices seem to be stable and there's no rush for them to lock down a house RIGHT NOW.

It's sure not good for my bottom line as a landlord for them to keep adding homes and keeping rates up. But it sure seems like a no brainer for society at large.

james_marks• 4 months ago

This balanced perspective on what’s good for someone personally vs what’s good for society at large is what’s missing from the world.

bombcar9• 4 months ago

Any reasonable landlord/real estate investor will have planned for various results - if your rental empire depends on "rents go up" and can't handle a flat market, let alone a downturn, you're going to be in for a bad time.

A stable market is great; as you can find good deals with some sort of certainty, and focus on where you can actually build value (rehab, etc).

tonymet3• 4 months ago

what they didn't mention is that supply didn't impact rents until the large remigration back out of Austin

abigail95• 4 months ago

show pop stats

JumpCrisscross9• 4 months ago

what they didn't mention is that supply didn't impact rents until the large remigration back out of Austin

This has been studied to death. But just like soybean farmers in Idaho voting for tariffs on China it seems a category of urban renter is more wedded to ideology than self interest.

The Austin metro area's population is up [1][2]. Austin's GDP is up [3]. Migration per se doesn't explain a phenomenon that is robust across cities, countries and centuries.

[1] https://www.macrotrends.net/global-metrics/cities/22926/aust...

[2] https://en.wikipedia.org/wiki/Austin,_Texas#Demographics

[3] https://fred.stlouisfed.org/series/GDPALL48453

tonymet3• 4 months ago

2-3% is a margin of error compared to 20-40+% y/o/y growth. That means the influx ceased, some left, some had babies. Meanwhile housing was built.

Of course rents will crash if everyone anticipates 20-40% growth and it’s suddenly 0 . Let’s see in a few years if the pricing trend continues downward or upward.

If it’s downward, yes we’ve solved the rent problem by “building”. If it’s upward, as it has been, it’s not just about supply .

cat-turner• 4 months ago

Thats cool. Now do LA. Sorry but I want beaches and housing options.

shcheklein• 4 months ago

Can it be also related to demand not catching up or even declining? If place is in high demand and prices go down shouldn't it cause even more people coming to it (compensating for a possible price change). (Note: not an expert on this, I'm just curious how it really works - besides obvious thing: more supply -> price goes down).

JumpCrisscross9• 4 months ago

Can it be also related to demand not catching up or even declining?

The Austin metro area's population has been monotonically increasing [1]. Increasing housing supply decreases prices. If you want to reduce housing costs, flood the system with housing.

[1] https://www.macrotrends.net/global-metrics/cities/22926/aust...

afh1• 4 months ago

Germany could learn a lesson or two here...

CSMastermind• 4 months ago

Certainly, that can't be true?

Increased supply lowered prices for the same levels of demand?

Seems unlikely.

kart23• 4 months ago

the problem in sf is building is incredibly expensive, and projects that have been planned, land acquired, are simply sitting as empty lots because developers don’t have the money.

interest rates for construction loans, reduced funding, labor and material costs, all contribute to the amount of housing built.

there is a bond being debated in the ca senate now that will help by giving loans for construction.

https://calmatters.org/politics/2026/01/2026-housing-agenda/

imadch• 4 months ago

Austin is a good reminder that supply does matter — but also that it needs to be added at scale before people actually feel it.

Small incremental changes probably just get absorbed without visible impact on rents.

nomilk• 4 months ago

Dumb question, many cities suffer from extremely high property (i.e. land) prices. I understand the NIMBY barrier. But I don't understand why it isn't more common to simply.. start a new city. Especially in countries like Australia where property prices are sky high and alternative places for setting up a new city are abundant. Maybe internet connectivity was previously a barrier, but now.. starlink.

I put this question to grok; its response:

Unfortunately, Australia's legal, regulatory, financial, and practical systems make this extremely difficult (bordering on impossible at any meaningful scale).

Crazy that the reason we can't have an order-of-magnitude reduction in the cost of the most important thing people need (shelter) is not due to resource constraints, but man-made ones.

noahbp• 4 months ago

Why would you think that the same thing preventing density and new development in cities won’t stop your new city from growing before any building taller than 2 stories is built?

bluGill4• 4 months ago

You can't start a new city. I city exists for all the things you can do. Your new city will have nothing to do because nobody lives there and there are no jobs to attract anyone to move.

that is why we build suburbs - they get anound this by being right next to a place with everything you want in a city

vel0city5• 4 months ago

It obviously wouldn't be successful on day one, and it would take some kind of exceptional pressure to jump start it, but these things have been done in the past in the US and have been done recently in China. Not arguing these were good things, but they have happened before.

Think back to the old "company towns". Lowell, Massachusetts, built for a textile mill. Hershey Pennsylvania, built around a chocolate factory. Fordlandia, Brazil, a rubber plantation town. All of these were essentially cities and towns planned out around a central industry.

Similar things happened with the ghost cities in China with several of the big notable ones eventually actually growing into real, functional cities.

Once again, these have all kinds of messy histories and I'm not saying they're all good ideas. But just pointing out, it can be done.

ryanmerket• 4 months ago

Sure you can. You just need enough land and money to start basic things like a post office, city hall, courthouse, roads, and a way to get power to the whole thing.

See Starbase, Texas

cuuupid10• 4 months ago

This is actually how you start a city though, you build a suburb and wait for it to grow into a city. This takes a really really long time so it's better to build near existing cities.

We don't observe this phenomenon occurring often in the modern day only because cities sprawl rapidly and so the evolution of the suburb becomes a borough of the existing city rather than a brand new city. Otherwise Brooklyn, Jersey City, Weehawken, etc. would all be considered new cities instead of being referred to as the NYC metro.

BeetleB• 4 months ago

Lots of examples in various countries in the 20th century prove you wrong.

Brasilia, Canberra, Islamabad, Reston, etc.

abtinf• 4 months ago

You might enjoy the novel A Town Like Alice by Nevil Shute.

jfoster2• 4 months ago

Crazy that the reason we can't have an order-of-magnitude reduction in the cost of the most important thing people need (shelter) is not due to resource constraints, but man-made ones.

You say that as though reduction in cost of housing is a universal desire, but it isn't.

Suppose a couple of years ago you took a $500,000 loan to buy a $700,000 house, which you'll be paying off for the next 10 years. Would you like the market value of your house to decline substantially during that time?

If there's enough of the population bought into property, it won't be politically feasible to allow the value of homes to decline.

FireBeyond3• 4 months ago

Suppose a couple of years ago you took a $500,000 loan to buy a $700,000 house, which you'll be paying off for the next 10 years. Would you like the market value of your house to decline substantially during that time?

No, but when your city proposes a "missing middle" plan, watch who all comes out of the woodwork to scream murder at their research that shows that the projected effect of doing so will lower property values in my town from an 11.5% YoY average increase to a "mere" 9% YoY increase. You'd have thought the city was suggesting executing grandmothers in the streets.

(I cannot personally complain, I put down 10% on my home purchase here in 2021 and was able to get out of PMI due to having 20% equity against appraised value 366 days later, while only making required payments.)

foltik2• 4 months ago

Always comes back to the good ol “fuck you, I got mine.”

jojobas2• 4 months ago

There is no shortage of cheaper existing cities in Australia, but everyone wants to live in Sydney, Brisbane, Melbourne and Perth.

The existing smaller cities just slowly wither.

Existing homeowners of the capitals have little interest in real estate prices dramatically dropping - would you?

xboxnolifes• 4 months ago

In this hypothetical, who is the individual or group of people that you envision would take the initiative to start a new city? What is their incentive to do so?

AngryData2• 4 months ago

People move to where there is jobs and money. You can't build the housing first, in our society you need capitalists to invest into building businesses to make people want to move there. And because we have spent decades killing small business in favor of corporations, you need corporations to decide to build where there are no people and they have to pay a small short term premium to attract workers. Except corporations don't like doing that because it is a longer term investment and they are worried about next quarter's numbers and maximizing executive level bonuses which means short term planning.

steve-atx-7600• 4 months ago

You could build all the housing first in China until recently…

knappe• 4 months ago

You can, but it is damn difficult.

https://www.volts.wtf/p/is-the-brand-new-city-in-california

1970-01-01• 4 months ago

Water. You need clean water to grow a city. There isn't much of that to spread around anymore.

bluGill4• 4 months ago

most people posting here are talking about california or texas - desert or near deserts where there isn't enough water.

however there are many places where there is more than enough water. East of the mississippi for example. other continents also have areas where there is plenty.

aorloff• 4 months ago

Except in the oceans, and near the oceans

renewiltord• 4 months ago

Subject to the same constraints. They tried to make one in California and it was blocked by others in the same county. It’s fine to be honest. Over time California will become less relevant to the US and Texas more so.

redwood2• 4 months ago

Supply glut aside... Quality of life down... Traffic up... Kind of makes sense rents are down.

redwood2• 4 months ago

Supply glut aside... Quality of life down... Traffic up... Kind of makes sense rents are down. Density needs transit investment too

alsetmusic• 4 months ago

It's almost as though the well-known and proven method of building more housing works!

