Austin’s surge of new housing construction drove down rents

nemomarx

Good news - experimental verification of the law of supply and demand! I'm sure the analysis is welcome though and I hope policy makers try to learn from this. We could densify most american cities quite a lot more.

riknos314

So glad we don't need to re-write the first chapter of almost every economics 101 textbook!

xwowsersx

You mean to tell me that increasing supply lowers price? Fascinating.

clamprecht

At a glance, I'm a bit skeptical. It looks like they're cherry picking the high point for rent (the COVID spike). > "Rents fell. 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)." Of course having more housing should, all things equal, lower rent. But all things certainly weren't equal, especially during this time period.

lifeisstillgood

>>> The city changed zoning regulations to allow construction of large apartment buildings, particularly near jobs and transit. In 2018, voters approved a $250 million bond measure to build and repair affordable housing. Permitting processes were reformed to speed development and reduce costs. All three of the five things most economists say about house building - and each one will hit house owning voters hard making it hard to replicate. But none the less a triumph of common sense :-)

Gigachad

Same has been happening in Melbourne, Australia. The state government has basically steamrolled the boomers and allowed highrise construction next to existing train stations. Despite having huge population growth, rents are some of the most affordable in the country.

rconti

Meanwhile, California is also trying to build housing near transit, but Menlo Park wants to preserve the character of downtown by preserving dirty, cracked, flat, surface-level parking lots like it's 1950.

lumirth

I mean… duh? Genuinely baffled at people struggling to understand this. When there’s more of a thing, it costs less. Which is good when that thing is essential, like housing. Not sure the idea of housing being an asset which endlessly accrues value is good for anybody involved, long-term. Open to disagreement, though! I’m no economist.

postflopclarity

how surprising, never would have seen that coming

lanfeust6

Similar phenomenon in several cities: https://substackcdn.com/image/fetch/$s_!vg94!,f_auto,q_auto:...

jackconsidine

Anecdote: I lived in Austin from 2017 to 2021. My rent was always very cheap (my baseline is Brooklyn which I guess makes everything feel cheap. But my rent went up $50 for the first 3 years and then down $200 during Covid and I checked recently and my aptmnt is still the same price). Around the time I left everyone was buying up houses to rent and Airbnb. Very palpably felt the growing supply when it came to bnb's (the owners having a harder time competing for renters etc). It's hard not to be surprised in spite of the tremendous growth in that city

legitster

Another part of this - higher interest rates really put the brakes on home values. We own a rental property and the home value has more or less been locked in since 2022. In our otherwise hot metro area, nobody has raised their rental rates on similar properties in 4 years. It's a win-win for our tenants. Prices seem to be stable and there's no rush for them to lock down a house RIGHT NOW. It's sure not good for my bottom line as a landlord for them to keep adding homes and keeping rates up. But it sure seems like a no brainer for society at large.

tonymet

what they didn't mention is that supply didn't impact rents until the large remigration back out of Austin

cat-turner

Thats cool. Now do LA. Sorry but I want beaches and housing options.

shcheklein

Can it be also related to demand not catching up or even declining? If place is in high demand and prices go down shouldn't it cause even more people coming to it (compensating for a possible price change). (Note: not an expert on this, I'm just curious how it really works - besides obvious thing: more supply -> price goes down).

afh1

Germany could learn a lesson or two here...

CSMastermind

Certainly, that can't be true? Increased supply lowered prices for the same levels of demand? Seems unlikely.

kart23

the problem in sf is building is incredibly expensive, and projects that have been planned, land acquired, are simply sitting as empty lots because developers don’t have the money. interest rates for construction loans, reduced funding, labor and material costs, all contribute to the amount of housing built. there is a bond being debated in the ca senate now that will help by giving loans for construction. https://calmatters.org/politics/2026/01/2026-housing-agenda/

imadch

Austin is a good reminder that supply does matter — but also that it needs to be added at scale before people actually feel it. Small incremental changes probably just get absorbed without visible impact on rents.

nomilk

Dumb question, many cities suffer from extremely high property (i.e. land) prices. I understand the NIMBY barrier. But I don't understand why it isn't more common to simply.. start a new city. Especially in countries like Australia where property prices are sky high and alternative places for setting up a new city are abundant. Maybe internet connectivity was previously a barrier, but now.. starlink. I put this question to grok; its response: > Unfortunately, Australia's legal, regulatory, financial, and practical systems make this extremely difficult (bordering on impossible at any meaningful scale). 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.