6 ms·

Austin rents have fallen for nearly two years

56 points by matthest 2y ago

matthest 2y ago
Supply and demand 101 is undefeated.
- alephnerd 2y ago
  Much less red tape thanks to political support, plus the fact that new housing now coming online in Austin were largely financed in the 2018-22 period. Don't underestimate the collapse of financing for residential construction. That's a bigger reason why there aren't as many new developments plus those that are prioritized tend to be priced much higher than to be affordable.
black_13 2y ago
[dead]
mattgibson 2y ago
It would be interesting to know if land prices have changed over the same period. Also whether any other comparable cities have had similar falls in price.
- majormajor 2y ago
  The article mentions "San Antonio, Dallas and Plano" as also having seen declines in rent, and that the job market in Austin has slowed compared to during Covid. There is likely a shared post-Covid-migration dip as the market no longer has a huge influx of relatively-desparate new money.
CartyBoston 2y ago
You don't suppose people are choosing to live elsewhere for any "political" reasons do you?
- juunpp 2y ago
  How do you mean exactly?
  - renewiltord 2y ago
    It's a hypothesis that with RvW repealed, state laws become important for that. Similarly other laws may cause outmigration. Ultimately, California is losing people and Texas is gaining them so it's hard to say that this is driving depopulation of Texas.
    - juunpp 2y ago
      Yeah, that's what I thought. I wasn't tracking what GP meant to imply. Both people and companies have been moving to Austin recently.
- oldpersonintx 2y ago
  [dead]
- verdverm 2y ago
  Anecdotally, I was considering Austin but am no longer, primarily b/c of the governor, ag, and socially regressive laws. Sad I'm going to miss out on a great music and growing tech scene. There are other options though I also have a (former) long time friend that went hard MAGA and now wants to move to a state that reflects his political alignment
- wakawaka28 2y ago
  The entire tech job market is in a recession, but people want to blame politics. It's not politics. Some people don't like the Texas weather, and that is a bigger factor than politics.
- tzs 2y ago
  I don't know if this counts as a "political" reason, but since I became old enough that there is a good chance that my next job will be my last job before retirement (if my current job does not turn out to be my last), I'd only consider moving for that next job if it is in a state I'd be willing to retire in. Texas is not such a state because of their Medicare rules. Medicare is a federal program, but for some aspects of it states are allowed to add additional rules. First, a very brief overview for those younger or foreign readers who have had no reason to learn anything about Medicare. When you turn 65 and start Medicare you can choose between "traditional" Medicare (also called "original" Medicare) and "Medicare Advantage". With traditional Medicare the government is the insurer. They provide hospital insurance (called "Part A") which for each hospitalization covers up to 60 days at 100% after a $1676 deductible, then covers 30 more days $419 per day. They will also cover days after 90 at $838 per day, up to a lifetime total of 60 "after 90" days. After all those "after 90" days are used you pay all costs. They also provide insurance for non-hospital stuff (called "Part B") that covers preventative services at no cost, and a bunch of other stuff with with a $257 per year deductible and 20% coinsurance. There are a series of plans available to traditional Medicare users offered by private insurance companies that supplement part A and B by covering your part A deductible and your part B coinsurance. The plans are called "Medigap" plans or "Medicare supplement" plans. The federal government defines what these plans must cover but the companies that offer them set the price (and can offer additional benefits beyond what the government requires). There are 10 of these plans, called plans A, B, C, D, F, G, K, L, M, and N. Not all are available in all states, and some of those are no longer open to new enrollees, but generally in most states you'll have a choice of several. When you turn 65 and first enroll in Medicare you have "guaranteed issue" rights. If you apply for a Medigap plan the company must issue it regardless of your prior health history and they cannot charge you more based on that history or on pre-existing conditions. Every year there is an open enrollment period where you can change your Medigap plan, either to the same plan letter from a different company or to a different plan letter but you will not have federal guaranteed issue rights (with some exceptions such as your provider no longer offers the plan you are currently on). So maybe you bought a Medigap plan from say UHC when you started at age 65, because they were the