Similarly, the tested and proven solution to homelessness is providing housing up front. Don't have any requirements (employment, sobriety, etc) blocking housing. Those things are easier to achieve with a roof over your head.

rgovostes• 4 months ago

I'll admit ignorance here, but I've been skeptical of the claim that new construction drives rents down. What I actually see is: a luxury apartment building goes up, surveys the market, and sets its rents 30% higher for the privilege of living in a new building with a gym for dogs or ball pit or whatever. Then the older buildings say, "Well, we can raise our rents 20% and still be the best deal in town," and so on.

Maybe if you flood the market with 30% more housing units like Austin you get the Econ 101 effect. On the other hand, apartment owners realized intentional vacancy is a profitable strategy, which alone seems to defy that basic interpretation.

piinbinary• 4 months ago

a luxury apartment building goes up, surveys the market, and sets its rents 30% higher for the privilege of living in a new building with a gym for dogs or ball pit or whatever. Then the older buildings say, "Well, we can raise our rents 20% and still be the best deal in town," and so on.

I think that might not be the right cause and effect relationship. The actual cause is increased demand. This creates both the increased pricing of existing stock and an incentive to build new stock.

marssaxman• 4 months ago

Then the older buildings say, "Well, we can raise our rents 20% and still be the best deal in town,"

They can only get away with that when there is a housing shortage.

alephnerd5• 4 months ago

I've been skeptical of the claim that new construction drives rents down.

It can, but not in isolation.

It requires a couple additional variables such as population demand (rate of growth of Austin has reduced since the COVID boom [0]), existing stock (Texas had a building boom and bust in the 1980s [1] that decoupled it's housing market from the rest of the US), and a shift from buying to renting.

That said, the peers I have who work in professional real estate (not realators - as in actual MDs for REITs or multi-generational landlord families whose parents went to school with Governers and Mayors) are starting to shift away from real estate to equities because of headaches around succession planning and reduced margins.

What is ending up happening is megacap REITs like Equity Residential, Essex, Avalon, etc are buying out older groups, taking stakes in new developments, and shifting away from selling condos to perpetually leasing. At their size they can afford to have significant amounts of unleased units becuase they would have made up the cost via higher rent on leased units, tactically building high margins condos and SFHs in high appreciation geographies, or loss harvesting in order to subsidize commercial buildouts like data centers.

Naively saying only construction will reduce prices is false, and if the consolidation aspect is not solved (and sadly, it won't be) it would only lead to an even worse situation.

Additionally, these are hyperlocal problems and what may work for Austin may require significant retooling for Chicago.

[0] https://www.bizjournals.com/austin/news/2026/01/28/austin-be...

[1] https://www.nytimes.com/1986/09/14/business/john-connally-s-...

Tiktaalik4• 4 months ago

what you're neglecting to consider is what would have happened if someone moved to Austin (say a wealthy person from SF) and that expensive new apartment didn't exist.

The mechanism by which new construction drives down rents is that people that need a new apartment are in less competition with existing residents in older worse apartment buildings.

So the newcomer from SF moves into the expensive new apartment, which means that there's less competition for decades old apartments, which means that when one of those is vacated there is less price appreciation on that product.

If there is a scarcity of apartments what happens is that when a decades old apartment is vacant it is filled by a wealthy newcomer and the landlord increases the rent accordingly.

QuiEgo3• 4 months ago

There were a ton of apartments built in lower-cost areas outside of the urban center as well - the Parmer area (near the new Apple campus), the Tech Ridge area near I-35, and out by the airport and Tesla factory as a few examples. It wasn't only high-end, lots of mid-level stuff was built too.

pembrook6• 4 months ago

Your scenario is simply describing a massive under-supply problem, and mis-attributing causality for price increases.

If the older buildings are able to raise prices 20% with no increase in vacancies after the new build, the new build not coming in would mean those older buildings rent would be bid up more than 20%.

The people moving in who could have afforded the 30% more expensive luxury units will just have to pick from the older units and outbid lower income people for spots in this low supply, growing city (under no other scenario could you crank up rent on aging stock 20% without losing to competing landlords).

bartlebyS2• 4 months ago

In my neighborhood in NYC, I've also observed that rents increased after luxury apartments were built here. In fact my landlord cited the increased median rent in the neighborhood as a reason to raise my rent.

My understanding of the situation is that luxury apartments do indeed gentrify neighborhoods (i.e. they increase the local rent and drive displacement of locals that can't keep up with those rent increases).

However, across the entire city, it slightly eases rent pressure by providing additional housing supply.

So, like you mentioned, if you get enough housing across many neighborhoods, you can drive down rents. Otherwise, that luxury complex in your neighborhood might only be helping ease rent pressure in other neighborhoods.

hunterpayne15• 4 months ago

"In fact my landlord cited the increased median rent in the neighborhood as a reason to raise my rent."

Your landlord lied to you to get you to pay the increase. You had little choice because finding a cheaper apartment probably wasn't possible/desirable and you probably didn't want to argue with him in front of the rent board. Understandable but that doesn't mean your landlord's explanation has any validity.

eszed• 4 months ago

if you flood the market with 30% more housing units like Austin you get the Econ 101 effect

According to TFA, it seems so.

Which is great, because it's further evidence that we should do the same thing everywhere.

babybjornborg2• 4 months ago

This is democracy in action: give the people what they want (and need)!

babybjornborg2• 4 months ago

Why are you downvoting me, I'm right

ksec• 4 months ago

This reads like some triumph but rent was up 100%+ from 2010, and it is merely back down 15%.

Even adjusting for inflation, and even if the measurement of inflation is decent, it would still need to go down by another 20%.

pclowes11• 4 months ago

Its wild how the solution to housing costs is really just:

Build more housing. Keep law and order.

No it doesn’t need to be “affordable”. Yes rent control is a terrible idea.

Just build more housing.

Note: that the US already has plenty of housing and housing costs basically go up in areas of low crime relative to economic opportunity. If you build housing, but allow crime to rise, you have wasted everybody’s time.

datsci_est_20155• 4 months ago

Multiple things can be done at once. The policies you laid out are not mutually exclusive, and have different utility for different communities. But yes, fundamentally more housing is needed for growing populations. Conversions and rezoning are also important parts of the urban equation to “build more housing”, not just exurban McMansion developments.

tsunamifury• 4 months ago

[flagged]

tptacek• 4 months ago

There isn't affordable housing in areas of opportunity. You can easily find cheap housing if you don't care about proximity to jobs or to good school districts.

bitmasher9• 4 months ago

What do you mean by "economic singularity"? If your goal is being near economic opportunity then Austin has plenty.

It’s not NYC or SF, but this suggests that those would be more affordable if they just built more housing.

pibaker2• 4 months ago

It is not affordable if it is located somewhere with no job.

slg9• 4 months ago

This comment is phrased as if the article is confirming these points when it either doesn't mention them or even directly refutes them. First there is no mention of either crime or rent control in the article. But more importantly, it states that "A key piece of Austin’s strategy has been to encourage the construction of affordable housing." So why are you concluding that affordable housing isn't needed?

terminalshort10• 4 months ago

Affordable housing is the only type of housing that will ever be built. Builders aren't so stupid as to build products that their customers can't buy. Government intervention is not needed.

jychang• 4 months ago

The comment is phrased in the greater context of the public discussion about housing, in general. Not the specific information of the article.

You know, like how a discussion about war might reference the various recent wars that everyone knows about; it's not limited to just the content of the article.

pclowes11• 4 months ago

In this case affordable housing nets out as a way to overcome policy barriers to market rate housing. So it actually makes the market freer.

Many other implementations of affordable housing further raise the barrier and thus even if any is built it doesn’t help widespread housing affordability issues.

Rent control is just another flavor of housing affordability policy that often (always?) backfires.

Crime, social peace, and economic opportunity are very linked. A lot of house prices in urban areas are wildly distributed and often the increase cost is to buy distance and safety (often just a couple blocks) from high crime areas.

tharmas2• 4 months ago

You have to restrict investors buying up that newly built housing too.

Homes for people. Not investors.

creato2• 4 months ago

It really doesn't matter as long as someone is living in it.

bryanlarsen• 4 months ago

35% of Americans rent their homes. And they almost invariably rent from investors. Therefore if more than 35% of homes are owned by investors this drives down rent. If less than 35% are owned by investors rent goes up.

triceratops22• 4 months ago

No not really. You just have to restrict the same investor from buying all the housing in an area, and prevent investors from colluding on rents.

estearum34• 4 months ago

New construction has already decelerated in Austin due to falling prices, which compresses already-near-zero margin on real estate development.

