Discussion

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.

seanmcdirmid: 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).

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.

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 :-)

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.

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

riknos314: So glad we don't need to re-write the first chapter of almost every economics 101 textbook!

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

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

cg5280: The problem isn’t the powers that be. A lot of regular homeowners fight new developments tooth and nail. And many blue states unfortunately give them a lot of tools to do so.

JumpCrisscross: > A lot of regular homeowners fight new developmentsWhich is self interested. The paradox is renters being turned against their own interests by large landlords pitching anti-gentrification.

TulliusCicero: It's typically local residents who fight this. There's a "fuck you, got mine" tendency to pull up the ladder once you've made it.

dmoy: 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.

standardUser: It's a balancing act. Build too much and developers make less money. Build too little and poverty and homelessness shoot up. Which side do you want to err on?

nemomarx: They can recoup the investment with volume (especially apartments) I would think? Sell 10 houses at 2 million each or 30 at 1 million each or however it breaks down.

seanmcdirmid: Their lan, labor, and material costs aren’t trivial. If thy were pulling a 10-20% margin before, how will increasing volume (which increases costs) make it up?

atomicnumber3: So, do we just need to nationalize housing construction? If the free market apparently just can't handle it?

seanmcdirmid: Maybe? Obviously boom bust cycles that come from a free market are not very efficient.

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.

scarmig: > 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%.

postflopclarity: just because rents fell doesn't mean developers couldn't recoup their investment. 2008 was completely different.

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

cheriot: > and each one will hit house owning voters hard making it hard to replicateIn a negative way?

2postsperday: You haven't factored in Inflation.

afh1: Germany could learn a lesson or two here...

JumpCrisscross: > what they didn't mention is that supply didn't impact rents until the large remigration back out of AustinThis 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

JumpCrisscross: > Developers not recouping their investmentLast time I did the back-of-the-envelope math, financing permitting delays in San Francisco added 10% to the cost of new housing [1]. (Note: not the cost of permitting. Just the cost of financing the delay.)This is deadweight loss that everyone in the transaction wins from eliminating. One could absolutely see lower prices and higher developer margins if this waste were cut.[1] https://news.ycombinator.com/item?id=38664780

strbean: > everyone in the transaction winsNobody ever thinks of the poor banks!

lo_zamoyski: Usury-as-a-Service.

abigail95: show pop stats

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.

strbean: 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.

rconti: Well, in Menlo Park they're just flat surface parking lots, not even multi-story structures. The planned development is multi-story housing with parking underneath.To be fair, I am boycotting the (similar) underground garage over at Springline because they're clearly made only for people in Range Rovers or whatever. They have those AWFUL ticket machines, set too far back (to avoid getting hit) and too high to access from a normal car.

JumpCrisscross: > Nobody ever thinks of the poor banks!I thought about that. But a bank would rather lend in lots of high-confidence, low-duration deals than a small number of high-margin deals. The only people who lose when housing is built are incoment landowners. Because prices go down.

lo_zamoyski: Trump explicitly said he wants to keep prices high [0]. This is the problem with a culture that views housing not as a need or a home, but as an investment. Pathological.[0] https://www.pbs.org/newshour/politics/watch-trump-says-he-wa...

darth_avocado: It is well known that there was a brief moment in time when people were abandoning San Francisco and “moving to Texas” (mostly Austin) that coincides when the rents peaked in Austin. I’d be not surprised if that was also the time when San Francisco rents were down.We’re seeing a reversal in trend when SF is hot again and Austin is not. So not exactly a straightforward comparison. It could explain the SF-> Austin and back trend.

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).

JumpCrisscross: > 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...

james_marks: 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.

0_____0: Public housing projects were and sort of still are a thing. Glass Amendment limits the number of units that can be produced but most areas are well below those limits and the larger issue is that there's no budget or political willpower for social housing projects right now.

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.

Gigachad: 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.

jakelazaroff: Sure they are. What developer wouldn't rather rent out ten apartments for $2k/mo than two apartments for $4k/mo?

odyssey7: Is the Bay Area really dealing with ticket machines? The global capital of technology? Just bill by plate or something.

epistasis: The global capital of technological has absolute horrid infrastructure and is not on the forefront of any municipal technologies.There's a big disconnect from people building new projects and local governance, and it's growing. When tech companies started even providing buses for their employees, because local government is too fractured and incapable of running needed bus routes, and can not coordinate across county and city borders, local activists were extremely upset that tech workers were not driving their personal cars and instead using environments-saving and traffic-reducing transit.

