matthestMar 19

Austin’s surge of new housing construction drove down rents

https://www.pew.org/en/research-and-analysis/articles/2026/03/18/austins-surge-of-new-housing-construction-drove-down-rents

Austin’s Surge of New Housing Construction Drove Down Rents

After decades of explosive growth, Austin, Texas, in the 2010s was a victim of its own success. Lured by high-tech jobs and the city’s hip reputation, too many people were competing for too few homes. From 2010 to 2019, rents in Austin increased nearly 93%—more than in any other major American city. And home sale prices increased 82%, more than in any other metro area in Texas.

Show threadpclowesMar 19

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.

Show threadestearumMar 19

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?

Show threadterminalshortMar 19
Because home builders don't make money by buying and selling houses, they make money by building them and selling them.
Show threadestearumMar 19

And... how is this relevant?

I'm not sure what you're trying to imply here. You should spell it out explicitly.

Show threadepistasisMar 19

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 between an asset holder and a productive builder are night and day.

Show threadestearumMar 19

> 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.

Show threadepistasisMar 19

It was not clear that it was your point at all! Yes of course, gotta get your return on capital invested or the money goes elsewhere, probably into a REIT that invests in the existing assets and drives up prices even further. Because the demand for housing goes somewhere: either existing owners profit or the people building and alleviating the shortage profit.

Every single municipality in the US I'm familiar with has done everything they can to make it expensive to build and try to remove any profit margin from building. Which leads to capital moving towards piggybacking on the rentierism of the average homeowner, the people who control the policies that make it unaffordable to build.

Show threadestearum
How do you interpret "which compresses already-near-zero margin on real estate development" if not "the costs are already near the sale price?"
Mar 19 at 3:01amWeb
Show threadsmcinMar 19

Not all new houses sell. Some become shadow inventory, some take 5+ years to sell. If you drive around new developments you can measure the fraction.

IIRC, Mountain House (near Tracy, CA) in the 2008-2010 crash was an example of a large new development that did not initially sell and was in serious danger of going zombie, and not having the new schools that had been promised to people moving in.