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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

#311

Post by pandaman »

epistasis wrote: post #263
estearum wrote: post #246

Earlier quoted context omitted.

And... how is this relevant? I'm not sure what you're trying to imply here. You should spell it out explicitly.

The difference is between buying and asset and producing an asset. Even if RAM costs are falling, it can still be profitable to produce more RAM, as long as the costs are far enough below the eventual sales price. It's entirely different if you're buying the housing already built; there's no productive activity, you're just a rentier and do not benefit at all from falling housing prices. The differences in interests…

There is a difference but not in the way you think. Producing an asset is just buying other assets and labor. The difference with buying an asset is that a part of the assets you bought for production is illiquid for a term of the production. Generally you can only sell unfinished construction at a huge discount during most of the stages. So producing an asset is as same as buying an asset but with a lockout period, when you cannot sell.

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

#312

Post by easterncalculus »

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.

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.

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

#313

Post by TimorousBestie »

triceratops wrote: post #310
TimorousBestie wrote: post #290

Earlier quoted context omitted.

Maybe not half, but it’s pretty common around here (generic midwestern city) for renting to be more expensive than a comparable mortgage. Many landlords seem to expect to pay their mortgage and property taxes and maintenance with the rental income, and still net a profit, if r/landlord is to be believed.

The profit is compensation for the risk. The mortgage and property taxes and maintenance are due no matter what - can't find a tenant, tenant doesn't pay, tenant flushes paper towels down the toilets every day etc etc. If there was no profit there would be no landlords. Some might say that's great. But it would be a world with less flexibility, with fewer choices. Don't like your job and want to move? Split up with y…

Okay, so why were you asking if renting can be more expensive than buying? You seem to already know that it can be.

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

#314

Post by ivewonyoung »

datsci_est_2015 wrote: post #299
ivewonyoung wrote: post #241

Earlier quoted context omitted.

There was an article on HN front page a few months ago which stated(paraphrased) "building more housing to reduce prices is a right wing ideology that doesn't match reality" or some such. I'll reply here if I find it.

hn.algolia.com is a great search interface. I searched “housing” and top posts in the past year and didn’t see anything related to your quote on the first two pages. Maybe I need to search deeper.

What I paraphrased wasn't in the article headline but inside the text, almost in passing.

The best I could find was a couple of comments from two years ago which have a similar theme.

https://news.ycombinator.com/item?id=39206707

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

#315

Post by pclowes »

estearum wrote: post #234
creato wrote: post #223

Earlier quoted context omitted.

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

No, not really. It matters whether the margin is higher than other investment opportunities of similar scale and risk profile. Already, the answer is very often no. In Austin, the answer will increasingly be no. That means people will not finance new construction, so if demand continues to grow it will outstrip supply and prices will go back up until the margin on new construction exceeds that of alternative investme…

I would expect the development of Austin to continue until market equilibrium and then pause. Decreasing margin does not mean equilibrium. Obviously austin is not at equilibrium because we still have price data on developer activity and that would be near zero if developers couldn’t make returns given risk etc.

I guess I don’t see where we disagree?

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

#317

Post by triceratops »

TimorousBestie wrote: post #313
triceratops wrote: post #310

Earlier quoted context omitted.

The profit is compensation for the risk. The mortgage and property taxes and maintenance are due no matter what - can't find a tenant, tenant doesn't pay, tenant flushes paper towels down the toilets every day etc etc. If there was no profit there would be no landlords. Some might say that's great. But it would be a world with less flexibility, with fewer choices. Don't like your job and want to move? Split up with y…

Okay, so why were you asking if renting can be more expensive than buying? You seem to already know that it can be.

I said they were inventing fantasy scenarios.

The actual numbers might be more like rent $1400 vs mortgage $1000. After property taxes, insurance, and maintenance there might be $50 left. A handsome 3.5% profit, rising to maybe 6-7% if you include principal paydown. This is hardly a money-printing machine. It's a steady return for taking on some risk.

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

#318

Post by tonymet »

JumpCrisscross wrote: post #55
tonymet wrote: post #35

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

> 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 ro…

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 .

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

#319

Post by gnopgnip »

estearum wrote: post #271
epistasis wrote: post #263

Earlier quoted context omitted.

The difference is between buying and asset and producing an asset. Even if RAM costs are falling, it can still be profitable to produce more RAM, as long as the costs are far enough below the eventual sales price. It's entirely different if you're buying the housing already built; there's no productive activity, you're just a rentier and do not benefit at all from falling housing prices. The differences in interests…

> it can still be profitable to produce more RAM, as long as the costs are far enough below the eventual sales price. Right... my point is that the costs are not far below the eventual sales price. That's why construction is slowing down. And as mentioned several other times, it's actually not as simple as cost > sale price. It's margin > margin of alternative investments of similar scale and risk profile.

Dr Horton is the largest builder in the US. In q3 2025 they had a 21.8% gross margin.

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

#320

Post by epistasis »

bpt3 wrote: post #288
epistasis wrote: post #275

Earlier quoted context omitted.

There's a big difference between land prices and the building prices. When costs rise 5% per year for a house that's untouched, that's almost entirely the land price going up. You can make housing cheaper by putting more houses on the same amount of land. In high cost areas, the price of land dominates the cost of housing. Political pressure to change the investment nature of housing can come from various directions,…

> Politically, we must stop prioritizing the views of homeowners at the local level. They already got their reward, massive unearned capital gains on their residence, there's no need to give them priority on land use over the general needs of society. They are the majority of people in most areas, so it does make sense that they would be given priority in some ways. The rest of your post is unsubstantiated vitriol, w…

You quoted my vitriol to the homeowners, the rest is not vitriol, it's basic land economics.

> They are the majority of people in most areas, so it does make sense that they would be given priority in some ways.

In some ways sure. But in the ways that they are? Absolutely not, it's basic unfairness. The entire tax system is tilted in favor of home owners. We don't need to do that, we could make it more equal so that people with less wealth are not penalized.

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