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/

nzeid: What evidence is there that developers won't break even or profit? The demand is clearly there, it's a seller's market.

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

idontwantthis: Or develop 12 competing apps that each only work in different lots.

tkel: 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.

Aurornis: The parent comment never claimed that the housing market only has two factors. You’re arguing against a strawman of your own creation.

matheweis: It’s not a free market construction issue at all, it’s a regulatory zoning and permitting issue.Read the article and the peer comments here; Austin’s boom came about from reducing regulatory constraints.Nationally remove the artificial restrictions and the supply side will fix itself.

seanmcdirmid: Did Austin really have any constraints holding it back? It’s still Texas. People still look at Houston as the canonical example of a city with no artificial constraints.

maxerickson: As a homeowner, I want number to go up.These things push against that.Really, I'd prefer not having policies that tend to push up housing prices or discourage people from moving, but here we are, those types of policies are common.

wbobeirne: As a home owner in Austin, I want my friends to be able to afford homes too and not feel like they have to move to have a yard and a family. Bring on the new construction.

maxerickson: What do you think the big paragraph at the end meant to convey?

alephnerd: Menlo Park isn't comparable to Austin though - Austin's equivalent of Menlo Park would be a country club in the Austin Hills.A better comparison would be ATX against San Jose, and a better comparison for Menlo Park would be Barton Creek (the CDP, not the part with the mall and within the ATX city border).

gtowey: > As a homeowner, I want number to go up.Which is myopic.As a homeowner, I want cities to be livable and affordable for those who want or have to live there. I don't care if the value of my home changes one cent. It's honestly kind of useless, because it's not like I can sell the house and buy a nicer one. All the houses are more expensive so it's always going to be a lateral trade. It only helps if you sell and move to a lower cost of living area.It's kind of a sham that we have been conditioned to treat housing as an investment. Housing is where people live, it shouldn't be a commodity to be hoarded.

maxerickson: So you are saying you are a reactionary? Did you even try to read my entire comment?

JumpCrisscross: > It's foolish and anti-intellectual to insist that the housing market has only two factorsElasticitiy moderates the effect. It doesn't reverse it. Increasing housing supply decreases housing costs. A lot of people are venally or ideologically motivated against accepting this. Our housing crisis is a political choice. (Note: I'm a homeowner.)

mr_00ff00: This reminds of a fun fact I remember learning in university.Elasticity is the relationship between demand and supply, and there are actually very rare instances where it can be negative (where demand increases with price).These are called Giffen goods.https://en.wikipedia.org/wiki/Giffen_goodExplanation (that I remember)Inelastic demand is when a good is demanded so much, that an increase in price has little affect on the total quantity (people still demand it, think like addictive substances)So a perfectly inelastic product would be a straight line where any amount is demanded at any price.So having the curve keep going it would get a positive slope, where higher price makes demand go up.If I remember the example I was given was food during a famine. Supply is already low, but an additional pressure on price is the known shortage. The idea being that as the price goes up people see it as harder to get.It’s been so long since I studied the subject so I might have gotten some things wrong here.

natpalmer1776: As a former homeowner in Texas, I wanted the number to go down for lower property taxes. Taxes accounted for almost 1/3 of my monthly mortgage payments by the time I sold, and are a significant barrier to affordability of homes when values tend to vastly outstrip the rate of inflation leaving typical households struggling even with the homestead tax exemption.The only people in the low income neighborhood I grew up in that could afford to weather this wave of out-of-state and investment banking homebuyers were those who were of retirement age and had their property taxes “frozen” at an affordable level.

pibaker: Over 60% of Americans are homeowners. In any functioning democracy, they ought to be the people in power.

tkel: There's loads of other inefficiencies as well. It's difficult to find housing and moving is a huge hurdle. 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.

bombcar: As a home owner I don't really care about number go up. I'd rather it go up than down, sure. But staying level would also suit me fine.Going down might be nice, perhaps I could buy the neighbor's house and combine the lots and make a nice set of row houses ...House go up being important is really only needed if I'm using it for leveraged appreciation and doing something like dragging the cash out like a piggy bank; but that's a tiger that will have to be dismounted eventually.

solid_fuel: > A lot of regular homeowners fight new developments tooth and nail.In a system where those with more capitol have more power, homeowners are the powers that be. They're more likely to vote and have more money for discretionary spending - like donating to politicians.

calvinmorrison: People have been steered for decades into using their home as a vehicle for retirement. Of course they want to protecet it.