So yes, it really is "just build more housing." The problem is: why would you build more housing as prices fall?

creato2• 4 months ago

It doesn't matter whether prices are going up or down, it matters if the price is more than the cost to build.

terminalshort10• 4 months ago

Because home builders don't make money by buying and selling houses, they make money by building them and selling them.

pembrook6• 4 months ago

Construction costs don't scale linearly with rent prices, it's a different market altogether that depends on regulation/worker supply/material costs/equipment/etc.

As long as construction costs remain below the value of the units all-in, there's profit motive for developers to build.

FireBeyond3• 4 months ago

In my state, or in my capital city, you say this, but the real estate developers are generally the top 1% in town. If they're running on razor-thin margins, I'm not seeing it - I am seeing them on my Facebook (being friends with the wife of the mayor) doing things like taking their kids on vacation to the French Riviera, Switzerland, Tokyo, the Maldives... well, alongside the City's Planning Committee commisioners and their families...

spongebobstoes• 4 months ago

it doesn't matter if prices are falling or rising, it only matters how the ROI of building compares to other investment opportunities

we can also make it cheaper to build. easing taxes on imported materials, bringing in more skilled labor, expediting permits, and even direct subsidies like tax breaks

cuuupid10• 4 months ago

It's not necessarily prices falling here but the profitability of [demand] at [price]. Like if prices fall 10% but demand rises 20%, you would want to build more housing.

This is the beauty of the free market because it guarantees three things:

[1] Real estate is generally a good investment and will hold value or appreciate in the long term, because supply will adjust to demand shocks to rescue values

[2] If people want to live somewhere, houses will be built for them to live there

[3] Real estate developers and construction are solid, safe businesses with great unit economics because building may decrease prices, but may still increase demand

It's when you constrain and restrict a market that players have to adjust and then you get crazy scenarios

komali24• 4 months ago

Maybe other real estate savvy people can help me understand this plus two other things I'm confused about in the housing crisis:

1. Houses are unaffordable for many Americans. To get houses to prices where they'd be affordable again would require a housing prices drop that would likely be, market-wide, significantly low enough to put a ton of people underwater on their mortgages. What is society/the government meant to do about that? Is it an insurmountable floor on how low we can get housing prices? That floor feels very close if so.

2. We've been promising the last five generations (or more) of Americans that a house is an Investment, capital I, an excellent place to keep your money. How do we overcome the political pressure to turn a house into a depreciating investment for the length of time required to get housing to be affordable again? What kind of politician would put their neck on the line to piss off every boomer and 75% of gen X and 30% of millennials, or whatever the house ownership distribution is?

adrianN4• 4 months ago

There is the possibility that the government builds housing, since the government doesn't have to care about direct profits and can include the overall economic effects of affordable housing in its calculations. We don't expect much direct profits from roads either, but we keep building more and more of them.

SocialGradients2• 4 months ago

This is an empirical claim. It looks like new monthly permits are down from ~4k a month in 2021-2022 to ~3k a month. They're still up significantly from before 2020. The building boom has slowed but it's still elevated. Not particularly close to zeroing out.

The data is here: https://fred.stlouisfed.org/series/AUST448BPPRIVSA.

pinkmuffinere4• 4 months ago

I'm confused by this objection, if you draw a stereotypical supply and demand curve, you can see how prices settle to an equilibrium point. Of course reality has more complications, but I think your objection is 95% answered by a supply and demand curve. You keep building houses when it is profitable. You stop when it is not. This naturally keeps everything in balance.

lmm• 4 months ago

already-near-zero margin on real estate development

Why is the margin so low when the prices are so high? Is it because the value of housing is already priced into the value of land?

The problem is: why would you build more housing as prices fall?

Why would you want to? When you stop being able to sell more houses, that's the sign that you've built enough.

rconti7• 4 months ago

As long as the cost to build housing is less than the revenue from selling it, why wouldn't you?

It's not like homebuilders in Austin flee for North Carolina when the margins shift slightly.

eru• 4 months ago

Huh? In Silicon Valley the objection is usually: even if we build more housing, prices won't fall.

So which way is it now?

throwaway274482• 4 months ago

Why let private developers build at all? The market provides perverse incentive to not house everyone.

locknitpicker3• 4 months ago

The problem is: why would you build more housing as prices fall?

Profitability is not black-and-white. Real estate investments can still be profitable if prices fall.

There are different types of real estate markets too. Working class homes in suburbs are not the same market as upper middle class apartments in an urban center.

A very interesting type of investment is high-density housing in catchment areas of new public transportation hubs. Those tend to be so profitable that they can even finance the investment in the public transportation service.

All you need is willingness to invest.

throwaway2037• 4 months ago

    > already-near-zero margin on real estate development

I did a little bit of research. I looks like 15-20% is a normal target margin for the United States. Is this really "already-near-zero"? I disagree.

modriano• 4 months ago

The prices may be falling, but if you can still make more profit (per unit time) building in Austin than elsewhere (due to less red tape or more local builders or whatever), building will occur.

energy1232• 4 months ago

That gets automatically decided by the market. That's the beauty of markets. They automatically solve the local knowledge problem. It takes a government to create a lack of housing.

sophrosyne424• 4 months ago

Supply increases until the market reaches saturation. The question is why build more housing if the current supply is sufficient?

21asdffdsa122• 4 months ago

Why would you produce more bread, milk, eggs as prices fall? You would of course wait for the next-pig cycle - when the starving masses pay any price to you.

The answer- essentials can never be a non-government interferring market. This can be by creating artifical oversupply by buying up oversupply for foreign aid or bio fuels(food production). In the case of housing, this is by having the goverment continually construct housing.

crystaln• 4 months ago

This is how markets balance. When there is under supply prices go up and incentivize production. When there is oversupply production goes down. Prices converge on a small premium to the price of production.

wnc3141• 4 months ago

Of its still profitable to do so, considering opportunity costs for the capital, firms will continue to build. However, it's so expensive to build that these project wind up not becoming bankable very quickly. I think that's the underlying issue that needs to be addressed.

PowerElectronix• 4 months ago

That sounds like they could use some deregulation to keep margins healthy.

inglor_cz2• 4 months ago

The point is that housing would be cheaper, not that it would become dirt cheap.

There are some inherent costs to new housing. Work of professionals involved, cost of materials, compliance with all technical regulations, some profit for the developer, connection to infrastructure. Let us mark this unavoidable cost by C. It is a component of the current prices.

Then there is the component N, which is deadweight cost caused by zoning and non-technical regulations. I am not saying that it should be 0, but it is in our interest that it is kept in check, maybe 20 per cent of C. As of now, in some places, it well may be 120 per cent of C, even though it is really hard to calculate.

This component of the final price directly enriches no one, it is pure friction caused by special interests of various parties that don't want to see any new housing either near them, or anywhere (landlord cartels that hate competition - indirect enrichment).

Even C is now a formidable figure. Modern homes are basically industrial robots, they are much more complicated from the inside than they were 100 years ago. But there isn't really a reason why they should be horribly expensive.

If as a regular office person you can buy a home for, say, 5x your annual income, it is not unaffordable. That is well, just normal. Not completely everyone is expected to own their home.

The problem is that nowadays, the multiplier in many places isn't 5x, but 10x or 12x. That is just way too much. And given that C cannot be easily massively reduced (unless some sort of massive robotization of construction work happens), you really need to attack N.

samrus• 4 months ago

Thats how supply demand works right? Its a stable equilibrium. When supply is low, prices rises to entice supply, supply increases to match demand, prices fall, the rate of increase of supply falls as well until supply approaches to meet demand. It prevents oversupply. If supply slips below demand again prices will rise to pull it back up

Theres no problem here. Thats how the system should work

pbhjpbhj• 4 months ago

To house people. Shelter is a basic need.

Saline9515• 4 months ago

Building codes also push prices higher. In the EU, the recent regulations force developers to build luxury buildings as a baseline, at a high cost.

Not all buildings require elevators, intelligent thermostats, triple-panel windows or electric car plugs. Especially when you are experiencing a housing crisis.

torginus5• 4 months ago

How can real estate have zero margin when housing rises exponentially in price?

No other good behaves like this. A midsize sedan didn't increase in price (in real term) over time, while new cars improved.

New houses don't really improve that much over time, yet are getting more more and more expensive.

Why is that?

thinkingtoilet• 4 months ago

The problem is: why would you build more housing as prices fall?

So human beings with thoughts and feelings can live indoors. It's not hard.

balderdash• 4 months ago

lower prices != unprofitable, it might, it may also mean lower, similar, higher margins / ROI

foobiekr3• 4 months ago

Why would you build more cars as prices fall?

What do you think homebuilders do? Just close up shop when the market dips?

