Austin’s surge of new housing construction drove down rents (opens in new tab)

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

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?

This comment is phrased as if the article is confirming these points when it either doesn't mention them or even directly refutes them. First there is no mention of either crime or rent control in the article. But more importantly, it states that "A key piece of Austin’s strategy has been to encourage the construction of affordable housing." So why are you concluding that affordable housing isn't needed?

Vienna built housing itself, with this housing it was possible to have cheap rents and keep rents from private investors down. https://en.wikipedia.org/wiki/Housing_in_Vienna

We love solutions to housing that sound good but won’t work, like rent control and subsidizing demand. Building more is unpopular because it would actually work.

The same goes for homelessness. Feel good sound good solutions are popular. Housing the homeless is not.

BTW I have this weird crazy hypothesis that there might be a connection between homelessness and insufficient housing supply. Like, people not in a home, and not enough homes. I know it’s a stretch.

Sometimes I feel like there are other problems like this that we don’t really want to solve but want to pretend to solve.

Rent control is one of the best ideas, and it may be a civilizational, foundational idea.

Property ownership is at the very core of entrenched power, and the foundation of rent-seeking and wealth asymmetry.

If you look at even the Monarchs of long past - it wasn't their 'titles' that made them powerful - it was the economic rent that came along with the land ownership.

Even in more open market economies, property is still is basically long term economics lording over short term economics of wage earning workers.

Being able to kick someone out of their home almost arbitrary basically puts working class people at the 'total whims of the market' and it's one of the most disruptive concepts imaginable.

If we take the view that 'housing is about housing first - only about investment to the extent it does not disrupt housing' - then a different perspective takes shape.

Many Canadian provinces have 'basic rent controls' and it does not generally prevent new housing development.

If anything, providing 'housing stability' is probably the best way to create base prosperity, so those people can go out and spend on all the other things.

There might need to be some degree of leeway here and there for certain kinds of density challenges, but that can be had with rent control

There is almost unlimited land in North America to build on - if in one spot it's a bit difficult - build elsewhere.

If people want to have 'density' then incorporate an area and 'build density' in that area.

Also it does need to be 'affordable' but that can work with regulations.

Edit: our housing problems are about screwed up management, it's actually not even an ideological problem underneath. Like 'rent control' the way it is framed scares some people, but its literally province wide in Ontario, Quebec and it's a 'non issue' for new unit hinderance. Even the nimbyism stuff can be worked around: if people don't want high-rises next to them, it's their right, but there's a lot less opposition to 'mild density' especially if it fits in local cultural and aesthetic context. We can have our cake and it eat on housing. I think we invent ideological lenses because it's easier to frame 'narratives' than it is just weird policies, special circumstances, hiccups, different municipal things going on all at once.

I don't know how much I buy this. Washington, DC added about 60,000 units between 2015 and now, so a little less proportionally to Austin (with 1 million residents vs 650k). Metro area, 160k more in DC, with a population of 3 million (vs 2.5 million in Austin). Even if DC's unit add is slower than Austin's, you'd expect median rent changes to be within the ballpark, right? Maybe only a slight increase instead of the small decrease Austin saw?

No. Rent doubled.

I don't know if Austin or DC is an outlier, but considering how many states sued property managers and their rental management software providers over price-fixing, I'm leaning toward Austin. In the rest of the country, building more doesn't lower rents. Lowering rents lowers rents. And you have to force landlords to do so.

> Yes rent control is a terrible idea.

When you aren't building more housing, for whatever reason, rent control is the only thing that prevents domestic 'immigrants' into your city from making all the residents homeless.

Since cities can't stop migration into them, it's the only tool they have to protect their existing residents.

---

PS. If you believe in trial-by-combat for housing, why not a similar approach to border control? It's the same concept, open it all up and let the market decide whether your existence is worth it.

There are billions of honest, hard-working, capable people who will happily pay more than you for where you live, do your work for less pay than you're willing to accept, and would love to live... Wherever you currently feel entitled to live.

What gives you any right to deny the market from improving the welfare of your landlord and employer?

There is a massive difference between rental prices and home ownership. There is a further difference apartment rentals and single family rentals.

Rented apartments are a commodity with features. Owned houses are fixed assets with different economic rules.

Yet Austin didn't just "build more housing" in a vacuum, they also changed how and where you can build

Well, build more housing and ensure the more housing is being bought by people who live in it or (if you don't find enough of those) by people who will rent it to them. Many problems occur when capital buys living space as an investment that needs to go up in value, since now there is an incentive to keep some scarcity.