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

bryan_w: They reinvest that generous 10% to buy more tools and hire more talent to build 10x as many homes at 2%. Seems pretty straightforward to me

BurningFrog: After a few decades in California, I'm pretty sure there are no "people in power".There are a lot of people with some power, which they use as they see fit. It all adds up to marginal and pseudo-random changes, as the state drifts toward... wherever it's going.

epistasis: People want to blame the 1% for massive wealth ineqality, but when it comes to unaffordable housing, a basic necessity of life, the villain is actually about 30% of the population that is rich enough to own homes, act like rentiers, and block access to neighborhoods and opportunities.The greatest inequality difference is that between those with housing assets and those without. Yes the 1% are a problem but they are not the reason that young people can no longer afford housing without generational wealth, that's all due to the seemingly normal guy that's enforcing a class system based on home ownership versus non-ownership.

servo_sausage: 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.

bombcar: Any reasonable landlord/real estate investor will have planned for various results - if your rental empire depends on "rents go up" and can't handle a flat market, let alone a downturn, you're going to be in for a bad time.A stable market is great; as you can find good deals with some sort of certainty, and focus on where you can actually build value (rehab, etc).

seanmcdirmid: If you are smart, you throttle up investments just before a boom starts and throttle them back just before a boom ends. At least you try to up your margins during good times so you can survive bad times. The trick is keeping your talent employed during the bad times so they are trained up and still in the industry for good times. Stability is obviously preferable.

onlyrealcuzzo: Menlo Park has a higher population density than Austin...The majority of it is not Bel Air...

alephnerd: > The majority of it is not Bel Air...The median household income is $210K [0] and it's the same demographic. A Menlo Park home address opens the same doors in the Bay that a Bel Air address does in Los Angeles.[0] - https://www.census.gov/quickfacts/fact/table/menloparkcityca...

bombcar: You should be able to identify properties and track them over time; and then even if you argue that "brand new condo" vs "same condo 10/20/30 years later" aren't directly comparable; well you can start to compare other metrics.

shimman: Seems like a free market issue, any profit resulting from development is a free market issue. Your profit margins mean worse quality housing for people, and we can see what actual public housing programs look like with Singapore and Vienna where rents can typically cost less than 20% of median salaries:https://www.youtube.com/watch?v=LVuCZMLeWkoAs renown corporate welfare recipient Bezos would say: "your margin is [our] opportunity."If the only thing stopping development is that rich developers want to make more money, then maybe we should get rid of the rich developers and let the public decide what to build. It couldn't be worse and it'd be 20-60% cheaper too.

mountainriver: 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.

ajross: > now the city has a bunch of more soulless condos and is horribly congestedThe first bit is a taste thing; obviously lots of people view modern sprawl as "soulless" too.But the latter point is just plain wrong. Dense housing IMPROVES traffic congestion and shortens commutes, always, everywhere, markedly. And it's for a bleedingly obvious reason: pack people in closer together and they don't have to travel as far to get where they're going. QED.What you're imagining is some kind of fantasy hometown, which never increased in population and whose economy never developed. I mean, it's true. Forgotten ghost towns have very little traffic and quirky soulful architecture, c.f. Detroit. Everyone agrees that's a bad thing, though.

orangecat: 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.So there were a bunch of people who wanted to live there and now can.