The answer is there are companies in the business of building homes. If there is profit to be made, they will keep building. Most of the issues we have today are caused by extreme and dysfunctional regulatory regimes that destroy the return on investment by extending the process out. More time sitting on the property before building = lower investment return, and other investments end up making more sense.

testaccount28• 4 months ago

without rent control, what economic incentive do renters have to maintain law and order / invest in local community / be a good neighbor? any investment they make is captured by the landlord. in fact, they are incentivized to maintain their neighborhood in as much disrepair as they can stand, for fear of rent increases.

the little old lady living in a rent controlled apartment is a big part of why rents are high in that area: she was part of what made the community thrive. we would do well to compensate her for this.

bsder4• 4 months ago

Just build more housing.

Also "Wipe out a whole boatload of techbros who artificially inflate prices". Nobody is talking about that part of the equation.

Austin was one of the places a lot of tech folks flocked to when everybody was working online. RTO and layoffs have wiped a lot of them out. I'd estimate almost 1/3 of the tech folks that were floating around last year are now in other cities.

mmooss7• 4 months ago

Its wild how the solution to housing costs is really just:
Build more housing. Keep law and order.

Safety (law and order) increases housing costs, as you say. It's desireable on its own, but it does not solve housing cost. NYC is very safe and very expensive. Crime is way down in most of the US, and housing costs are much higher.

pclowes11• 4 months ago

NYC is fairly high density. Has stopped building massive new skyscrapers and has water on two sides. It is also a tier 1 global city culturally AND economically. Its not really reasonable to expect to be affordable.

easterncalculus2• 4 months ago

And also expand the city line for what "Austin" is so you can include the cheaper, far from everything housing that you refuse to build.

Yes, it does need to be affordable, and a certain percentage of it needs to be non-market housing. Housing isn't an elastic commodity. Get real.

pclowes11• 4 months ago

But where do you draw the limit on moving the line in?

Do I get to demand affordable housing overlooking Central Park in NYC? Beachside in Malibu?

If you want large incentive for development at scale you need to allow developers to make fat margins or else you wont get too many of them. Yes you can use affordable housing to do that. Eg: in the article they got higher density and exceptions (aka “fat stacks”) for building affordable housing units.

This is all policy tradeoffs at the end of the day. Eg: a tent is not “housing”, why? Because of reasonable policy. Same thing with housing codes etc. All directionally wise/good. But at the same time you can have bad affordable housing policy.

I do think housing is elastic and a cities policies around that elasticity determines if they will thrive or stagnate.

bluegatty7• 4 months ago

Rent control is one of the best ideas, and it may be a civilizational, foundational idea.

Property ownership is at the very core of entrenched power, and the foundation of rent-seeking and wealth asymmetry.

If you look at even the Monarchs of long past - it wasn't their 'titles' that made them powerful - it was the economic rent that came along with the land ownership.

Even in more open market economies, property is still is basically long term economics lording over short term economics of wage earning workers.

Being able to kick someone out of their home almost arbitrary basically puts working class people at the 'total whims of the market' and it's one of the most disruptive concepts imaginable.

If we take the view that 'housing is about housing first - only about investment to the extent it does not disrupt housing' - then a different perspective takes shape.

Many Canadian provinces have 'basic rent controls' and it does not generally prevent new housing development.

If anything, providing 'housing stability' is probably the best way to create base prosperity, so those people can go out and spend on all the other things.

There might need to be some degree of leeway here and there for certain kinds of density challenges, but that can be had with rent control

There is almost unlimited land in North America to build on - if in one spot it's a bit difficult - build elsewhere.

If people want to have 'density' then incorporate an area and 'build density' in that area.

Also it does need to be 'affordable' but that can work with regulations.

Edit: our housing problems are about screwed up management, it's actually not even an ideological problem underneath. Like 'rent control' the way it is framed scares some people, but its literally province wide in Ontario, Quebec and it's a 'non issue' for new unit hinderance. Even the nimbyism stuff can be worked around: if people don't want high-rises next to them, it's their right, but there's a lot less opposition to 'mild density' especially if it fits in local cultural and aesthetic context. We can have our cake and it eat on housing. I think we invent ideological lenses because it's easier to frame 'narratives' than it is just weird policies, special circumstances, hiccups, different municipal things going on all at once.

wyager• 4 months ago

Rent control is one of the best ideas

It's funny how this question might have the greatest divergence in answer distribution between people who do and don't know what they're talking about

Other candidates are "is debt good" and "is property tax better or worse than income tax"

hahahacorn4• 4 months ago

It would be far more efficient to simply tax away all rent collected from land instead of grossly warping markets and creating terrible incentives for all involved.

The reason is that you can’t produce more land. Fixed supply will also warp economic markets and create terrible incentives (land speculation).

If you want the best solution, you implement a land value tax. If you want the 2nd best solution, tax property (Land + Building value). If you want the worst solution, implement rent control.

jmyeet5• 4 months ago

Rent control is the wrong solution to the right problem (ie affordable housing).

It creates all sorts of problems that wouldn't exist otherwise. For example, if you've been in a rent control house or apartment for 10+ years and are paying significantly less, what happens if you want to move? Or just need a bigger place? It's a huge impeediment to mobility and flexibility.

Also, you have an adversarial relationship with your landlord. They want you to leave so they can raise the rent. They'll skimp on maintenance, turn off the heat (even when it's illegal) and generally make your life miserable until you leave.

The solution to these problems is social housing, meaning the government becomes a significant supplier of affordable, quality housing. The very wealthy and the real estate industry don't want this however because it will decrease profits.

Property ownership is at the very core of entrenched power,

In the literature, there is a distinction made between private property and personal property. I'm fine with people owning their own home if they want. That's personal property. Private property is when we allow people and corporations to hoard housing. I'm all for making it financiall punitive to own more than one house.

slopinthebag2• 4 months ago

our housing problems are about screwed up management, it's actually not even an ideological problem underneath

Broadly, our housing problems are bureaucratic in origin and I think bureaucracy is indeed an ideology.

jmyeet5• 4 months ago

So pretty much everything you've said here is wrong.

Build more housing? In a place like Austin, you can just keep building out, basically. To a point. Eventually cities doing this reach a limit. Houston and Atlanta are pretty much at or beyond that limit.

And it's not that building low-density SFH housing is the most economic. It's simply the most subsidized. Every road, every parking space, every sewer pipe, every water pipe, every utility pole, every school, every hospital, every police station, every fire station... they all add factor in to the true cost of housing and the more spread out things are, the more expensive those things become. Taken to extremes, look at the billions Houston spends now to add just one more lane (because this one will totally solve traffic) on, say, the Katy Freeway or the ring roads.

Yes it does need to be affordable. NYC is the posterchild for this. Nothing that's getting built on billionaire's row will ever trickle down to being affordable housing. They build ultra-luxury housing because it's the most profitable and it does absolutely nothing for anyone else because these units are just ways for non-residents (mostly) to park wealth and not pay their fair share of taxes.

Rent control is the wrong solution for the right problem and it's typically American. By that I mean it forces the solution onto private landlords who are going to do everything possible to get out of those obligations and deliver subpar but compliant housing. And they'll demand tax breaks for it. When in fact the solution is for the government to supply a large chunk of the housing market ie social housing. But there's a pervasive and wrong idea that we can only solve problems in the private sector and that's nothing more than a wealth transfer from the government to the already-wealthy.

"Just build more housing". Yeah, and then you get Houston. Cities need to be planned. Cities require infrastructure. And one of the most important thing cities need is public transit infrastructure, something sadly lacking in virtually every American city.

The core to so many of these problems is that we need to stop treating housing as a speculative asset. Owning two or more houses should be incredibly difficult and expensive and should be taxed punitively. By this I mean the capital gains on non-primary residences should be 80% and property taxes should be significantly higher.

FarmerPotato3• 4 months ago

You seem to know Houston; alas yes Austin was formerly surrounded by open spaces.

But let's not miss the point of the article. This is a right-ward shift of the supply curve. It means that the economics of building the next unit got cheaper. That's the point.

I've seen a lot of neighborhoods across the USA, and Austin making way for higher-density housing on urban corridors (Lamar) is like, duh, this is more live-able. There are new towers along rail and bus route, townhomes packed in, and behind the tree line it's now possible for some single-family lots to become duplexes or fourplexes. And rather than McMansion ugly, the new Austin residents are dressing those up to look pretty darn cool.

There is a lot more to be done to remove supply-side barriers in every city.

pclowes11• 4 months ago

I dont understand your solution, houses are expensive because there are too few of them in desirable places (otherwise we have plenty). The govt becoming a command economy wrt to housing does not fix the supply. If the govt is just supposed to handle all the supply and demand aspects of housing well I have good news, there is a lot of very cheap housing in former Soviet Republics just not desirable housing.

Also taxing homeowners harder doesnt really solve the problem. CA has insane taxes, SF especially has a giant budget. They just waste it. I dont believe that once the govt raises taxes they will suddenly become efficient and competent.

The idea that the more spread things out the more expensive they are is sound theory. However in practice, per capita taxes in a city are often higher than the rural or suburban regions. One water main should serve more people in a city and its cost amortized across the population should be cheaper.