Build more housing and scale schools, police, and fire linearly per unit.

truly incredible, instead of subsidizing demand you build more houses and just like that they're more affordable, somebody should write some economic theories on this.

So pretty much everything you've said here is wrong.

Build more housing? In a place like Austin, you can just keep building out, basically. To a point. Eventually cities doing this reach a limit. Houston and Atlanta are pretty much at or beyond that limit.

And it's not that building low-density SFH housing is the most economic. It's simply the most subsidized. Every road, every parking space, every sewer pipe, every water pipe, every utility pole, every school, every hospital, every police station, every fire station... they all add factor in to the true cost of housing and the more spread out things are, the more expensive those things become. Taken to extremes, look at the billions Houston spends now to add just one more lane (because this one will totally solve traffic) on, say, the Katy Freeway or the ring roads.

Yes it does need to be affordable. NYC is the posterchild for this. Nothing that's getting built on billionaire's row will ever trickle down to being affordable housing. They build ultra-luxury housing because it's the most profitable and it does absolutely nothing for anyone else because these units are just ways for non-residents (mostly) to park wealth and not pay their fair share of taxes.

Rent control is the wrong solution for the right problem and it's typically American. By that I mean it forces the solution onto private landlords who are going to do everything possible to get out of those obligations and deliver subpar but compliant housing. And they'll demand tax breaks for it. When in fact the solution is for the government to supply a large chunk of the housing market ie social housing. But there's a pervasive and wrong idea that we can only solve problems in the private sector and that's nothing more than a wealth transfer from the government to the already-wealthy.

"Just build more housing". Yeah, and then you get Houston. Cities need to be planned. Cities require infrastructure. And one of the most important thing cities need is public transit infrastructure, something sadly lacking in virtually every American city.

The core to so many of these problems is that we need to stop treating housing as a speculative asset. Owning two or more houses should be incredibly difficult and expensive and should be taxed punitively. By this I mean the capital gains on non-primary residences should be 80% and property taxes should be significantly higher.

>If you build housing, but allow crime to rise

Building enough housing that rents go down is the same thing as lowering crime so not much of an issue there.

Multiple things can be done at once. The policies you laid out are not mutually exclusive, and have different utility for different communities. But yes, fundamentally more housing is needed for growing populations. Conversions and rezoning are also important parts of the urban equation to “build more housing”, not just exurban McMansion developments.

It's possible to build more housing and have rent control. Rent control is the only thing allowing working class families to live a dignified life in the USA's most desirable cities. Land value tax and social housing are simply not politically feasible – rent control is.

You may be implying it but you also need to make sure this new housing goes into the long term rental market, instead of being secondary residences or airbnbs. I've seen it happen first hand in my home town. That may not be a problem for Austin though.

The Law of Supply & Demand. As immutable as F=ma.

Austin is not even that good at "keeping law and order" (marginally better than say SF). It's really just "build more housing".

And yet, if you dig through the various comments on HN over the years regarding SF housing costs the overwhelming conesus is more rent control. Sometimes, the most common sense solution turns out to be the correct one.

You have to restrict investors buying up that newly built housing too.

Homes for people. Not investors.

> Build more housing. Keep law and order.

At least the latter has been equated with fascism in recent years. That's why it's become such a problem.

in america, more density and more people always means more crime

Wow, that sounds racist /s

> Just build more housing.

Also "Wipe out a whole boatload of techbros who artificially inflate prices". Nobody is talking about that part of the equation.

Austin was one of the places a lot of tech folks flocked to when everybody was working online. RTO and layoffs have wiped a lot of them out. I'd estimate almost 1/3 of the tech folks that were floating around last year are now in other cities.

> 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.

There is affordable housing all over America. Get it through your head. It’s about nearness to the economic singularity that costs so much not the housing itself.

And most importantly - limit housing speculation e.g. don't allow private equity to buy those.

Housing should not be a speculative investment or a wealth growth vehicle.

Housing must be a commodity.

> Its wild how the solution to housing costs is really just:

> Build more housing. Keep law and order.