CBLT: 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.

bombcar: I love induced demand. I'm going to use it to get rich - buy up some abandoned town somewhere, and then pay to run a 100 lane superhighway to it; induced demand means the town will fill up instantly and be hugely valuable!

seanmcdirmid: It doesn’t work unless there is currently repressed demand for living in that abandoned town because not enough housing or other factors.No one is complaining about a housing shortage today in buffalo which used to have twice as much housing stock as it does today, because the demand simply isn’t there now.

bombcar: Exactly - induced demand is just a misnomer/misunderstanding. "Pent-up demand" would be a much better way to explain it - but that would reveal that at some point the demand ceases; even SF has some limit - once all 12 billion people live there, demand will level off.

WarmWash: You can arbitrage markets for retirement, which is largely why people want their home values to increase. Their home is another form of 401k, and those mortgage payments aren't going to the bank or a land loed, they're going to their future.It's a minority of people who are ok never capitalizing on their home value.

thaumasiotes: > They have those AWFUL ticket machines, set too far back (to avoid getting hit) and too high to access from a normal car.Are you sure it's the ticket machines? Around here, the ticket machines have stayed the same, but it's now impossible to use them without stopping the car and getting out, because car manufacturers have decided I need eight inches of empty space between myself and the side of the car.

peder: > A lot of people are venally or ideologically motivated against accepting this.That’s the story of the last 10 years among certain types that keep regurgitating obviously wrong concepts.

lesuorac: Eh, people really need to be questioning econ 101 more often.It's built upon untrue assumptions- infinite buyers / sellers- perfect information- no switching / transaction costs

paulnpace: I'm not clear: does Econ 201 inform us as to how demand and supply are not related to price?

CharlieDigital: It is more complicated than that. A few years back when my youngest entered 1st grade, I attended some meetings where the superintendent talked about school expansions.Namely, when new housing is added, there are infrastructure considerations and corresponding expenses that translate to higher taxes.Schools built on parcels based on 1970's population now have to expand to fit more students or the township has to find and acquire new land to build a new school.That requires raising taxes for bonds. A new school is several million dollars and then hiring staff.Roads may need to be widened. New roads have to be built and maintained. Municipal staff may need to increase.Some services may actually benefit from economies of scale (waste collection). Most will not.Imagine you bought a house in 2005 and you were paying $4000 annual property taxes. Now your property taxes are $12000 because of the increased spend on infrastructure and increased assessed value.The problem is exacerbated because obviously people want to go where the good schools are, where it's low crime, good infra, easy access to transportation. That drives demand and decreases services while also raising taxes to pay for the growth.End of the day. My personal belief is that housing is a right. But I can also see why middle class folks end up pushing back when they get the bill in the form of increased property taxes.

shimman: I think the majority of the electorate very much blame the people you're talking about. Who do you think progressives and MAGA refer to when talking about neoliberals? They're talking about the corporate class; those that care more about money but willing to play up useless culture war issues that impact small amounts of people.

gknapp: Well, it's easy! Just get the majority of voters to hate each other enough that it's a moral boundary to vote together on any law, effectively limiting any meaningful change.

triceratops: > It's difficult to find housing that meets dozens of conditionsCorrect. That's why when there's more housing you're more likely to find what you need.

redwood: Supply glut aside... Quality of life down... Traffic up... Kind of makes sense rents are down.

solid_fuel: I'm not blaming individual homeowners, there are very strong incentives for treating homes like retirement investments. It's an issue of policy, but we do have to address that it is also causing rent to rise and contributing to the homelessness crisis.

tasty_freeze: 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.

thaumasiotes: > These are called Giffen goods.The terminology is actually split; sometimes they're called Giffen goods and sometimes they're called Veblen goods.The two types have identical behavior, so there's no good reason to have two different names, but in concept Giffen goods are something poor people buy, while Veblen goods are something rich people buy.

pembrook: Ah yes, that 150 year old meme reflexively copy-pasta'd by leftist internet commenters since the days of usenet to refute basic concepts like supply and demand."Lol you guys think humans are robots"No. Sorry, we won't be throwing away an entire field of human study and debate (economics) based on a straw man caricature that isn't true and wasn't true the entire time you've been alive.We don't throw away physics because the real world isn't a perfect vacuum either, don't be silly.

JumpCrisscross: > That’s the story of the last 10 yearsThe urban orthodoxy is around demand rationing. Supply-side arguments are incredibly new. The evidence cuts in one direction. (Unless we want a hukou system.)