least expensive option for the plan you wanted. But now 3 years later they have gone up and are the most expensive, and also in that 3 years you've developed some expensive chronic illness. You want to switch to another provider for your plan to save money, but they will charge you more because of that chronic illness so that won't work. So you are screwed...if you live in a state that doesn't provide guaranteed issue rights beyond what the feds require. Several states do provide more. California, Idaho, Missouri, and Nevada for example provide guaranteed issue during a window each year after your birthday provided you are switching to a plan that has the same or fewer benefits than your current plan. In my UHC example this would mean that every year you could switch to whichever provider had the lowest premium for your plan letter. (I think Missouri is slightly more restrictive...you can change to the same plan with a different provider rather than to any plan with the same or lower benefits). Some states go even farther. You can switch Medigap plans at any time, there is no restriction on changing plan letters except that A can only go to A and B-N can only go to B-N. New York is similar except I don't think they have that restriction on A <=> B-N. Bottom line is that if you live in Texas when you start traditional Medicare with a Medigap plan you might get stuck with that particular Medigap plan and provider, at least as long as you aren't willing to move. If you move to somewhere where your current provider does not offer your current plan you have guaranteed issue to chose a new plan available in that new area.
djoldman 2y ago
The article links to https://www.texastribune.org/2024/10/28/texas-housing-affordability-fight/ https://www.texastribune.org/2024/10/28/texas-housing-afford... to explain the increased construction: > Austin’s housing crisis had become undeniable. How to solve the problem became a dominant theme in the city’s 2022 elections. > "People just kind of got to this point where they had had enough," Council Member José "Chito" Vela said. "They just were like, 'okay, what we were doing on housing for the last 20 years is clearly not working.'" > The council members YIMBYs helped elect passed several reforms aimed at juicing the city’s housing stock.
- davidw 2y ago
  Local YIMBY groups are a great way to actually do something and see the results. Both of these groups have chapters or local affiliates across the country: https://yimbyaction.org/ https://yimbyaction.org/ https://welcomingneighbors.us/ https://welcomingneighbors.us/ There's new housing where I live that I went to hearings to advocate for. And as more comes on line, rents have started falling a bit, despite being a desirable place to live.
tasty_freeze 2y ago
20+ year resident of Austin here. I skimmed the article so maybe I missed it, but one thing that is lacking is the actions of private equity real estate purchases. During 2021/2022 (I'm not sure exactly the start/stop of the window) house values went up 50%+ here, and rent went up correspondingly. At the time, P.E. first were responsible for 40% of all home purchases. I just had a look at zillow, as imperfect as that is, it estimated my home value in Jan 2020 at $882K. It shot up during covid and peaked in May 2022 at $1.7M. It is now $1.2M. Anyway, the point is I think the private equity buying spree was also responsible for much of the run-up, which has since cooled off somewhat.
- derlvative 2y ago
  [flagged]
  - Etheryte 2y ago
    Strong disagree. He's a local with firsthand experience and he's also provided specific numbers with examples. Your comment is a pointless quip.
- rightbyte 2y ago
  Does Zillow keep the house to rent out or are they flipping them?
  - crooked-v 2y ago
    Neither. They do cross-promote a company, Opendoor, that does flipping, but Zillow's main goal is trying to replace realtors (or, rather, REALTOR®s, because the term is a trademark that wormed its way into people thinking of it as a business category).
    - 9283409232 2y ago
      Zillow was buying and flipping houses but they stopped in 2021 and sold all of their properties.
Workaccount2 2y ago
Who knew that the one and only solution to a housing crisis (besides forcefully removing people from the area) would actually help the problem of a housing crisis. The takeaway from this should be "Never listen to anyone who offers a fix for high housing costs if they say anything other than "Build more housing""
- crooked-v 2y ago
  Around here in Oregon, there's a truly bizarre subcurrent of people who think that building more housing makes prices go up, because something mumble mumble builders blah blah luxury.
  - pydry 2y ago