Safety (law and order) increases housing costs, as you say. It's desireable on its own, but it does not solve housing cost. NYC is very safe and very expensive. Crime is way down in most of the US, and housing costs are much higher.

without rent control, what economic incentive do renters have to maintain law and order / invest in local community / be a good neighbor? any investment they make is captured by the landlord. in fact, they are incentivized to maintain their neighborhood in as much disrepair as they can stand, for fear of rent increases.

the little old lady living in a rent controlled apartment is a big part of why rents are high in that area: she was part of what made the community thrive. we would do well to compensate her for this.

I think that building more housing helps, but a lack of supply is not the only cause of high housing prices. Wealth inequality is also a huge driver, possibly the primary driver. If wealth is allocated in a society in a sufficiently lopsided way, then a small number of people can buy up literally all the assets in the society. Regular people are bidding against a small cadre of ultra-wealthy people who can't possibly spend all their money on consuption, so they use it to buy assets like other people's homes. In the aggregate, increasing the housing supply won't bring down housing prices if wealth inequality is also growing above a certain rate.

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.

No, it really is not that easy. Check out China, and read up on the Spanish housing crisis. "Just build more" works only sometimes, as demonstrated in those counter-examples. Housing is massive societal and sociological problem with no simple fix. Furthermore, in many circles, another proposal is to cut red tape. You know, housing in the US already is among the least affordable and lowest quality in the developed world. But some people really insist that going back to asbestos and lead pipes would make housing cheaper.

And don't get me wrong, asbestos and lead are wonderful construction materials. Cheap, durable, and high quality. It's just a shame it causes all sorts of health complications when we use them, right? I mean, it would definitely make housing cheaper, but also cause all kinds of health problems.

NIMBYism has never been about preserving neighborhood characteristic, or noise and traffic concerns. Menlo Park is not Big Sur. Sure, some concerns are reasonable and should be investigated, but most of the time they're bureaucratic distractions that's been weaponized by people who want to delay progress and protect their investment.

For most Americans, A house is their primary savings account, retirement plan, and probably where they keep majority of their wealth. We don't build new housing in old neighborhoods because it would de-value the investment of too many people. Until we can solve this problem (where people are incentivized to pull the ladder up behind them), we will always have housing shortages. It's just too profitable.

To be fair it is not the city/elected officials who wants to retain the parking lots. The downtown redevelopment would probably make the city a lot of money.

It is the businesses around downtown who are pushing the save downtown campaign. I imagine the businesses contribute a fair chunk of revenue to the city now and have some influence .

Relative to say parts of Redwood City, or Palo Alto. Menlo park has a fair amount of student-ish 4 Unit lots, so it not all zoned SFU.

To be fair, parking structures always look and feel pretty distopian.

I like the approach of making downtowns walkable and having a bit of parking at the periphery of downtown, along with good public transit. Encourages people to use public transit to get to town in the first place. Downtown residents can use transit or a zipcar or equivalent when the need to get out of town, instead of devoting a ton of space downtown for storing their cars.

Not sure if that approach is really practical, but if it can be made to work it is much nicer.

Babies throw tantrums, your job as a parent is to not give in to their demands. But California has a weakened state government due to the governor's will-he-wont-he bid for higher office some time between now and 2092, he's afraid to make waves. If it were me I'd say: you need more housing. And if the fine people of Menlo Park say no, then let them maintain El Camino Real themselves. A home depot employee will be by to unlock the shovel cage for you shortly.

Menlo Park isn't comparable to Austin though - Austin's equivalent of Menlo Park would be a country club CDP in the Austin Hills like Rob Roy.

A better comparison would be ATX against San Jose.

Just like how the "rich" residents of Santa Clara county know that you want to live in Campbell, Los Gatos, Menlo Park, Los Altos, Loyola, etc, similarly rich Texans and Austinites live in the Hills.

The reality is the residents of Menlo Park and Rob Roy don't want your type, and in a lot of cases tend to be the same people as there aren't many places left where you can trail run, bike, eat Michelin star ramen, and not pay income tax.

Just because we make good money in tech, it doesn't make us "them". I highly recommend reading the works of Pierre Bourdieu with regards to cultural capital.

Menlo Park people are pretending that they are Atherton.

If you owned a 600sqm allotment in Menlo Park surely you'd want it to stay a parking lot and not become vibrant apartment blocks.