JumpCrisscross: Cool! Thanks!

trollbridge: We already have that. They're called "housing projects".

mh2266: I got billed by plate at gravel parking lots in places in Iceland where there were probably more sheep nearby than human residents. Embarrassing.

rgovostes: I'll admit ignorance here, but I've been skeptical of the claim that new construction drives rents down. What I actually see is: 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.Maybe if you flood the market with 30% more housing units like Austin you get the Econ 101 effect. On the other hand, apartment owners realized intentional vacancy is a profitable strategy, which alone seems to defy that basic interpretation.

alephnerd: > 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 that decoupled it's housing market from the rest of the US), and a shift from buying to renting.[0] - https://www.bizjournals.com/austin/news/2026/01/28/austin-be...

thesmtsolver2: You should read again. The reforms made the market more free.

marssaxman: > 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.

piinbinary: > 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.

TulliusCicero: 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.

hnthrow0287345: Their core argument is that we could increase supply but choose not to, and that we should be maximizing supply (as an ethical and moral mandate, but that is not a tenant of capitalism really) because housing is an essential thing like food and water. FWIW we don't maximize food/water production either for various reasons, which would also drive food/water prices down.Maximizing supply can mean other things than building like taxing unoccupied homes by large amounts making them unpalatable to own as a second (or higher) home, thus putting them back on the market. However these aren't all good because obviously our economy deals with more effects than just simple supply and demand, like maximizing the amount of loans given to people wanting housing regardless of the ability to repay is known to be a bad idea.If you throttle the supply you can clearly control the price and the people you're talking about believe there is a concerted effort to control that supply. This can happen directly (choosing not to build as soon as land is available to build on) or indirectly (e.g. politics, mass media influencing people to vote to not increase supply).What people generally hate is production of essentials not being maximized which would give us the actual lowest price, and maybe we as a society should be maximizing that supply to arrive at the lowest cost for a given house with given features.And then the rebuttal to that is usually "tough shit lol" which is why people coming out with simple supply and demand replies are generally seen as derisive.

triceratops: > FWIW we don't maximize food productionWe kinda do, through farm subsidies.

lotsoweiners: I would bill by ticket machine too if it was my job to collect money on the parking. I’m guessing that the amount of people who never pay is much higher than zero so it really only makes sense when you have such high throughput that the slowdown is detrimental (such as the Bay bridge).

babybjornborg: This is democracy in action: give the people what they want (and need)!

thesmtsolver2: You need Econ 301 and stats 101 to see Econ 201 is wrong.

triceratops: Nobody lives there anymore, it's too expensive. /s

iknowstuff: Which side is the rich side?

pottertheotter: South of 101

alephnerd: 280 to El Camino is "oldish rich" (made their millions in the 1980s-2000s), the El Camino to 101 is "new rich" (made their millions in the 2000s-2010s), and 101 to Meta used to be a Samoan ghetto (literally, redlining was legal until fhe 60s and unofficially the norm until the 90s) until they were gentrified out.The old money (rich before tech) to the West of 280 in Woodside and Portola Valley.

bluGill: False. Even if you don't move, people move all the time and that moves the needle for everyone.

trollbridge: Good analogy. I've always considered induced demand a bit of a fantasy.New businesses the sprout up that market themselves certainly induce a bit of demand, but more lanes and stoplights doesn't exactly motivate people to want to go somewhere.

alsetmusic: It's almost as though the well-known and proven method of building more housing works!Similarly, the tested and proven solution to homelessness is providing housing up front. Don't have any requirements (employment, sobriety, etc) blocking housing. Those things are easier to achieve with a roof over your head.

kortilla: “People like to drink certain kinds of beer” and “some people don’t drink beer often” are not arguments against supply and demand driving beer prices.

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.

noahbp: 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?

redwood: Supply glut aside... Quality of life down... Traffic up... Kind of makes sense rents are down. Density needs transit investment too

pixl97: Taking on those liabilities is very risky when the next downturn happens and you're stuck with inventory.

wcfrobert: 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 keep things they way they are.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.