In practice, cities tend to have tons of programs that drive taxes up. They are free to do that, not necessarily bad, but also not efficient from a tax payer perspective.

4fterd4rk3• 4 months ago

So build more dense housing. It's that easy. Neuter the NIMBYs. Let people build.

verall2• 4 months ago

Houston has a very high density of delicious food. The traffic is horrible but if there was a big investment into public transit, I think it would be a very nice place to live.

- an austinite.

atoav• 4 months ago

Well, build more housing and ensure the more housing is being bought by people who live in it or (if you don't find enough of those) by people who will rent it to them. Many problems occur when capital buys living space as an investment that needs to go up in value, since now there is an incentive to keep some scarcity.

vkou6• 4 months ago

Yes rent control is a terrible idea.

When you aren't building more housing, for whatever reason, rent control is the only thing that prevents domestic 'immigrants' into your city from making all the residents homeless.

Since cities can't stop migration into them, it's the only tool they have to protect their existing residents.

---

PS. If you believe in trial-by-combat for housing, why not a similar approach to border control? It's the same concept, open it all up and let the market decide whether your existence is worth it.

There are billions of honest, hard-working, capable people who will happily pay more than you for where you live, do your work for less pay than you're willing to accept, and would love to live... Wherever you currently feel entitled to live.

What gives you any right to deny the market from improving the welfare of your landlord and employer?

TurdF3rguson5• 4 months ago

The problem is, rent control scares away developers and traps tenants in apartments that they've grown out of.

Also why should cities prioritize protecting residents based on how long they've lived there? Everyone counts the same.

fogzen• 4 months ago

It's possible to build more housing and have rent control. Rent control is the only thing allowing working class families to live a dignified life in the USA's most desirable cities. Land value tax and social housing are simply not politically feasible – rent control is.

hunterpayne15• 4 months ago

That is simply not true in any way. Have you ever lived somewhere with rent control? Working class families who have members working jobs in rent controlled areas commute in from often over an hour outside of the city. There are only 3 types of people who live in those cities: those in public housing, upper middle class and wealthy. Their plumbers live in Tracy.

wolfi1• 4 months ago

Vienna built housing itself, with this housing it was possible to have cheap rents and keep rents from private investors down. https://en.wikipedia.org/wiki/Housing_in_Vienna

bobthepanda3• 4 months ago

It’s worth noting that a major confounding factor is that, unlike most cities with a housing crisis, Vienna is well below its population peak and so does not need to build nearly as much housing

davidw3• 4 months ago

Unless you want to build more sprawl-oriented social housing, you'd still need, in most American cities, to reform zoning codes and building codes (single stair and elevator reform) to get Vienna style social housing.

It's a "yes, and" problem though, mostly. Let the market build what it can, and if you want to pursue social housing, do that too - just don't let the perfect be the enemy of the good and delay the reforms while you try and put together all the social housing pieces.

nodesocket2• 4 months ago

And yet, if you dig through the various comments on HN over the years regarding SF housing costs the overwhelming conesus is more rent control. Sometimes, the most common sense solution turns out to be the correct one.

pclowes11• 4 months ago

Hows that working for SF so far?

protocolture• 4 months ago

If you build housing, but allow crime to rise

Building enough housing that rents go down is the same thing as lowering crime so not much of an issue there.

b0rtb0rt• 4 months ago

in america, more density and more people always means more crime

kevin061• 4 months ago

No, it really is not that easy. Check out China, and read up on the Spanish housing crisis. "Just build more" works only sometimes, as demonstrated in those counter-examples. Housing is massive societal and sociological problem with no simple fix. Furthermore, in many circles, another proposal is to cut red tape. You know, housing in the US already is among the least affordable and lowest quality in the developed world. But some people really insist that going back to asbestos and lead pipes would make housing cheaper.

And don't get me wrong, asbestos and lead are wonderful construction materials. Cheap, durable, and high quality. It's just a shame it causes all sorts of health complications when we use them, right? I mean, it would definitely make housing cheaper, but also cause all kinds of health problems.

Gareth321• 4 months ago

Your reply conflates “build more” with “build anything, anywhere, with no standards”, which is not what they wrote. China and Spain are not rebuttals to the basic supply point because both involved distorted credit, speculation, and overbuilding in the wrong places or segments, not healthy increases in broadly useful housing supply. The question is not whether supply is the only variable, but whether more homes, in places people actually want to live, puts downward pressure on prices and rents, and it does. That is just basic scarcity: when demand rises faster than housing stock, prices go up.

Keeping crime low matters too, because people pay a premium for safety, and high-crime areas often face weaker investment and worse long-term housing outcomes. And “cutting red tape” does not mean legalising asbestos or lead pipes, which is a straw man. It means reducing delays, exclusionary zoning, parking mandates, and other rules that limit safe housing production and raise costs for no good reason. Housing is absolutely a complex social problem, but complexity does not erase the role of supply. More safe housing plus safer neighbourhoods will not solve everything, but it is still one of the clearest ways to reduce pressure on rents and prices.

simgt• 4 months ago

You may be implying it but you also need to make sure this new housing goes into the long term rental market, instead of being secondary residences or airbnbs. I've seen it happen first hand in my home town. That may not be a problem for Austin though.

philipallstar4• 4 months ago

Build more housing. Keep law and order.

At least the latter has been equated with fascism in recent years. That's why it's become such a problem.

left-struck• 4 months ago

It’s a difficult problem not because we don’t know the simple solutions (supply and demand). It’s difficult because the people who have the majority vote also typically own the houses and they obviously don’t want the prices to go down. This is not just speaking about the US, many countries are facing this issue

philipallstar4• 4 months ago

Lots of people have kids and want them to be able to a) not be a victim of crime, and b) be able to afford a house. Anyone who has loads of money to afford high house prices and private security can afford luxury beliefs, as espoused in Oscar acceptance speeches, but everyone else with housing and kids is either voting for less crime and better affordability, or is not yet voting for those things.

jorisboris• 4 months ago

“Show me the incentive and i’ll show you the outcome”

I’ve learned a long time ago that we’re not always aware of how incentives drive our own behavior, it just happens naturally. This is exactly what’s happening with housing.

pj_mukh• 4 months ago

"typically own the houses and they obviously don’t want the prices to go down."

I've never understood this: If I replace a single home with 20 apartment homes, I've raised the value of the whole property at purchase time no? You're already dealing with home valuations that have faaar outstripped wages, the only way you go any higher is to build more homes on the same property.

Counterintuitively, the "I don't want to live next to apartments" line of thinking actually seems more potent in the regular NIMBY headspace? Like people will forego higher valuations to keep their suburb a suburb.

torginus5• 4 months ago

But people who only own 1 house at most are still disadvantaged by this - sure, the value of their apt goes up, but if they want to switch to a larger house, the difference they're paying also increases, so do the property and wealth taxes, if applicable.

There are many stories of solidly low-to-middle class families who lived in an area where property prices soared, and had to choose between bankruptcy or moving out, because they could no longer.

The only people who benefit from this are the investors and landlords. So allowing housing prices to surge is literally taxing the poor for the benefit of the rich.

Buildings also deteroriate - ask a civil engineer. Building something that lasts 50-100 years is much cheaper than something that can be maintained economically indefinitely. If you own a house with copper or PVC plumbing, that they go bad after 40-50 years, and fixing burst pipes quickly gets expensive.

Why do countries allow housing prices to rise then? Simple, it allows banks to have a massive portfolio of loans, where they get a steady source of income for literally decades, while also getting a massive portfolio of real estate they can use as basis for leverage to grant loans (which they profit off of).

Governments can then tax the banks and get some of that money without the dreaded specter of increasing income taxes.

The only problem is that the everyman gets stuck with a 10,25, and now 50 year old loan (with a similar increase in price) for the very same median house.

harrall2• 4 months ago

That’s why California has had dozens of state laws passed in the past 3 years that override many city and county ordinances to force additional supply. Lawmakers knew the only solution was more housing.

These bills permit the construction of denser housing near transit, force cities to actually meet housing quotas, allow the state to override a city’s zoning to permit more housing if they don’t make a good faith attempt, loosen the rules to build ADUs, and many other changes.

Is it ideal that we had to get to this point? No, but housing wasn’t being built.

ccppurcell• 4 months ago

A related idea: politicians know how to fix the problems, they just don't know how to get re-elected after doing so.

lkbm2• 4 months ago

That's part of it, but I definitely have known quite a few renters who opposed building more housing. Denial of supply and demand, as well as general dislike of "rich developers" is strong in many groups.

Incentives are typically the strongest force to watch, but so are various cultural/political narratives people come up with. People clearly don't all vote in our own economic interests in many situations. I'd assume this is largely because in the current information ecosystem, people don't understand what's in their economic interests.

socalgal2• 4 months ago

that's true, but plenty if people oppose building new apartments because, in general, the price will be high and they see this high prices and incorrectly conclude rents are rising when in reality, people move in, freeing up the less expensive places they were in before.

similarly they oppose because "gentrification" even though the evidence is that gentrification is net positive, even for those already living in the area. gentrification or not, people leave at the same rate. Those who stay see their income/wealth rise compared to the case of no-gentrification.

austin-cheney• 4 months ago

There is a massive difference between rental prices and home ownership. There is a further difference apartment rentals and single family rentals.