Austin's example shows what happens when a city actually follows through and allows density where it makes sense

TIL Menlo Park claims to have a personality

I don't expect Menlo Park to keep it character for long as Silicon Valley CEOs are fleeing the state.

it's crazy that people nowadays seriously question basic market pressure being a thing

There's loads of other inefficiencies as well. Moving is a huge hurdle. It's difficult to find housing that meets dozens of conditions, and even then you don't respond to supply + demand imagined equilibrium, you pay more or pay less to live near friends or family. It's something you only do a handful of times in your whole life. Trying to use the same analysis as for buying a can of beans is absurd. You might need to take econ 201 before you understand why econ 101 is wrong about housing.

Yes, it describes human nature better than psychology. We can’t fight even knowing about it.

the snark is quite rich when reading beyond the headline makes clear this was anything but a free market solution.

I don't think this is simple econ 101. Yes with more houses we should expect lower prices, but also with high prices we should expect more houses produced. All that is econ 101, but that second econ 101 prediction isn't happening. I would guess that some will chalk it up to vaguely (though not necessarily wrong) jerks/idiots blocking it. Whether it's because nimbyers want to keep their home values (what we should expect from econ) or it's broken city politics, there are lots of things going on here. It's more complicated.

They also teach you about elasticity in econ 101. It's foolish and anti-intellectual to insist that the housing market has only two factors, while simultaneously condescending about your understanding of economics shows that you really don't understand economics, it's more about your ego.

That's a really useful historical reminder

No it's not. It's 2 cherry picked data points with a sample size of 1 of a complex system with multiple confounding factors such as a pandemic

You can look at other neighborhoods such as palms in Los Angeles, which has the most aggressive housing build out in all of California. Median rent has increased - sometimes more housing can create more demand

What if the people in power don't want prices to go down?

I just hope that people remember this is just one factor affecting quality of life and making a city work.

"Density at all costs" ignores a huge set of tradeoffs that are equally as damaging to a city. Things such as urban form, street experience, long-term adaptability, integration with existing fabric, economic resilience, etc. These are the things that make a city work in the long term.

I’m a big proponent of building more housing. But a lot of it is being doing in very short sided ways that lead to huge externalities.

We could but it’s not always just “good” to make things dense.

My hometown has had a huge push to add more housing to make things more affordable. What happened? Rents went down for a couple years then right back up. Except now the city has a bunch of more soulless condos and is horribly congested.

Sometimes preserving things and keeping them nice and simple even if it’s costs a bit of a premium is better.

Developers not recouping their investment will discourage less housing in Austin in the future and it will become expensive again. A lot of our current housing shortages are from the build up in 2008 and an implosion of the entire industry (so that crafts people did not really exist for the next need for housing).

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.

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 .

In Amsterdam the Green Party is celebrating making homes more affordable to buy…. By kicking out the people who were renting them. And they continue to say only 20% of developments can be market rate, aka for everyone. When you’re new to the city because you just got a job at booking.com or whatever you only can hope to get a flat in that 20% - the rest isn’t for the likes of you!

https://youtu.be/t05cFv02pzY

> (a) shortage of skilled laborers; (b) high cost of labor; and (c) exorbitantly much red tape

Does the red tape also stop the Syrian refugees from working in construction? It's a genuine question and I am not trying to be disingenuous.

The last time I was in Germany, I aw several constructions projects in Cologne and Frankfurt. However, I rarely noticed any non-white construction workers. This was quite unusual for a Texan like me because Mexican laborers drive all the construction in Texas if not most of the US.

>But it does show a number of problems inherent in Germany's current situation: (a) shortage of skilled laborers; (b) high cost of labor; and (c) exorbitantly much red tape. These three points alone are among the most frequently cited factors that companies feel inhibit business, and it holds across disciplines.

There are 9 billion people in the world, roughly half of them are perfectly capable of doing manual labor.

There is plenty of skilled labor, and the cost is frankly not that high, you just need to let them work.

Can we be serious here? There is one and only one cause of "high housing prices" and that is a political choice to make housing expensive.

Don't tell people what they can or can't do with their property.

Don't prevent people from being brought in to build stuff.

Do these 2 things and housing will be built if the price is truly high. Anything else is bullshit.

If you are in your terminal home, then yes, selfishly one would want the value to go up. But if you ever plan on moving to another home, sure dropping prices mean you get less, but it also means you pay less for your next purchase.

If you are in your terminal home, you also want low prices until the week before you eventually sell your house, as Texas has a high property tax rate to make up for the lack of state income tax.

> and each one will hit house owning voters hard making it hard to replicate

In a negative way?