Qwertious: Housing is also really weird:- the main input (land) is also an output, so when the price of the output goes up, so does the value of the input.- economies of scale don't really work, due to the impracticality of transporting the good (houses) and fitting the good inside a machine (in house "factories", normal workers go inside the house and work on it by hand; not a lot changes compared to traditional construction)- more supply in one area increases the value (and therefore demand) in that area, so it's not actually clear-cut whether building more would reduce the price more than it increases it, at first glance.

ksec: This reads like some triumph but rent was up 100%+ from 2010, and it is merely back down 15%.Even adjusting for inflation, and even if the measurement of inflation is decent, it would still need to go down by another 20%.

pottertheotter: 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.

tkel: Yes, you learn why supply + demand curves do not actually describe many markets

cyberax: > 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?

fragmede: it says "it's complicated".

QuiEgo: 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.

cyberax: Sigh. NO it didn't. One fact of life: new construction does NOT lead to lower housing prices. Sad, but true.So what did? Likely COVID. The _only_ way to decrease the housing prices is to decrease the population. As proven by countless cities, including the world's most liveable Copenhagen.So does my prediction hold for Austin? Let's see.Austin TX population in 2019 (ACS estimate, data series ACSDP1Y2019.DP05): 979263.2021 (ACSDP1Y2021.DP05): 9446582023 (ACSDP1Y2023.DP05): 979700.2024 (ACSDP5Y2024.DP05): 979539.So yep, my prediction holds true. The housing prices in Austin were stagnant because its population decreased during COVID and barely recovered to pre-COVID levels.Want another prediction? Seattle's home prices will fall down, because its population is now (likely) decreasing. Not because of a rush of new construction. We'll see updated population released stats in April.

QuiEgo: > To be fair, parking structures always look and feel pretty distopian.What a lot of the new buildings in Austin are doing is putting an attached garage directly behind a 4 + 1 mixed use development - the street-facing facade is the apartments and shops, and the garage is directly behind (and usually attached) to the apartments. You basically never see them.

scoofy: They put it in the middle usually. It’s literally called the “Texas Doughnut” — a 5 over 1 surround a parking garage.

bluGill: 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

thaumasiotes: It's always been a service.

Tiktaalik: Yeah this would be the interesting thing to try to normalize the data against somehow.

kortilla: Food supply is most definitely maximized

svpk: Not really, it used to be the case that a full third of Americans moved every year. Obviously life is more complicated than econ 101, but it's also obvious that a current undersupply of housing is one of, if not the primary, drivers of home pricing. Admittedly other factors like the governments interference in the home loan space have also had large effects on the market over the last century.https://www.theatlantic.com/magazine/archive/2025/03/america...

Tiktaalik: 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.

varenc: I'm with you, but many people still question this. Here's a recent pre-print paper that was in the news arguing that inequality, not lack of supply, is the real source of housing affordability: https://osf.io/preprints/socarxiv/95trz_v1

pclowes: 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.

camkego: I think one is, is when your main source of wealth and financial worth, often by 3x or 5x, is your home, you don't want lower housing costs.I am not sure how to solve that.

fragmede: There wasn't, but given the housing market right now, I don't know that there isn't.

lelandfe: It's just as much "change is scary" and "I like this as it is." It's a very human reaction.

pclowes: I dont think its just that. Nimbys also see:- many new building being very ugly (side note: ugly buildings no matter how green get torn down and are this not as green as building that are beautiful)- increasing density bringing increased crime- increased density actually turning out to be less efficient on a per capita tax basis (this is always wild to me, cities should be spending much less per capita than rural areas but arent)

jojobas: 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?

jfoster: > 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.

svpk: ... Your examples seem to undercut your point if I'm understanding what you're trying to say.In your first example the "cost" in the form of traffic etc. was reduced so more people "buy" in the sense that they go on the road until you reach a new "cost" equilibrium. In practice that equilibrium is quite close to the original cost so it doesn't fix the issue traffic. But if that same number of people had driven before the high way expansion traffic would have been way worse; the cost would have been too high so they previously opted not to drive.In your second example by increasing the supply of money the money ends up costing less; it becomes worthless due to inflation.When there's more of a thing it cost less.

BenFranklin100: It’s going to take a SCOTUS decision overturning Ambler vs Euclid in my opinion.We certainly will not see zoning reform until the Boomers die.