    Because a 5 million dollar luxury apartment built for foreign investors and an affordable 2 bed for a nurse arent competing in the same market any more than a bike and a ferrari are. It wouldnt be such a problem if the free market could create land, could create public transportation to link up housing to cheap land or could be kept from creating "apartment bitcoins" with a 100% land value tax but it refuses to and it wont. So, while the margins on luxury housing are ~15% and affordable is 4-6% the free market will rationally maximize the utility of property construction firms...
    - crooked-v 2y ago
      > arent competing in the same market It's the same market, because those investors are already there whether or not new luxury housing is built. The people buying the ultra-high-end stuff will, if it's not available, buy slightly lower high-end stuff, and so on down the chain ad infinitum, resulting in higher prices for those low-end two-bedrooms. Conversely, the very-high-end stuff being built then frees up some fraction of housing capacity all the way down the chain, lowering prices. https://www.nmhc.org/research-insight/research-notes/2024/why-building-luxury-apartments-brings-down-rent-for-all/ https://www.nmhc.org/research-insight/research-notes/2024/wh... > inner city land is scarce Inner city land here in Portland has plenty of surface parking lots, one- and two-family homes, and old buildings that have gone unused, sometimes for literally years†. † This part also gets into the bizarre rules around commercial building valuations and mortgages, which can make it a better choice for the building owner (at the expense of the city) to leave a building vacant indefinitely and eat the commercial mortgage payments than to rent it out cheap and have the mortgage provider suddenly call in the entire loan because the building valuation went down.
somewhereoutth 2y ago
The quickest way to build new housing is to turn short term lets (e.g. AirBnB) back into long term lets. A slower way is to extend and improve public transit (so effectively growing the desirable 'inner city' area). Affordability would benefit from rolling back some of the financial engineering that makes people believe they can pay more than they can actually afford.
- betaby 2y ago
  AirBnBs are 0.05% of the total hosing stock in the Greater Montreal area. Converting that 0.05% to a long-term wouldn't do anything.
majormajor 2y ago
Some interesting snippets from the article also in-play here: > above where rents stood prior to the pandemic but below where they peaked amid the region’s red-hot growth > The region’s population and job growth slowed as apartment building took off. > San Antonio, Dallas and Plano have also seen declining rents — but they haven’t fallen as fast as in Austin. > While nearly 17,000 apartments are under construction, according to MRI data, builders have pulled back on new projects amid the glut. > Austin rents sit about 17% above pre-pandemic levels, Zillow figures show. Nearly half of the Austin-Round Rock region’s renters are “cost-burdened,” according to a report last year published by Harvard University’s Joint Center for Housing Studies — meaning that they spend more than 30% of their income on rent and utilities, leaving less money in their pockets to spend on other essential needs like groceries, clothes and transportation. This is obviously far better than them not falling at all, but as a place with a big Covid migration boom + crazy pricing market, it will be interesting to see if it turns into a long-term decrease compared to the pre-Covid prices. Slowed job growth compared to the Covid-migration will likely help keep the prices from ramping back up, but slowed construction as prices already started to dip could counteract that to mean it ends up more like "pre-Covid status quo" than "much more affordable than it used to be." They built in a boom - which is better than NOT building in a boom like some places have done - but there's a lot more work to be done. Question is: will being hands-off there be enough, or will there need to be more proactive government intervention to encourage continued building in a more "normal" market? It would also be interesting to compare the effect of the mentioned YIMBY politicians with policies in other areas of TX where rents have fallen post-Covid. There is a LOT of underutilized land already available around the major cities in the state, it's not like the SF Bay Area. That's where more active intervention might be needed since for the couple decades before Covid developers were happy to build at a rate that let prices still go up quite a lot.
- matthest 2y ago
  Good summary. Also worth noting that Denver is experiencing something similar. Not the same context, but also an increase of new supply leading to lowered prices: https://www.denverpost.com/2025/01/24/metro-denver-apartment-rents-falling-vacancies-rising https://www.denverpost.com/2025/01/24/metro-denver-apartment... Ignore the "plunge" in the title. I think it mentions it's only something like a 3% drop. But will be interesting to see if that 3% increases over time.