As a homeowner I have zero objections to apartments built near jobs and transit (which also means away from my house). I also don't think apartments directly compete with single family housing. Like, they do, but only in certain situations and at certain levels of occupancy and the economy.

I am strongly opposed to building homes in stupid places, worsening traffic or overburdening infrastructure. This is why I tend to strongly oppose ADUs. If you want to turn my neighborhood into a dense urban environment, fine, but buy my house and my neighbors' houses, bulldoze them, and build proper urban density.

I also have a lot of skepticism regarding our housing shortage. You can go find people making the same arguments about housing shortfalls in 2006(underbuilt for years, new family formation, prices will remain high...). But then something happened, and it wasn't that 10% of Americans suddenly died. Suddenly we had more homes than we needed. Why? Because housing demand is related to economics. Now that we're slowing down reproduction and kicking out or scaring off immigrants we're likely setting ourselves up for another round of oversupply. "Good!" Well, tell that to the soon to be unemployed home builders.

> Crazy that the reason we can't have an order-of-magnitude reduction in the cost of the most important thing people need (shelter) is not due to resource constraints, but man-made ones.

You say that as though reduction in cost of housing is a universal desire, but it isn't.

Suppose a couple of years ago you took a $500,000 loan to buy a $700,000 house, which you'll be paying off for the next 10 years. Would you like the market value of your house to decline substantially during that time?

If there's enough of the population bought into property, it won't be politically feasible to allow the value of homes to decline.

You can't start a new city. I city exists for all the things you can do. Your new city will have nothing to do because nobody lives there and there are no jobs to attract anyone to move.

that is why we build suburbs - they get anound this by being right next to a place with everything you want in a city

In this hypothetical, who is the individual or group of people that you envision would take the initiative to start a new city? What is their incentive to do so?

Water. You need clean water to grow a city. There isn't much of that to spread around anymore.

There is no shortage of cheaper existing cities in Australia, but everyone wants to live in Sydney, Brisbane, Melbourne and Perth.

The existing smaller cities just slowly wither.

Existing homeowners of the capitals have little interest in real estate prices dramatically dropping - would you?

Subject to the same constraints. They tried to make one in California and it was blocked by others in the same county. It’s fine to be honest. Over time California will become less relevant to the US and Texas more so.

You can, but it is damn difficult.

https://www.volts.wtf/p/is-the-brand-new-city-in-california

Why would you think that the same thing preventing density and new development in cities won’t stop your new city from growing before any building taller than 2 stories is built?

You might enjoy the novel A Town Like Alice by Nevil Shute.

People move to where there is jobs and money. You can't build the housing first, in our society you need capitalists to invest into building businesses to make people want to move there. And because we have spent decades killing small business in favor of corporations, you need corporations to decide to build where there are no people and they have to pay a small short term premium to attract workers. Except corporations don't like doing that because it is a longer term investment and they are worried about next quarter's numbers and maximizing executive level bonuses which means short term planning.

> Please bear in mind when you discuss "rent control" in the USA you really do mean the version you see in your locale. The idea that rent control sui generis failed worldwide is (in my personal opinion) a stretch.

Can you cite a version of it that worked?

> 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). By January 2026, Austin’s median rent had fallen to $1,296, 4% lower than that of the U.S. overall ($1,353).

For comparison, in San Francisco December 2021, the median one bedroom was $2810. In San Francisco March 2026, it was $3597, an increase of 28%.

If you just compare it to other cities you can see that Austin did much better in prices.

Idk about rent, but even as of a year or two ago, Austin metro housing index was lower than its 2016 level. Rent following a similar trajectory wouldn't be super surprising to me.

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.

Unfortunately, there's a lot of people -- especially further left -- who fight this kind of reasoning. They insist that the housing market is different, and that just building more private housing won't help.

No amount of evidence will convince these people, because they already made up their mind ahead of time: their ideology says the market can't help, so the market can't help, period. Any evidence to the contrary is a plot by billionaires or something.

Who would've thought?!

A lot of our health care needs are notoriously inelastic, which is IMO the biggest reason free market dynamics are not a good choice.

Because for-profit healthcare and higher ed have shown poor outcomes empirically?

Ideology, mostly.

If you’re asking about a population decrease then, no, Austin has not had a declining population count for decades, and not recently either, although growth has slowed. So it’s not a case of decreased demand.

This balanced perspective on what’s good for someone personally vs what’s good for society at large is what’s missing from the world.