Tiktaalik: There's a lot of talking past each other on this issue. Sure there's probably clueless people out there, but a lot of left wing housing activists that are skeptical of free market housing liberalization understand very well economics and the benefits of housing supply, but are concerned about the time horizons involved and concrete near term impacts on low income residents.It is of overall net benefit over the long term to raze a small three story walkup apartment and build something denser, overall increasing the amount of housing.However, in the short term it's immediately quite (sometimes existentially) bad for affordability if existing affordable housing is destroyed and replaced by brand new (and thus inherently luxury) housing.So accordingly we naturally see low income housing activists push back against some redevelopment and ask why development is not occurring in wealthy single family home areas where the amount of people impacted is less and class those that are not remarkably negatively impacted.Personally I think the data shows that in general it is still really beneficial to build out as much housing as possible and avoid the negative impacts of a shortage, but I do think there are people validly pointing at a real problem of displacement.

vel0city: It obviously wouldn't be successful on day one, and it would take some kind of exceptional pressure to jump start it, but these things have been done in the past in the US and have been done recently in China. Not arguing these were good things, but they have happened before.Think back to the old "company towns". Lowell, Massachusetts, built for a textile mill. Hershey Pennsylvania, built around a chocolate factory. Fordlandia, Brazil, a rubber plantation town. All of these were essentially cities and towns planned out around a central industry.Similar things happened with the ghost cities in China with several of the big notable ones eventually actually growing into real, functional cities.Once again, these have all kinds of messy histories and I'm not saying they're all good ideas. But just pointing out, it can be done.

AngryData: 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.

steve-atx-7600: You could build all the housing first in China until recently…

CyberDildonics: I don't know if that's a boycott, or just going some place you like better.

williadc: This is a really well-thought out comment, and I agree with just about everything in it. One comment I'd like to call out for additional consideration is the comment on retirees being priced out due to rising property taxes.In my experience, most retirees have more rooms/land than they can make productive use of. I feel that there should be some pressure for them to sell that property to families who can use it more productively. That's the stick, but I feel there needs to be a carrot, where builders are constructing homes that these retirees will be drawn to. There are retirement communities in the southern US like "The Villages" https://www.thevillages.com/, but as the population here ages, we need to build these everywhere so retirees can move into the communities that meet their needs without being forced to leave their cities.

mancerayder: Anyone ever drive around Austin, its highways and its endless new construction of new superhighways, to the point that Google Maps is confused?As annoying as NYC (and driving) are, there are downsides to unlimited housing and lack of zoning - as it turns out, the same states that do this sort of thing we all praise, are the same laissez-faire philosophies that oppose communal public transportation and walkable urban communities.

knappe: You can, but it is damn difficult.https://www.volts.wtf/p/is-the-brand-new-city-in-california

datsci_est_2015: 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.

amarant: A fellow Swede I presume?It's extra silly cause I once parked in central Oslo and got the ticket mailed to my sthlm address. No fuss, no problem, super easy!We got a lot to learn from our neighbours....

plantain: Water, still wet.

tharmas: You have to restrict investors buying up that newly built housing too.Homes for people. Not investors.

slg: This comment is phrased as if the article is confirming these points when the article 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?

CyberDildonics: more soulless condosIf you want soul move to New Orleans. Meanwhile people need comfortable places to live that don't make them indentured servants for the rest of their lives. I'll take a neighborhood with walkability and density over an old drafty brick building with no grocery stores any day.

tkel: Prices in massively inefficient markets do not follow the supply + demand equilibrium. Beer is not an inefficient market. You're doing the absurd comparison.

tsunamifury: 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.

bitmasher9: What do you mean by "economic singularity"? If your goal is being near economic opportunity then Austin has plenty.It’s not NYC or SF, but this suggests that those would be more affordable if they just built more housing.

lasky: Supply and demand doesn't apply here. We need affordable housing, not more housing for rich people, made by rich developers. Just because my house is worth $3M and I have $3M in stock options doesn't mean I'm rich.

