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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

#691

Post by shafyy »

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.

> 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.

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

#692

Post by graemep »

zozbot234 wrote: post #586
roenxi wrote: post #575

Earlier quoted context omitted.

There's a couple of "ifs" there and the scenario seems implausible. If I look at the prime real estate in a city it tends to be a lot of skyscrapers rather than very large homes (with occasional exceptions like say a Buckingham Palace). But it looks like the economic equilibrium is lots of cheaper apartments rather than large homes for rich people. > ... and even investment properties occupied by nobody ... Not much…

People don't want to rent those homes out because once you're doing so it's difficult to evict a long-term tenant. You just lose out a lot on flexibility - even if you try and manage that risk by leasing out housing e.g. on a yearly basis, landlord-tenant law often overrides that since there are strong ethical reasons for not evicting someone who has since come to treat that rental space as their home. Short term ren…

There are some places in the UK (mostly new developments in London) that have a significant number of deliberately empty investment properties despite the law here making it easy to evict tenants. They are not being used for short term rentals either.

Although the easiest route (no-fault eviction) is being abolished soon, wanting to sell a property remains a valid reason to evict.

Some people just buy property as a speculative investment.

I do not think it is the main cause of shortages in London - that is people buying holiday homes, which are often large and centrally located. London provides a lot (restaurants, nightclubs, gambling, prostitution, financial services...) that attracts people with a lot of money to spend from all over the world.

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

#693

Post by jorisboris »

left-struck wrote: post #669
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.

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

“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.

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

#694

Post by zozbot234 »

shafyy wrote: post #691
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.

> 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 i…

"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.

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

#695

Post by abustamam »

aqme28 wrote: post #576
rconti wrote: post #419

Earlier quoted context omitted.

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

Isn't the parent article basically evidence of this? Housing supply grew, and prices fell.

The article only talks about rent, not price of housing, which I think is an important data point.

Homeowners don't want housing prices to fall. Ever. They don't care about rent prices (at least, not directly). But renters care about both — obviously lower rent prices are good, but many want to be able to enter the housing market but it's prohibitively expensive.

Perhaps falling rent prices has a similar effect on home prices — the value of buying a home for the purposes of renting becomes less desirable due to lower rental revenue, so prices fall. Not sure, the macroeconomics of housing never made sense to me because it's never as simple as pure supply and demand.

As an example, my wife and I finally decided to buy a house in a fast-growing CA suburb (not in Bay Area). The house was constructed in 2021 and sold for $611k. Plenty of renovations have been done on the house, we'd estimate around $20k+ worth of renovations, and the neighborhood and surrounding area has only grown since then (more parks, housing, great schools, stores etc).

The house was listed for sale at $600k; even then we were able to underbid and get our offer accepted. Inspections turned out clean, just minor cosmetic issues.

I don't keep an eye on the rental market but we've lived at two different rental properties and both of those places went up in rent once each, so I can only assume that rent is going up everywhere in this area.

Point is, rent and real estate don't always go in lock step.

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

#696

Post by taintlord »

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?

[dead]

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

#697

Post by [deleted] »

left-struck wrote: post #669
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.

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

[deleted]

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

#698

Post by taintlord »

energy123 wrote: post #525
estearum wrote: post #221

Earlier quoted context omitted.

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.

[dead]

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

#699

Post by zozbot234 »

graemep wrote: post #692
zozbot234 wrote: post #586

Earlier quoted context omitted.

People don't want to rent those homes out because once you're doing so it's difficult to evict a long-term tenant. You just lose out a lot on flexibility - even if you try and manage that risk by leasing out housing e.g. on a yearly basis, landlord-tenant law often overrides that since there are strong ethical reasons for not evicting someone who has since come to treat that rental space as their home. Short term ren…

There are some places in the UK (mostly new developments in London) that have a significant number of deliberately empty investment properties despite the law here making it easy to evict tenants. They are not being used for short term rentals either. Although the easiest route (no-fault eviction) is being abolished soon, wanting to sell a property remains a valid reason to evict. Some people just buy property as a s…

> despite the law here making it easy to evict tenants

"Easy" is relative. "Evicting" an airbnb'er once the term is up will always be orders of magnitude easier than kicking out a long-term tenant who regards that as their actual home. There's not even anything necessarily wrong with this! The easiest way to address the issue is literally to slash any remaining red-tape that's making things difficult for those who would want to AirBnb these properties out, while managing the resulting side-effects (including the plausible effect on the long-term rentals market) by levying a special fee if necessary.

As a bonus, easy AirBnb rental provides an alternative for some who might otherwise want a permanent holiday home.

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

#700

Post by pembrook »

estearum wrote: post #674
pembrook wrote: post #608

Earlier quoted context omitted.

Because "cheap" government housing has never been "high quality" in the history of the world. Those two properties are antithetical. Humans don't have a ton of preferences for the electricity they consume or the water they drink, just that it exists. It's a commodity, so a good task for government. Housing is not an undifferentiated commodity and is subject to extreme variances in preference. Markets do differentiati…

Pretty sure France and Singapore both have quite successful and high quality public housing projects.

France has similar issues as the US housing projects from the 70s (creating ghettos), these are not places that people choose to live. And yes, all governments put up halo projects that you see in the press that do not represent the average, please link me to them claiming I'm wrong, and I will say yes, this halo project designed by a famous architecture firm does look nice! Now show me the median late-1970s constructed French public apartment.

Singapore is different because they eliminated the "cheap" part. Singaporean HDB flats are expensive, have extremely long wait times (you're stuck for life when one comes up), while still being super tiny. Fertility rates are 0.87 there (replacement rate is 2.1). The domestic population is literally disappearing itself. I'm sure highly regulated tiny housing stock and development policy has no influence on family size though...

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