One of the things I like about the reporting in this Austin article, is they break down by building class.

In Melbourne I've never found a good source for this, only general averages; and my suspicions are that we just build shitboxes and claim the rent is lower on average, capturing something like shrinkflation rather than affordability.

> Can it be also related to demand not catching up or even declining?

The Austin metro area's population has been monotonically increasing [1]. Increasing housing supply decreases prices. If you want to reduce housing costs, flood the system with housing.

[1] https://www.macrotrends.net/global-metrics/cities/22926/aust...

I think Denver has a few other things going for it that simply make it a higher value housing market, namely: 1. Mild weather - dry weather with well defined seasons without 2. Natural recreation - some of the best year-around outdoor recreation in the country 3. More diverse economy - Austin is extremely tech heavy. Anecdotally most people saw dot-com boom hit Austin much harder than 08 crisis. Tech is bleeding right now. 4. Geography - building in Denver is constrained by Rocky mountains. The plains offer endless building but in Texas you can build any direction and topology is very flat.

I think the other thing not mentioned here is that Austin saw a huge influx of home buyers in 2020-2024 - most everyone I met during that time that moved from West Coast bought at the high and left within 2-3 years after realizing they couldn't handle the crumbling infrastructure and hot summers. Many of them have been holding onto these properties and trying to rent. This only put more pressure on another group - those who bought properties specifically for short-term rentals (e.g. Airbnb). Those who did stay are see massive headcount reductions in tech industry. Meanwhile there are many natives who would love to live closer but are stuck with properties purchased in '21-'24 in Round Rock, Georgetown, San Marcos, Taylor, etc.

So IMO this a perfect storm of not just building housing supply (which is great - the best thing the city has managed to do in the past 15 years), but also significant demand correction.

As someone born and raised in Austin and a homeowner within the city - I am ecstatic about decline in rents and home values. Austin became what it is in part because it was affordable.

We have no nearby mountains, hot summers, poor infrastructure, poor politics, a heavily polluted coastline --> there was no reason for it's prices to be as high as they were.

I'm with you and feel your anger. So tired of California's useless virtue signaling about housing and homelessness while no progress is made for decades. California, stop messing around and start living up to your virtue signals! It's infuriating to live in California, hear all day about caring about poor people, then do nothing at all for the bottom line and in fact endeavor to make it harder and discriminate against poor people as much as possible.

And then they'll act so surprised when the populists without a plan show up and win the national elections.

> 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 robust across cities, countries and centuries.

[1] https://www.macrotrends.net/global-metrics/cities/22926/aust...

[2] https://en.wikipedia.org/wiki/Austin,_Texas#Demographics

[3] https://fred.stlouisfed.org/series/GDPALL48453

show pop stats

This is nonsense. In every material good, the buying power of nearly everyone has increased in real terms over time, regardless of inequality. It's only in housing, with constrained supply, that inequality can drive up prices; and even in that case, it doesn't actually change the housing supply- if prices are high, that just means a lot of people who want to live there! Inequality doesn't reduce the number of houses.

Building a little reduces prices a little. Building a lot reduces prices a lot. If the prices are very high, then it's very profitable to build, so unless stopped by regulation, you will get a lot of building. Even if building merely keeps the price from going up as density increases, the value provided by living in an area goes up from agglomeration effects as it grows.

I guess the confounding factor is that the population isn't fixed. Greater construction could result in population growth which cancels out the gains from greater supply. You'd have to build faster than population growth to lower prices. And generally developers aren't looking to do that.

If you try to take any local action that might lower housing prices or even keep them steady, you will likely be stymied by a large contingent of people that deny that new housing could ever raise rents.

The idea that supply and demand don't apply to housing is quite popular:

https://www.jstor.org/stable/27397156

And the very few academic articles that try to refute housing supply lowering prices get a lot of press:

https://hellgatenyc.com/take-that-ezra-klein/

Even when it's not peer-reviewed and contradicts a ton of more serious research attempts, a bid of research which rarely gets popular press coverage.

It's like climate denialism, there's huge demand for denialist positions and very little research to back it up, so the press does not reflect the research.

People are quick to point out that induced demand exists - especially people that aren't fond of change.

Very broadly speaking, people mis-estimate effect sizes in economics by orders of magnitude. Induced demand is just their foothold to claim an effect exists, before they go about claiming the effect size they want to see.

> When there’s more of a thing, it costs less.