Rented apartments are a commodity with features. Owned houses are fixed assets with different economic rules.

shafyy2• 4 months ago

No it doesn’t need to be “affordable”

The article directly contradicts you:

"A key piece of Austin’s strategy has been to encourage the construction of affordable housing."

There is enough data now from around the world that shows that it is important what kind of new housing you build. Building all new luxury units does not lead to lower rents.

Another big factors for Austin is probably the significant decline in population growth in the past few years. But sure, keep spreading blanket statements and misinformation...

I know that there are many "free market" type of dudes on here, so keep the downvotes coming. But he truth is that an unregulated market in housing does not work. Even the "freedom" state Texas has understood this.

zozbot23418• 4 months ago

"Luxury housing" is a meaningless qualifier. New housing (market-rate) is always a luxury since, guess what, it's brand new! Older housing is inherently more affordable, so it's not that the new housing sells for less, but that its very availability pushes prices elsewhere down comparatively. That "elsewhere" may even be in a completely different neighborhood if the new market-rate housing acts as an amenity that soaks up demand locally - then neighborhoods that have thereby become worse by comparison will be cheaper.

api• 4 months ago

We love solutions to housing that sound good but won’t work, like rent control and subsidizing demand. Building more is unpopular because it would actually work.

The same goes for homelessness. Feel good sound good solutions are popular. Housing the homeless is not.

BTW I have this weird crazy hypothesis that there might be a connection between homelessness and insufficient housing supply. Like, people not in a home, and not enough homes. I know it’s a stretch.

Sometimes I feel like there are other problems like this that we don’t really want to solve but want to pretend to solve.

dnautics2• 4 months ago

Austin is not even that good at "keeping law and order" (marginally better than say SF). It's really just "build more housing".

risyachka• 4 months ago

And most importantly - limit housing speculation e.g. don't allow private equity to buy those.

Housing should not be a speculative investment or a wealth growth vehicle.

Housing must be a commodity.

xbar• 4 months ago

Build more housing and scale schools, police, and fire linearly per unit.

KolibriFly5• 4 months ago

Yet Austin didn't just "build more housing" in a vacuum, they also changed how and where you can build

jpfromlondon• 4 months ago

truly incredible, instead of subsidizing demand you build more houses and just like that they're more affordable, somebody should write some economic theories on this.

underlipton5• 4 months ago

I don't know how much I buy this. Washington, DC added about 60,000 units between 2015 and now, so a little less proportionally to Austin (with 1 million residents vs 650k). Metro area, 160k more in DC, with a population of 3 million (vs 2.5 million in Austin). Even if DC's unit add is slower than Austin's, you'd expect median rent changes to be within the ballpark, right? Maybe only a slight increase instead of the small decrease Austin saw?

No. Rent doubled.

I don't know if Austin or DC is an outlier, but considering how many states sued property managers and their rental management software providers over price-fixing, I'm leaning toward Austin. In the rest of the country, building more doesn't lower rents. Lowering rents lowers rents. And you have to force landlords to do so.

ej882• 4 months ago

Accounting for inflation, rents barely moved from 2022-2024 in D.C.: https://ipropertymanagement.com/research/average-rent-by-yea...

I suspect most of the rent increase is due to inflation (sticker price). Nonetheless rents are still rising, which means 60k units were not enough to outweigh demand.

wilkommen2• 4 months ago

I think that building more housing helps, but a lack of supply is not the only cause of high housing prices. Wealth inequality is also a huge driver, possibly the primary driver. If wealth is allocated in a society in a sufficiently lopsided way, then a small number of people can buy up literally all the assets in the society. Regular people are bidding against a small cadre of ultra-wealthy people who can't possibly spend all their money on consuption, so they use it to buy assets like other people's homes. In the aggregate, increasing the housing supply won't bring down housing prices if wealth inequality is also growing above a certain rate.

a2dam• 4 months ago

This can also be fixed by increasing supply. People buy housing as an investment because they expect it to increase in value. The best way to counteract that is to build and continue building so that doesn't happen.

WalterBright3• 4 months ago

The Law of Supply & Demand. As immutable as F=ma.

crypto_is_king• 4 months ago

Wow, that sounds racist /s

plantain• 4 months ago

Water, still wet.

mancerayder• 4 months ago

Anyone ever drive around Austin, its highways and its endless new construction of new superhighways, to the point that Google Maps is confused?

As annoying as NYC (and driving) are, there are downsides to unlimited housing and lack of zoning - as it turns out, the same states that do this sort of thing we all praise, are the same laissez-faire philosophies that oppose communal public transportation and walkable urban communities.

lasky• 4 months ago

The laws of supply and demand don't apply to housing in the Bay Area.

We need affordable housing, not more housing for rich people, made by rich developers. Just because my house is worth $3M and I have $3M in stock options doesn't mean I'm rich. I'm working class, I had to come back from paternity leave to log-in to Slack on my laptop every damn day, and tell Claude how to write this damn software!

Did you sign the petition to block the apartment building down the street? It would RUIN our neighborhood!!

As an aside, I am not part of the problem!! I care about poor people!!! I am a good person!!!!

Oh you want proof? Look at my front lawn: "In this house we believe black lives matter, science is real, love is love..."

Proof point 2: look at my Tesla! "I bought this Tesla before I knew Elon was crazy!"

Plus I voted for Kamala. I'm GOOD. People in Kansas are DUMB and BAD.

exabrial6• 4 months ago

It's wild how the solution to housing is: stop the government from stopping housing from being built.

caditinpiscinam• 4 months ago

You say progress, I say enshittification.

What this article says: *The median apartment rent in Austin has dropped X% over the past 5 years*

What this article does not say: *Apartments in Austin cost X% less to rent now than they did 5 years ago*

It's completely possible for the cost of the average apartment in a city to go down, while the cost of existing apartments increases. How does this happen? The enshittification of rentals. Units get smaller (apartments in Austin are shrinking), they get built near highways (air pollution), they lose amenities like parking, they pop up places where they previously weren't allowed (smaller ADUs, basement units, see article), they get subdivided (landlord throws up a wall and turns a large 1br into a cramped 2br).

If supply and demand were really working the way its heralds claim, then we'd see the price of existing units going down. This article offers no evidence that this is happening. I don't believe for a minute that it is.

Instead, it's the same story as always: your rents will keep going up. You can move somewhere cheaper and shittier if you want. The people who profit will congratulate themselves while decrying the thing they actually fear: rent control.

https://www.statesman.com/story/business/real-estate/2025/05...

verteu2• 4 months ago

No, plenty of indices use a "repeat-rent" methodology (comparing only prices changes across the same unit) to address the problem you describe.

They show Austin rents going down, eg Zillow's Observed Rent Index: https://www.zillow.com/research/data/

yieldcrv• 4 months ago

I would buy more complex arguments around housing price solutions if ALL housing price problems everywhere else hadn't been solved by building more housing

diogenescynic• 4 months ago

Wow it's almost like the law of supply and demand is in fact accurate. Who would have thought basic economic 101 would be proven out? It's almost like when you allow supply to increase to meet demand the price equilibrium can move down. Shocking.

I say this with a bit of righteous anger though because the moronic democrats in California want to virtue signal about housing and homelessness but they make it downright as difficult and expensive as possible to increase housing supplies. The democrats in California have done nothing but make our problems worse, even as there are states we can look to with proven examples to solve our problems. Nope... more housing lotteries and BMR units will be required instead of just making it easier to actually build..

usui• 4 months ago

I'm with you and feel your anger. So tired of California's useless virtue signaling about housing and homelessness while no progress is made for decades. California, stop messing around and start living up to your virtue signals! It's infuriating to live in California, hear all day about caring about poor people, then do nothing at all for the bottom line and in fact endeavor to make it harder and discriminate against poor people as much as possible.

And then they'll act so surprised when the populists without a plan show up and win the national elections.

foobiekr3• 4 months ago

Some of the problem in California is that the population of want-to-buyers is all focused on a small number of extremely geographically constrained areas.

Their answer is always "more density" but more density isn't going to solve it - the demand is not fixed and density will not alleviate it, so there is natural pushback on ruining the area and not actually solving the problem.

The real answer here is that the valley needs to extend further south, as in the 1990s plans for companies to start building campuses in Silver Creek or further, which would require the government to incentivize such moves.

Had the dotcom lasted another two years or so, IBM, Cisco, and many others would have done the capital investment in campuses further out, and the viable housing area would have increased dramatically, but it didn't work out that way.

easterncalculus2• 4 months ago

Austin is not a success story. It is a treading water story, and an example of lying with statistics because most of where it's cheap to live in "Austin" literally wasn't Austin when these measurements start. They just literally redrew the lines in part to make this headline.

