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Austin’s surge of new housing construction drove down rents

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Re: Austin’s surge of new housing construction drove down rents

#41

Post by JumpCrisscross »

seanmcdirmid wrote: post #9
nemomarx wrote: post #3

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.

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).

> 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

Re: Austin’s surge of new housing construction drove down rents

#42

Post by strbean »

rconti wrote: post #11

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.

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.

Re: Austin’s surge of new housing construction drove down rents

#43

Post by mr3martinis »

lifeisstillgood wrote: post #7

>>> 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…

[dead]

Re: Austin’s surge of new housing construction drove down rents

#44

Post by jakelazaroff »

Gigachad wrote: post #15
lumirth wrote: post #12

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.

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.

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

Re: Austin’s surge of new housing construction drove down rents

#45

Post by 0_____0 »

atomicnumber3 wrote: post #21
seanmcdirmid wrote: post #9

Earlier quoted context omitted.

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).

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

Public housing projects were and sort of still are a thing. Glass Amendment limits the number of units that can be produced but most areas are well below those limits and the larger issue is that there's no budget or political willpower for social housing projects right now.

Re: Austin’s surge of new housing construction drove down rents

#46

Post by james_marks »

legitster wrote: post #28

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 b…

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.

Re: Austin’s surge of new housing construction drove down rents

#47

Post by strbean »

JumpCrisscross wrote: post #41
seanmcdirmid wrote: post #9

Earlier quoted context omitted.

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).

> 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 cu…

> everyone in the transaction wins

Nobody ever thinks of the poor banks!

Re: Austin’s surge of new housing construction drove down rents

#48

Post by JumpCrisscross »

shcheklein wrote: post #38

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).

> 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...

Re: Austin’s surge of new housing construction drove down rents

#49

Post by darth_avocado »

scarmig wrote: post #26
clamprecht wrote: post #6

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.

> 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%.

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.

Re: Austin’s surge of new housing construction drove down rents

#50

Post by lo_zamoyski »

amelius wrote: post #10
nemomarx wrote: post #3

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.

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

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...

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