Yeah, and when we add lanes to roads, the average speeds increase and commutes get shorter. Right?

Also, if the government gives me $1 billion, then I'll be rich. But what happens if the government gives everyone $1 billion? Everyone will be rich, right?

Why are you downvoting me, I'm right

No, plenty of indices use a "repeat-rent" methodology (comparing only prices changes across the same unit) to address the problem you describe.

They show Austin rents going down, eg Zillow's Observed Rent Index: https://www.zillow.com/research/data/

what you're neglecting to consider is what would have happened if someone moved to Austin (say a wealthy person from SF) and that expensive new apartment didn't exist.

The mechanism by which new construction drives down rents is that people that need a new apartment are in less competition with existing residents in older worse apartment buildings.

So the newcomer from SF moves into the expensive new apartment, which means that there's less competition for decades old apartments, which means that when one of those is vacated there is less price appreciation on that product.

If there is a scarcity of apartments what happens is that when a decades old apartment is vacant it is filled by a wealthy newcomer and the landlord increases the rent accordingly.

In my neighborhood in NYC, I've also observed that rents increased after luxury apartments were built here. In fact my landlord cited the increased median rent in the neighborhood as a reason to raise my rent.

My understanding of the situation is that luxury apartments do indeed gentrify neighborhoods (i.e. they increase the local rent and drive displacement of locals that can't keep up with those rent increases).

However, across the entire city, it slightly eases rent pressure by providing additional housing supply.

So, like you mentioned, if you get enough housing across many neighborhoods, you can drive down rents. Otherwise, that luxury complex in your neighborhood might only be helping ease rent pressure in other neighborhoods.

> a luxury apartment building goes up, surveys the market, and sets its rents 30% higher for the privilege of living in a new building with a gym for dogs or ball pit or whatever. Then the older buildings say, "Well, we can raise our rents 20% and still be the best deal in town," and so on.

I think that might not be the right cause and effect relationship. The actual cause is increased demand. This creates both the increased pricing of existing stock and an incentive to build new stock.

> Then the older buildings say, "Well, we can raise our rents 20% and still be the best deal in town,"

They can only get away with that when there is a housing shortage.

> I've been skeptical of the claim that new construction drives rents down.

It can, but not in isolation.

It requires a couple additional variables such as population demand (rate of growth of Austin has reduced since the COVID boom [0]), existing stock (Texas had a building boom and bust in the 1980s [1] that decoupled it's housing market from the rest of the US), and a shift from buying to renting.

That said, the peers I have who work in professional real estate (not realators - as in actual MDs for REITs or multi-generational landlord families whose parents went to school with Governers and Mayors) are starting to shift away from real estate to equities because of headaches around succession planning and reduced margins.

What is ending up happening is megacap REITs like Equity Residential, Essex, Avalon, etc are buying out older groups, taking stakes in new developments, and shifting away from selling condos to perpetually leasing. At their size they can afford to have significant amounts of unleased units becuase they would have made up the cost via higher rent on leased units, tactically building high margins condos and SFHs in high appreciation geographies, or loss harvesting in order to subsidize commercial buildouts like data centers.

Naively saying only construction will reduce prices is false, and if the consolidation aspect is not solved (and sadly, it won't be) it would only lead to an even worse situation.

Additionally, these are hyperlocal problems and what may work for Austin may require significant retooling for Chicago.

[0] - https://www.bizjournals.com/austin/news/2026/01/28/austin-be...

[1] - https://www.nytimes.com/1986/09/14/business/john-connally-s-...

Your scenario is simply describing a massive under-supply problem, and mis-attributing causality for price increases.

If the older buildings are able to raise prices 20% with no increase in vacancies after the new build, the new build not coming in would mean those older buildings rent would be bid up more than 20%.

The people moving in who could have afforded the 30% more expensive luxury units will just have to pick from the older units and outbid lower income people for spots in this low supply, growing city (under no other scenario could you crank up rent on aging stock 20% without losing to competing landlords).

> if you flood the market with 30% more housing units like Austin you get the Econ 101 effect

According to TFA, it seems so.

Which is great, because it's further evidence that we should do the same thing everywhere.

There were a ton of apartments built in lower-cost areas outside of the urban center as well - the Parmer area (near the new Apple campus), the Tech Ridge area near I-35, and out by the airport and Tesla factory as a few examples. It wasn't only high-end, lots of mid-level stuff was built too.