If you want a success story, look a Vienna. That's what actual community and housing looks like and its because of the exact opposite of what econ clowns on here believe, non-market housing.

karakoram• 4 months ago

The solution to ALL cost of housing problems globally is this.

Everywhere you look, Australia, Canada, UK, EU this is just a massive issue for young professionals with long-term disastrous downstream political consequences, and yet, the solution is so simple but hardly ever implemented in these countries.

Just BUILD MORE HOUSING. Mass build everywhere. Vast amounts of land is available. Just build homes and apartments everywhere!

jeffbrines2• 4 months ago

Has anyone also considered the possibility that Austin is just not that great? Like...those comparing it to the Bay area or a light weight NYC need their heads checked. Maybe people (like me) just realized it wasn't great and...left?

quacker• 4 months ago

If you’re asking about a population decrease then, no, Austin has not had a declining population count for decades, and not recently either, although growth has slowed. So it’s not a case of decreased demand.

jeffbrines2• 4 months ago

Or...maybe...Austin just isn't that great? Maybe (just maybe) a lot of people (myself included) woke up one day and was like "why are we doing this?" and moved somewhere better?

Austin is not what people pretend. Same with Denver or SLC.

There are no tier 2 cities. Its like countries. There are first world, and third world. And thats it.

xiaolu627• 4 months ago

Interesting to see how building more housing in Austin actually lowered rents. The debate about rent control versus new construction is always thought-provoking.

EcommerceFlow• 4 months ago

Why do people accept that supply/demand works in so many industries when the private market is allowed to flourish, but won't accept it for healthcare, education, etc?

verteu2• 4 months ago

Because for-profit healthcare and higher ed have shown poor outcomes empirically?

hunterpayne15• 4 months ago

When? Because we don't use market solutions for those things now. Those are two of the most manipulated markets in the US. They also are two of the three industries whose prices increased by more than inflation, everything else has gotten cheaper (inflation adjusted) over the last several decades. Those things are related.

rootusrootus6• 4 months ago

A lot of our health care needs are notoriously inelastic, which is IMO the biggest reason free market dynamics are not a good choice.

slopinthebag2• 4 months ago

Ideology, mostly.

nielsbot2• 4 months ago

Relevant: I just listened to an interview with Max Buchholz, US Berkeley assistant professor and the lead author of a new working paper titled "Inequality, Not Regulation, Drives America's Housing Affordability Crisis."

He says that building housing does bring prices down, but not very much. In his paper they argue that income inequality is a big driver of making housing unaffordable. (Not billionaires, but more those making more than the median income vs the rest) Because (among other reasons) those with higher income have leeway to spend more on housing versus those at the lower end of the income scale who can’t spend more on housing even if they get a raise.

https://www.youtube.com/live/ai76174930Q?si=R-FYO86COepRADhE...

Straw• 4 months ago

This is nonsense. In every material good, the buying power of nearly everyone has increased in real terms over time, regardless of inequality. It's only in housing, with constrained supply, that inequality can drive up prices; and even in that case, it doesn't actually change the housing supply- if prices are high, that just means a lot of people who want to live there! Inequality doesn't reduce the number of houses.

Building a little reduces prices a little. Building a lot reduces prices a lot. If the prices are very high, then it's very profitable to build, so unless stopped by regulation, you will get a lot of building. Even if building merely keeps the price from going up as density increases, the value provided by living in an area goes up from agglomeration effects as it grows.

nielsbot2• 4 months ago

Are you an expert in this space? Did you listen to the interview?

benguild• 4 months ago

“Great, now let’s see California…” - Patrick Bateman

bob1029• 4 months ago

I feel like the economics around the Texas real estate markets are getting really twisted due to other factors.

The quality of construction in these new builds is generally very bad. If you compare a Texas home built in 2025 with one in 2015, I can guarantee you will find shocking differences once you pull back some of the drywall or have kids jumping around upstairs. I had a 2023 build for a year before I realized I had a hot potato situation on my hands and decided to bail.

The new builds used to command a premium, but in some communities the situation has completely inverted. Buyers are coming in and explicitly avoiding anything built in the new millennium. Information is flowing so much more freely around real estate and the unspoken bullshit scams prevalent within. We've now got home inspector influencers on TikTok showing first time homebuyers exactly what to look out for. We didn't have these kinds of information channels when I was shopping for my first home.

KellyCriterion4• 4 months ago

Did it actually drove down rents, OR did it only reduce the rate of yearly increasement?

:-)

zombot• 4 months ago

In other news: Water is wet. Still, it probably bears repeating. I'm sure some NIMBYs said more housing would drive up prices.

kleiba2• 4 months ago

Before moving to Europe, I always had this conception of Germany as being very good at organizing things, especially anything involving engineering. It doesn't take long to set this picture straight.

From 2015 to 2024, Austin added 120,000 units to its housing stock—an increase of 30%

Compare that to the following [1]:

The [...] government [...] intended to build 400,000 new homes annually, including at least 100,000 social housing units. This target was significantly missed from 2021 to 2024. In each year from 2021 to 2023, fewer than 300,000 new homes were built.

So, the city of Austin alone build on average 12,000 new housings each year, while all across Germany, they failed to build 300,000 new units. That's roughly a 1:25 ratio.

So, how much bigger is Germany than Austin, Texas? More than 80 times bigger.

Is that just because big projects don't scale linearly? I would think that that's definitely one factor. Also, I'm not convinced that economy of scale laws apply here, given that this is not one company building 300,000 houses.

But it does show a number of problems inherent in Germany's current situation: (a) shortage of skilled laborers; (b) high cost of labor; and (c) exorbitantly much red tape. These three points alone are among the most frequently cited factors that companies feel inhibit business, and it holds across disciplines.

[1] https://www.wsws.org/en/articles/2025/08/20/vmjm-a20.html

jdasdf2• 4 months ago

But it does show a number of problems inherent in Germany's current situation: (a) shortage of skilled laborers; (b) high cost of labor; and (c) exorbitantly much red tape. These three points alone are among the most frequently cited factors that companies feel inhibit business, and it holds across disciplines.

There are 9 billion people in the world, roughly half of them are perfectly capable of doing manual labor.

There is plenty of skilled labor, and the cost is frankly not that high, you just need to let them work.

Can we be serious here? There is one and only one cause of "high housing prices" and that is a political choice to make housing expensive.

Don't tell people what they can or can't do with their property.

Don't prevent people from being brought in to build stuff.

Do these 2 things and housing will be built if the price is truly high. Anything else is bullshit.

nslsm• 4 months ago

High cost of labour is positive.

kleiba2• 4 months ago

Like most other things, labor is highly regulated in Germany. You've got to understand that (from my experience as an outsider) it seems to be a country where it matters more what you are on paper (e.g., degrees, certifications, etc) than what you can actually do (e.g., practical experience). Not that the latter is not valued at all, but on the job market, it's often not sufficient.

Labor costs are determined by a lot of regulations - minimal wage, mandatory health insurance fees, mandatory pensions fees, etc. make labor costs in Germany much higher than the average in the West. So, it's all not that easy.

suddenlybananas• 4 months ago

Don't prevent people from being brought in to build stuff.

If housing is about supply and demand, surely the demand part matters too.

CalRobert8• 4 months ago

While it’s a different country my experience in Ireland and the Netherlands has been that there’s this bizarre contempt for builders. Like “I build homes and sell them to people for money” basically makes you satan incarnate. So housebuilding is bogged down in x% social, y% “affordable” (because apparently the goal of making all housing affordable by actually building enough is unthinkable) and very little gets built .

In Amsterdam the Green Party is celebrating making homes more affordable to buy…. By kicking out the people who were renting them. And they continue to say only 20% of developments can be market rate, aka for everyone. When you’re new to the city because you just got a job at booking.com or whatever you only can hope to get a flat in that 20% - the rest isn’t for the likes of you!

https://youtu.be/t05cFv02pzY

roysting• 4 months ago

Both of you are really just beating around the bush of this whole issue in basically the same way as the very people you are complaining about, albeit at a different position. You both have a very elitist mentality towards this issue, i.e., “those peasants should move out of the way for superior people like me”, when what you are both describing is ironically failure of the privileged and powerful to understand what is causing the problems, conflicts, and tension; their own behaviors, actions, and mentalities.

Maybe the indigenous population you have contempt for wanting to preserve their communities and cultures don’t want your colonialist mindset of “those savages are not utilizing the land as I wish, so we can just overrule, overrun, and take it from them. How dare they not avert their eyes, for I have a job at booking.com or I go to UT/work at Oracle/Tesla.

It’s funny how you types never suggest that newcomers, i.e., colonizers, pay a high price for their colonization and that go to the indigenous, even if just to compensate them for the imposition and abuse. You always seem to insist on wanting to kick the indigenous from atop your high horse and demand they make way to your superiority as you abuse and exploit them. You’re not any different than any other past form of this colonist mentality, you want to steal from and abuse the indigenous.

