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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

#521

Post by mchusma »

idiotsecant wrote: post #406
pinkmuffinere wrote: post #376

Earlier quoted context omitted.

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.

What do you do when that equilibrium point is hopelessly above what the average person can afford?

Not sure I buy the premise. Austin has a household $133k median income with a $435k median home price. It’s very affordable.

But, to make Austin more affordable still, you make it less expensive to build so that it’s profitable to build. Typical regulations that do this are: - Lower minimum sizing requirements - open zoning - raise height limits - make sure you don’t have unwarranted restricted fire codes (some places have elevator stairwell requirements that are insane) - make permitting easier or not required at all for some cases - no min parking requirements

Pretty sure as good as Austin is, they could easily reduce the costs by up to 30% (there are parts of the country with 50% the cost per sq ft for new construction).

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

#522

Post by modriano »

estearum wrote: post #221
pclowes wrote: post #176

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.

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?

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.

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

#523

Post by fc417fc802 »

laserlight wrote: post #501
tirant wrote: post #467

Earlier quoted context omitted.

That means there’s an invisible hand keeping prices up, or basically that the market is not free enough. That’s caused most of the time due to excessive regulation. Another reason is high demand in locations where offer is limited due to physical limitations. There’s always demand to live in Broadway, and offer can never catch up due to its physical limitations.

> That means there’s an invisible hand keeping prices up, or basically that the market is not free enough. Nowhere in the economic theory there is a proposition stating that prices should fall below affordable levels, given enough competition.

We don't need economic theory for that it's just common sense. Humanity has been erecting structures to live in for approximately our entire existence. The modern economy is mechanized. How could a wood frame structure or a small high rise possibly be unaffordable if the market is functional?

Stop and think for a second. Someone in good health with a willingness to DIY and a sufficiently flexible schedule can literally build their own house from the ground up. It's a substantial time investment but not actually as much as you might think. Housing isn't very resource intensive compared to the rest of the modern economy.

The only possibilities I can imagine to explain unaffordable housing are broken regulations, critical levels of resource exhaustion, natural or man made disaster, and gross economic dysfunction.

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

#524

Post by fc417fc802 »

locknitpicker wrote: post #479
tirant wrote: post #467

Earlier quoted context omitted.

That means there’s an invisible hand keeping prices up, or basically that the market is not free enough. That’s caused most of the time due to excessive regulation. Another reason is high demand in locations where offer is limited due to physical limitations. There’s always demand to live in Broadway, and offer can never catch up due to its physical limitations.

> That means there’s an invisible hand keeping prices up, or basically that the market is not free enough. That’s caused most of the time due to excessive regulation. No. Why do you guys fall so easily for the "regulation" cliche? The answer is far easier: unwillingness to invest. Why are there investment funds willing to burn through tens of millions in stupid stuff like NFTs or pets.com, but investing $10m on a 5 s…

The invisible hand is zoning. There's plenty of investment available but you literally aren't allowed to build what would be useful in most cases.

Sure you're free to go out into the middle of nowhere and build all sorts of wild stuff but there's no market for that because that isn't actually what anyone wants. You can't blame the investors when what people actually want to pay for has effectively been outlawed.

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

#525

Post by energy123 »

estearum wrote: post #221
pclowes wrote: post #176

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.

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?

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.

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

#526

Post by energy123 »

lesuorac wrote: post #103
muyuu wrote: post #77

Earlier quoted context omitted.

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

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 - Housi…

First year economics doesn't ignore any of this. There's behavioral economics and microeconomics, for example.

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

#527

Post by kleiba »

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

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

#528

Post by lumost »

tirant wrote: post #467
idiotsecant wrote: post #406

Earlier quoted context omitted.

What do you do when that equilibrium point is hopelessly above what the average person can afford?

That means there’s an invisible hand keeping prices up, or basically that the market is not free enough. That’s caused most of the time due to excessive regulation. Another reason is high demand in locations where offer is limited due to physical limitations. There’s always demand to live in Broadway, and offer can never catch up due to its physical limitations.

The invisible Hand may be monetary policy. The median household may simply no longer be able to afford the median home due to the continued wealth distribution shift brought on by interest rate targeting.

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

#529

Post by hunterpayne »

rcpt wrote: post #180
varenc wrote: post #152

Earlier quoted context omitted.

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

The black pill about that story isn't that a (crappy) preprint exists, it's that it got coverage in the press and was viral on social sites.

Telling people lies that they want to believe has always been profitable.

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

#530

Post by fzeroracer »

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.

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