56 points by matthest 2y ago

matthest 2y ago

Supply and demand 101 is undefeated.

alephnerd 2y ago
Much less red tape thanks to political support, plus the fact that new housing now coming online in Austin were largely financed in the 2018-22 period. Don't underestimate the collapse of financing for residential construction. That's a bigger reason why there aren't as many new developments plus those that are prioritized tend to be priced much higher than to be affordable.

black_13 2y ago

[dead]

mattgibson 2y ago

It would be interesting to know if land prices have changed over the same period. Also whether any other comparable cities have had similar falls in price.

majormajor 2y ago
The article mentions "San Antonio, Dallas and Plano" as also having seen declines in rent, and that the job market in Austin has slowed compared to during Covid. There is likely a shared post-Covid-migration dip as the market no longer has a huge influx of relatively-desparate new money.

CartyBoston 2y ago

You don't suppose people are choosing to live elsewhere for any "political" reasons do you?

juunpp 2y ago
How do you mean exactly?
- renewiltord 2y ago
  It's a hypothesis that with RvW repealed, state laws become important for that. Similarly other laws may cause outmigration. Ultimately, California is losing people and Texas is gaining them so it's hard to say that this is driving depopulation of Texas.
  - juunpp 2y ago
    Yeah, that's what I thought. I wasn't tracking what GP meant to imply. Both people and companies have been moving to Austin recently.
oldpersonintx 2y ago
[dead]
verdverm 2y ago
Anecdotally, I was considering Austin but am no longer, primarily b/c of the governor, ag, and socially regressive laws. Sad I'm going to miss out on a great music and growing tech scene. There are other options though I also have a (former) long time friend that went hard MAGA and now wants to move to a state that reflects his political alignment
wakawaka28 2y ago
The entire tech job market is in a recession, but people want to blame politics. It's not politics. Some people don't like the Texas weather, and that is a bigger factor than politics.
tzs 2y ago
I don't know if this counts as a "political" reason, but since I became old enough that there is a good chance that my next job will be my last job before retirement (if my current job does not turn out to be my last), I'd only consider moving for that next job if it is in a state I'd be willing to retire in. Texas is not such a state because of their Medicare rules. Medicare is a federal program, but for some aspects of it states are allowed to add additional rules. First, a very brief overview for those younger or foreign readers who have had no reason to learn anything about Medicare. When you turn 65 and start Medicare you can choose between "traditional" Medicare (also called "original" Medicare) and "Medicare Advantage". With traditional Medicare the government is the insurer. They provide hospital insurance (called "Part A") which for each hospitalization covers up to 60 days at 100% after a $1676 deductible, then covers 30 more days $419 per day. They will also cover days after 90 at $838 per day, up to a lifetime total of 60 "after 90" days. After all those "after 90" days are used you pay all costs. They also provide insurance for non-hospital stuff (called "Part B") that covers preventative services at no cost, and a bunch of other stuff with with a $257 per year deductible and 20% coinsurance. There are a series of plans available to traditional Medicare users offered by private insurance companies that supplement part A and B by covering your part A deductible and your part B coinsurance. The plans are called "Medigap" plans or "Medicare supplement" plans. The federal government defines what these plans must cover but the companies that offer them set the price (and can offer additional benefits beyond what the government requires). There are 10 of these plans, called plans A, B, C, D, F, G, K, L, M, and N. Not all are available in all states, and some of those are no longer open to new enrollees, but generally in most states you'll have a choice of several. When you turn 65 and first enroll in Medicare you have "guaranteed issue" rights. If you apply for a Medigap plan the company must issue it regardless of your prior health history and they cannot charge you more based on that history or on pre-existing conditions. Every year there is an open enrollment period where you can change your Medigap plan, either to the same plan letter from a different company or to a different plan letter but you will not have federal guaranteed issue rights (with some exceptions such as your provider no longer offers the plan you are currently on). So maybe you bought a Medigap plan from say UHC when you started at age 65, because they were the least expensive option for the plan you wanted. But now 3 years later they have gone up and are the most expensive, and also in that 3 years you've developed some expensive chronic illness. You want to switch to another provider for your plan to save money, but they will charge you more because of that chronic illness so that won't work. So you are screwed...if you live in a state that doesn't provide guaranteed issue rights beyond what the feds require. Several states do provide more. California, Idaho, Missouri, and Nevada for example provide guaranteed issue during a window each year after your birthday provided you are switching to a plan that has the same or fewer benefits than your current plan. In my UHC example this would mean that every year you could switch to whichever provider had the lowest premium for your plan letter. (I think Missouri is slightly more restrictive...you can change to the same plan with a different provider rather than to any plan with the same or lower benefits). Some states go even farther. You can switch Medigap plans at any time, there is no restriction on changing plan letters except that A can only go to A and B-N can only go to B-N. New York is similar except I don't think they have that restriction on A <=> B-N. Bottom line is that if you live in Texas when you start traditional Medicare with a Medigap plan you might get stuck with that particular Medigap plan and provider, at least as long as you aren't willing to move. If you move to somewhere where your current provider does not offer your current plan you have guaranteed issue to chose a new plan available in that new area.

