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 threadgnopgnip
Dr Horton is the largest builder in the US. In q3 2025 they had a 21.8% gross margin.
Mar 19 at 3:09amWeb
Show threadeks391Mar 19
As someone who is not versed in real estate, I don't see why your comment and parent couldn't both be true. Is Dr Horton building homes in Austin? Are the margins in Austin pulling down their average margin? That could explain high profit while dissuading new construction in Austin.
*I don't know the answers to either of these questions, but of you do, that could provide some "proof" for either side of the argument, depending on what the answers are.
Show threadvel0cityMar 19

> Is Dr Horton building homes in Austin?

Yes, a ton.

https://www.drhorton.com/texas/austin

> That could explain high profit while dissuading new construction in Austin.

Given they're still building a ton in Austin, there doesn't seem to be a dissuasion for building there. I do not have any idea about their average margin in the Austin market versus other markets though, but if that was a major decider on whether to build or not the answer is they're still choosing to build.

Show threadestearumMar 19
You can look at new housing starts to see there is indeed a dissuasion to building there. That's literally the very first observation in this thread: construction rates are already falling significantly.
Show threadvel0cityMar 19

Dropping a bit from being one of the highest rates in the country still puts it at one of the highest rates in the country.

Looking at this data:

https://constructioncoverage.com/research/cities-investing-m...

If housing starts in Austin drop 15% for 2026, as some places are estimating, that puts Austin from 32,294 to 27,453 new homes added. It changes its national rank in this dataset from #6 to...#6.

U.S. Cities Building the Most New Housing [2025 Edition]

Analyzing data from the U.S. Census Bureau and Zillow, researchers identified the U.S. metros and states that are building the most new homes.

Construction Coverage
Show threadestearumMar 19

… why would the relative ranking matter?

Your claim is that falling prices aren’t leading to less development.

That is both logically and empirically false.

The observation is simply that supply chases demand. As demand is satisfied, prices go down and supply creation slows down or even stops. It’s befuddling that you’re acting like this doesn’t apply here.

Show threadvel0cityMar 19

> why would the relative ranking matter?

Trying to compare competitiveness of various markets on where builders are going to invest their money building?

> It's margin > margin of alternative investments of similar scale and risk profile.

Homebuilders want to build homes. They'll build where its profitable for them to build. Lots of markets are facing downturns in new construction, but home builders are still choosing markets like Austin more than tons of other markets.

> Your claim is that falling prices aren’t leading to less development.

I never said such a thing, although I do think you're potentially thinking in too black and white on it. In fact, I think it was quite clear I was talking about comparing the Austin homebuilding market to other markets with my statement "Austin market versus other markets though".

> As demand is satisfied, prices go down and supply creation slows down or even stops

I think we're still far from demand actually being satiated in the Austin area. Its still the 6th most growing metro in the US, even with housing construction dropping an estimated 15% for 2026.

If builders were really heavily dissuaded from building in Austin, if margins were really that terrible compared to the rest of the country, why would it be the 6th largest spot of housing growth in the US? Shouldn't all those builders decide to invest elsewhere?

I agree, margins are probably less than they were or were projected to be compared to just a few years ago. And I agree that's probably one of the biggest drivers of new construction cooling a bit. But the questions I was answering were:

Is Dr Horton building homes in Austin?

Are the margins in Austin pulling down their average margin?

The answer to the first is obvious and easy. The answer to the second is more complicated, but if it was truly dragging down their average margin in any significant way wouldn't they have just stopped and invested in building in the higher margin areas?

Show threadsmcinMar 19

Their gross margin is a lagging metric on houses they built 2/3 quarters ago, and applied for development permits ~4 quarters ago.

US homebuilder gross margins have been declining since 2023.