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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

#631

Post by cyberax »

simianwords wrote: post #564
cyberax wrote: post #555

Earlier quoted context omitted.

> The population numbers you have reported are misleading because they use 5 year estimated numbers. I specifically chose consistent data series. While each one of them can't represent the true population, they absolutely do illustrate the trend. The number you're quoting is from the Census, which only happens at 10 year intervals. If you have better population estimates for these years that use the same consistent m…

> I specifically chose consistent data series. While each one of them can't represent the true population, they absolutely do illustrate the trend. The number you're quoting is from the Census, which only happens at 10 year intervals. False. You are comparing 5 year estimates with 1 year estimates so it’s not consistent. With SF I agree that it went down because of population but I’m not sure how that explains 19% re…

Sorry, misclicked on this one: 2024 (ACSDP5Y2024.DP05): 979539.

The 1Y series is indeed https://data.census.gov/table/ACSDP1Y2024.DP05?q=Austin,+TX at 993771. I believe this is a statistical outlier, and is not reflecting the true population.

So let's test my prediction, shall we? The 2025 data will be released in April. If my prediction holds, then the population figures for Austin will be nearly flat or falling.

I also made the same prediction for Seattle, its rents are now falling slightly. So its population will be decreasing.

> With SF I agree that it went down because of population but I’m not sure how that explains 19% reduction in rents in Austin with higher population.

As you see from my data, the consistent series up to 2023 indicated falling population. The 2024 data was the outlier.

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

#632

Post by TurdF3rguson »

vkou wrote: post #619
TurdF3rguson wrote: post #579

Earlier quoted context omitted.

I guess I need to hear more about your seniority rules. If I leave in a city all my life and leave for a month, do I have to start over when I move back?

Not sure what your point is. My point is that the rules around rent exist to protect current residents of a city. Just like rules about immigration exist to protect current residents of a country. If you think one of them is immoral and unfair, but the other isn't, you're the one who needs to square that cognitive dissonance - not me. It sounds like you generally think economics should trump the welfare of existing r…

> you're the one who needs to square that cognitive dissonance - not me.

No, you are. You have imaginary rules about who should be protected in a city (based on seniority??) that nobody else is aware of and are certainly not following. It goes by things like age and net worth, and basically nobody gives a shit how long you've lived somewhere.

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

#633

Post by Tade0 »

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.

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.

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

#634

Post by scoofy »

roysting wrote: post #610
CalRobert wrote: post #568

Earlier quoted context omitted.

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…

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…

I think it's funny how you think I would be "colonizing" the same neighborhood I literally grew up in.

I grew up in Austin. A bunch of people had kids there in the 1970's and 80's. More than where there before. So even if literally nobody had moved to Austin, there would still be a housing crisis without letting people build new housing.

Unsurprisingly, literally just letting the market respond to demand makes things more affordable for everyone. Yea, some people I don't like might move to Austin. They're probably not all bad. That's what multiculturalism is about.

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

#635

Post by zozbot234 »

roysting wrote: post #610
CalRobert wrote: post #568

Earlier quoted context omitted.

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…

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…

Ah yes, the well-known "indigenous population" of the Netherlands, one of the highest-GDP places in the world at present and of course a country with its own actual colonialist past. Do you really think these "indigenous" noble savages can't afford to pay for their own rents on a market-rate basis? They're keeping outsiders away (unless they pay outsized luxury prices, of course) out of pure unchecked privilege, not for any kind of high-minded culture preservation.

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

#636

Post by 3rodents »

kleiba wrote: post #527

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…

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.

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

#637

Post by simianwords »

cyberax wrote: post #631
simianwords wrote: post #564

Earlier quoted context omitted.

> I specifically chose consistent data series. While each one of them can't represent the true population, they absolutely do illustrate the trend. The number you're quoting is from the Census, which only happens at 10 year intervals. False. You are comparing 5 year estimates with 1 year estimates so it’s not consistent. With SF I agree that it went down because of population but I’m not sure how that explains 19% re…

Sorry, misclicked on this one: 2024 (ACSDP5Y2024.DP05): 979539. The 1Y series is indeed https://data.census.gov/table/ACSDP1Y2024.DP05?q=Austin,+TX at 993771. I believe this is a statistical outlier, and is not reflecting the true population. So let's test my prediction, shall we? The 2025 data will be released in April. If my prediction holds, then the population figures for Austin will be nearly flat or falling. I…

I still don't see your point. The population increased in Austin while the rents decreased. Even if nearly flat, the rent fell down by ~19% in real terms.

How do you explain that?

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

#638

Post by inglor_cz »

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 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.

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

#639

Post by simianwords »

cyberax wrote: post #615
simianwords wrote: post #565

Earlier quoted context omitted.

Yeah that’s induced demand and it’s a good thing for the economy. The rents are supposed to reduce only temporarily. But the goal is to not reduce is permanently. The goal is to increase land utility. Building houses helps with that cause.

> Yeah that’s induced demand and it’s a good thing for the economy. No, it's not good. It leads to nothing but urban decay. That's how you get Tokyo with a crazy price bubble, while beautiful traditional houses decay into dust just 3-4 hours away. > The rents are supposed to reduce only temporarily. Except that they don't even decrease. If your population is growing, so is your rent. And it doesn't matter how much yo…

> No, it's not good. It leads to nothing but urban decay.

This is subjective and loaded. I don't see any concrete point you are making.

>Except that they don't even decrease. If your population is growing, so is your rent. And it doesn't matter how much you build (for large enough cities).

They did temporarily in Austin - 19% after accounting for inflation.

Overall, making a city like NYC is preferred for any country. Even if the prices are really high, it reflects the economic activity of that city. Why would a house cost ~$800k if the person living there won't make multiples of it with their wages?

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

#640

Post by jaapz »

taffronaut wrote: post #594
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.

I have struggled to understand why houses don't get built and land sits idle for years. I can only assume that it's significantly more complicated. I'm not trying to excuse the complications. I guess if the house prices are forecast to go up, you build some houses, but not all that you can because the longer you wait, the higher the profit will be on the ones you start later. If house prices are going down, even if i…

Why would you build on a plot of land when the plot of land itself is already appreciating in value with you doing nothing to it

Building is risky and costly

Having an asset that appreciates on its own regardless of what you do with it is not

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