djoldman 2y ago

The article links to https://www.texastribune.org/2024/10/28/texas-housing-affordability-fight/ https://www.texastribune.org/2024/10/28/texas-housing-afford... to explain the increased construction: > Austin’s housing crisis had become undeniable. How to solve the problem became a dominant theme in the city’s 2022 elections. > "People just kind of got to this point where they had had enough," Council Member José "Chito" Vela said. "They just were like, 'okay, what we were doing on housing for the last 20 years is clearly not working.'" > The council members YIMBYs helped elect passed several reforms aimed at juicing the city’s housing stock.

davidw 2y ago
Local YIMBY groups are a great way to actually do something and see the results. Both of these groups have chapters or local affiliates across the country: https://yimbyaction.org/ https://yimbyaction.org/ https://welcomingneighbors.us/ https://welcomingneighbors.us/ There's new housing where I live that I went to hearings to advocate for. And as more comes on line, rents have started falling a bit, despite being a desirable place to live.

tasty_freeze 2y ago

20+ year resident of Austin here. I skimmed the article so maybe I missed it, but one thing that is lacking is the actions of private equity real estate purchases. During 2021/2022 (I'm not sure exactly the start/stop of the window) house values went up 50%+ here, and rent went up correspondingly. At the time, P.E. first were responsible for 40% of all home purchases. I just had a look at zillow, as imperfect as that is, it estimated my home value in Jan 2020 at $882K. It shot up during covid and peaked in May 2022 at $1.7M. It is now $1.2M. Anyway, the point is I think the private equity buying spree was also responsible for much of the run-up, which has since cooled off somewhat.

derlvative 2y ago
[flagged]
- Etheryte 2y ago
  Strong disagree. He's a local with firsthand experience and he's also provided specific numbers with examples. Your comment is a pointless quip.
rightbyte 2y ago
Does Zillow keep the house to rent out or are they flipping them?
- crooked-v 2y ago
  Neither. They do cross-promote a company, Opendoor, that does flipping, but Zillow's main goal is trying to replace realtors (or, rather, REALTOR®s, because the term is a trademark that wormed its way into people thinking of it as a business category).
  - 9283409232 2y ago
    Zillow was buying and flipping houses but they stopped in 2021 and sold all of their properties.