_1tiu2• 4 months ago

The Netherlands is a different kind of environment because there is a calculated policy of not doing anything that could reduce home values. This trickles through all policies for any action that could meaningfully solve the housing crisis.

3rodents• 4 months ago

Shortage of labor, high cost of labor and red tape are all consequences rather than causes. The cause is cultural. Property is the asset in much of the world and the value of property depends on limited supply. There's a disincentive to build more property, especially if you are a politician courting property owning voters.

In the U.K. people are indoctrinated from birth to believe that you work hard to save your money to buy a house and the value goes up so that you can retire with a valuable asset. Flooding the country with new property would completely upend that foundational part of U.K. culture.

If the governments of European countries wanted more property to be built, they could make it happen. The problem is, there is no appetite, they're walking a very fine line: more property must be built but property values cannot go down.

China is an extreme example (and has quality issues) but they have been building more than 10 million new homes per year for a long time, and now have tens of million of vacant homes that nobody wants to buy. That's a nightmare outcome for most Europeans who plan to retire on the value of their home.

The U.S. is fairly unique among western economies in that investing in the stock market has been a normal part of wealth building for the hoi polloi and while homes are important assets, they're not everything. In Europe, investing in the stock market is still novel, property is still the asset.

malshe2• 4 months ago

(a) shortage of skilled laborers; (b) high cost of labor; and (c) exorbitantly much red tape

Does the red tape also stop the Syrian refugees from working in construction? It's a genuine question and I am not trying to be disingenuous.

The last time I was in Germany, I aw several constructions projects in Cologne and Frankfurt. However, I rarely noticed any non-white construction workers. This was quite unusual for a Texan like me because Mexican laborers drive all the construction in Texas if not most of the US.

fzeroracer• 4 months ago

I feel like there was something else at play.

For reference, I moved to Austin in 2018, my rent for my apartment was about 1200/month. In 2022 (the year I left), my rent jumped suddenly to 1600/month despite new apartments near me, and all of the apartments I looked into had similar jumps. And anecdotally speaking my coworkers all reported similar massive rent spikes.

It feels more like this is associated with the tech industry cooling significantly in Austin so they can't get away with pricing bumps. This isn't to say new housing doesn't help, but it certainly didn't prevent me from getting fucked on rent.

ggm2• 4 months ago

Please bear in mind when you discuss "rent control" in the USA you really do mean the version you see in your locale. The idea that rent control sui generis failed worldwide is (in my personal opinion) a stretch.

Public housing also has many models. State owned. State funded but via cooperatives. Part state. state assisted co-buy. There's lots of models and so it is also a bit bogus to talk as if public housing has one shape.

I don't like the tone of input here, there is jeering and name calling and ACKSHEWALLY type responses so I am not going to continue, I just wanted to say: don't forget the lessons learned in Austin may not extend world-wide.

zahlman2• 4 months ago

Please bear in mind when you discuss "rent control" in the USA you really do mean the version you see in your locale. The idea that rent control sui generis failed worldwide is (in my personal opinion) a stretch.

Can you cite a version of it that worked?

ggm2• 4 months ago

From an economist? no. From rent activists? Sure. From The Mayor of London? He wants it. From economists in London? They don't want it. From rent activists in Berlin? It worked for their client pool. From economists in Germany? Mixed outcome.

The thing is, there is no neutral arbiter. The people who say it failed, are systems level reviewers with overal economic takes. The people (like me) who say it succeeded are looking at sub-cohorts of the housing economy who otherwise would be homeless.

Success is complicated.

anovikov• 4 months ago

Is it simply normal supply and demand? They had massive surge of prices that made construction more profitable so after a time lag, building boom happened, bringing prices back to the average long-term trend. If some place becomes 'affordable', its economy suffers because good people don't like living in places where housing is affordable - they move out.

Hey, here's a good way to improve 'housing affordability' locally: dumb down schools. People with cash will move out and prices will fall. Something suggests me it's not the solution really lol.

Affordability is relative. System always balances itself on the level that barely over 50% of people can afford housing (because it's a democracy). There's no fixing to it unless one abolishes either democracy (so no one cares what people want and developers have a free roll building as much as they want), or market economy (when the Party provides housing as it pleases).

alecco• 4 months ago

Sure, but it's not that easy. The swaths of new people need infrastructure and support: schools, hospitals, police, fire stations, roads, water, sewage, flood prevention, etc. That's a lot of money upfront. This is why most cities in the EU block many projects like these.

Also those people will saturate downtown making it lose its culture.

I'm always amazed at the American way of "just throw money at the problem".

silexia• 4 months ago

I am trying to build new homes in Washington state. I have been navigating a gauntlet of a five step process where eleven departments have to give approvals at each step and it has taken five years. This is just to split a twenty acre parcel into two ten acre parcels.

subtextminer• 4 months ago

I live in Austin. In the 1980s, there was a building boom that collapsed.

Austin had 23%(!) apartment vacancy in 1990 after a collapse that started in 1985.

It wasn't until about 1993 that prices returned to 1985 nominal values.

At the time it wasn't code changes that caused this but excessive lending by Savings and Loan banks. You can research the S&L crisis that required a federal bail out. This cause massive bankruptcy and the creation of an entity all the Resolution Trust Corporation to sell all this near worthless property for pennies on the dollar. This affected all of Texas and also Louisiana and Arizona.

For Austin this was great as a whole as rents were ridiculously cheap for 10-15 years and it was an economic and cultural catalyst, drawing in hordes of young people from around the country.

KolibriFly5• 4 months ago

That's a really useful historical reminder

taeric• 4 months ago

Nevermind the collapse of salaries flowing into the area which is destroying what the market demand is willing to pay for the existing stock? This crowd, of any, should be familiar with how many jobs flowed into that area and the promise of how many more it would be. Only for that to basically evaporate overnight.

Like, yes. At a base level, you need enough supply to keep prices down. But, the entire point of supply and demand is that it is two curves that intersect. And the demand curve, if pushed up, will also increase prices. Could you over supply such that you drive down the unit costs in a way that keeps prices down? Of course it is plausible. It is not typical market behavior, though. For that, you need excessive spending by someone.

KolibriFly5• 4 months ago

That feels like the real takeaway: most housing shortages are caused by a pile of small constraints, so you need to remove a pile of small constraints

wr6392• 4 months ago

Up here in Denver I see all kinds of new apartments complexes going up all over. I have not seen the rents coming done because of that yet.

sudo_gopnik• 4 months ago

I think Denver has a few other things going for it that simply make it a higher value housing market, namely: 1. Mild weather - dry weather with well defined seasons without 2. Natural recreation - some of the best year-around outdoor recreation in the country 3. More diverse economy - Austin is extremely tech heavy. Anecdotally most people saw dot-com boom hit Austin much harder than 08 crisis. Tech is bleeding right now. 4. Geography - building in Denver is constrained by Rocky mountains. The plains offer endless building but in Texas you can build any direction and topology is very flat.

I think the other thing not mentioned here is that Austin saw a huge influx of home buyers in 2020-2024 - most everyone I met during that time that moved from West Coast bought at the high and left within 2-3 years after realizing they couldn't handle the crumbling infrastructure and hot summers. Many of them have been holding onto these properties and trying to rent. This only put more pressure on another group - those who bought properties specifically for short-term rentals (e.g. Airbnb). Those who did stay are see massive headcount reductions in tech industry. Meanwhile there are many natives who would love to live closer but are stuck with properties purchased in '21-'24 in Round Rock, Georgetown, San Marcos, Taylor, etc.

So IMO this a perfect storm of not just building housing supply (which is great - the best thing the city has managed to do in the past 15 years), but also significant demand correction.

As someone born and raised in Austin and a homeowner within the city - I am ecstatic about decline in rents and home values. Austin became what it is in part because it was affordable.

We have no nearby mountains, hot summers, poor infrastructure, poor politics, a heavily polluted coastline --> there was no reason for it's prices to be as high as they were.

wr6392• 4 months ago

I have been to Austin only once for South by Southwest back in 95. As a musician I loved being in Austin, especially for that event. I do get the differences between there and Denver. I love it here. However it is getting hotter here too. It's 85 today and will be 87-88 Friday, and we are running out of water along with the rest of the Southwest. Who knows what's going to happen or where to go to if it gets real bad?

performative• 4 months ago

this is completely anecdotal, but there's a pretty cool trend i notice where urban places with reasonable renter economies tend to fall into one of three categories

1) "b- to c-tier" cities that build build build build build (austin, slc, phoenix)

2) de-industrialized cities that already have the housing stock (chicago, baltimore, detroit, pittsburgh, philly, worcester)

3) struggling smallish towns and cities that leaned into building better downtowns (there's a billion of em)

Austin’s surge of new housing construction drove down rents

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