Workaccount2 2y ago

Who knew that the one and only solution to a housing crisis (besides forcefully removing people from the area) would actually help the problem of a housing crisis. The takeaway from this should be "Never listen to anyone who offers a fix for high housing costs if they say anything other than "Build more housing""

crooked-v 2y ago
Around here in Oregon, there's a truly bizarre subcurrent of people who think that building more housing makes prices go up, because something mumble mumble builders blah blah luxury.
- pydry 2y ago
  Because a 5 million dollar luxury apartment built for foreign investors and an affordable 2 bed for a nurse arent competing in the same market any more than a bike and a ferrari are. It wouldnt be such a problem if the free market could create land, could create public transportation to link up housing to cheap land or could be kept from creating "apartment bitcoins" with a 100% land value tax but it refuses to and it wont. So, while the margins on luxury housing are ~15% and affordable is 4-6% the free market will rationally maximize the utility of property construction firms...
  - crooked-v 2y ago
    > arent competing in the same market It's the same market, because those investors are already there whether or not new luxury housing is built. The people buying the ultra-high-end stuff will, if it's not available, buy slightly lower high-end stuff, and so on down the chain ad infinitum, resulting in higher prices for those low-end two-bedrooms. Conversely, the very-high-end stuff being built then frees up some fraction of housing capacity all the way down the chain, lowering prices. https://www.nmhc.org/research-insight/research-notes/2024/why-building-luxury-apartments-brings-down-rent-for-all/ https://www.nmhc.org/research-insight/research-notes/2024/wh... > inner city land is scarce Inner city land here in Portland has plenty of surface parking lots, one- and two-family homes, and old buildings that have gone unused, sometimes for literally years†. † This part also gets into the bizarre rules around commercial building valuations and mortgages, which can make it a better choice for the building owner (at the expense of the city) to leave a building vacant indefinitely and eat the commercial mortgage payments than to rent it out cheap and have the mortgage provider suddenly call in the entire loan because the building valuation went down.

somewhereoutth 2y ago

The quickest way to build new housing is to turn short term lets (e.g. AirBnB) back into long term lets. A slower way is to extend and improve public transit (so effectively growing the desirable 'inner city' area). Affordability would benefit from rolling back some of the financial engineering that makes people believe they can pay more than they can actually afford.

betaby 2y ago
AirBnBs are 0.05% of the total hosing stock in the Greater Montreal area. Converting that 0.05% to a long-term wouldn't do anything.

majormajor 2y ago

Some interesting snippets from the article also in-play here: > above where rents stood prior to the pandemic but below where they peaked amid the region’s red-hot growth > The region’s population and job growth slowed as apartment building took off. > San Antonio, Dallas and Plano have also seen declining rents — but they haven’t fallen as fast as in Austin. > While nearly 17,000 apartments are under construction, according to MRI data, builders have pulled back on new projects amid the glut. > Austin rents sit about 17% above pre-pandemic levels, Zillow figures show. Nearly half of the Austin-Round Rock region’s renters are “cost-burdened,” according to a report last year published by Harvard University’s Joint Center for Housing Studies — meaning that they spend more than 30% of their income on rent and utilities, leaving less money in their pockets to spend on other essential needs like groceries, clothes and transportation. This is obviously far better than them not falling at all, but as a place with a big Covid migration boom + crazy pricing market, it will be interesting to see if it turns into a long-term decrease compared to the pre-Covid prices. Slowed job growth compared to the Covid-migration will likely help keep the prices from ramping back up, but slowed construction as prices already started to dip could counteract that to mean it ends up more like "pre-Covid status quo" than "much more affordable than it used to be." They built in a boom - which is better than NOT building in a boom like some places have done - but there's a lot more work to be done. Question is: will being hands-off there be enough, or will there need to be more proactive government intervention to encourage continued building in a more "normal" market? It would also be interesting to compare the effect of the mentioned YIMBY politicians with policies in other areas of TX where rents have fallen post-Covid. There is a LOT of underutilized land already available around the major cities in the state, it's not like the SF Bay Area. That's where more active intervention might be needed since for the couple decades before Covid developers were happy to build at a rate that let prices still go up quite a lot.

matthest 2y ago
Good summary. Also worth noting that Denver is experiencing something similar. Not the same context, but also an increase of new supply leading to lowered prices: https://www.denverpost.com/2025/01/24/metro-denver-apartment-rents-falling-vacancies-rising https://www.denverpost.com/2025/01/24/metro-denver-apartment... Ignore the "plunge" in the title. I think it mentions it's only something like a 3% drop. But will be interesting to see if that 3% increases over time.