CharlieDigital: > I feel that there should be some pressure for them to sell that property to families who can use it more productively. I agree to extents. One lives in NY/NJ/CT because this is a big finance and pharma hub and it makes sense to live here while one works and eventually leave when that resource is no longer necessary.But there's nuance here, too: families. My wife's side is a big Italian family. Everyone's here. What do you do if your grand kids are all here? How do you support your adult kids and help them achieve financial security? Or leave and secure your own? Neither is an easy choice. > There are retirement communities... There are here as well. The reason they work here, as far as I understand it, is that they count towards "affordable housing" units that are mandated by state law here in NJ. But I put that in quotes because these units in 55+ communities are often honestly still quite expensive, especially if you've already paid off your mortgage decades ago.

tptacek: There isn't affordable housing in areas of opportunity. You can easily find cheap housing if you don't care about proximity to jobs or to good school districts.

jojobas: 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.

datsci_est_2015: Who are the people that “seriously question basic market pressure being a thing”? Am I missing something?

jltsiren: The real issue seems to be the top-heavy tax system that forces local governments to rely on property taxes. A local income tax would make them more capable of building and maintaining infrastructure, but that would require lowering taxes at higher levels. (Income taxes are superior to wealth taxes in the sense that income tends to correlate better with the ability to pay tax.)If the demand for housing is high, zoning fees can also be used to make developers pay for the infrastructure upfront. If done properly, their impact on housing costs should be minimal, as they mostly extract some of the added value created by the zoning from the landowner.

terminalshort: Affordable housing is the only type of housing that will ever be built. Builders aren't so stupid as to build products that their customers can't buy. Government intervention is not needed.

ms_menardi: And yet, gentrification.

1970-01-01: Water. You need clean water to grow a city. There isn't much of that to spread around anymore.

ryanmerket: Sure you can. You just need enough land and money to start basic things like a post office, city hall, courthouse, roads, and a way to get power to the whole thing.

1-6: I don't expect Menlo Park to keep it character for long as Silicon Valley CEOs are fleeing the state.

terminalshort: Hate to be the bearer of bad news here, but the boomers will never die. Gen X will become the new boomers, and then the millennials after them. Individual people die, but interests stay the same.

estearum: 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?

creato: It doesn't matter whether prices are going up or down, it matters if the price is more than the cost to build.

estearum: No, not really.It matters whether the margin is higher than other investment opportunities of similar scale and risk profile.Already, the answer is very often no. In Austin, the answer will increasingly be no. That means people will not finance new construction, so if demand continues to grow it will outstrip supply and prices will go back up until the margin on new construction exceeds that of alternative investment opportunities of similar scale and risk profile.

jychang: The comment is phrased in the greater context of the public discussion about housing, in general. Not the specific information of the article.You know, like how a discussion about war might reference the various recent wars that everyone knows about; it's not limited to just the content of the article.

FireBeyond: In my state, or in my capital city, you say this, but the real estate developers are generally the top 1% in town. If they're running on razor-thin margins, I'm not seeing it - I am seeing them on my Facebook (being friends with the wife of the mayor) doing things like taking their kids on vacation to the French Riviera, Switzerland, Tokyo, the Maldives... well, alongside the City's Planning Committee commisioners and their families...

estearum: you should go into real estate development and make a fortune while solving a serious social problem for your country!

lurk2: [delayed]

pembrook: Construction costs don't scale linearly with rent prices, it's a different market altogether that depends on regulation/worker supply/material costs/equipment/etc.As long as construction costs remain below the value of the units all-in, there's profit motive for developers to build.

bryanlarsen: 35% of Americans rent their homes. And they almost invariably rent from investors. Therefore if more than 35% of homes are owned by investors this drives down rent. If less than 35% are owned by investors rent goes up.

creato: It really doesn't matter as long as someone is living in it.

kristopolous: 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 pandemicYou 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

mactrey: Did rents in Palms go up because they built housing or because it's a great location in a city with increasing rent almost everywhere?Or in other words, is there any econometric evidence that building housing increased rents in Palms, or could we be confusing correlation with causation?

terminalshort: Because home builders don't make money by buying and selling houses, they make money by building them and selling them.

spongebobstoes: it doesn't matter if prices are falling or rising, it only matters how the ROI of building compares to other investment opportunitieswe can also make it cheaper to build. easing taxes on imported materials, bringing in more skilled labor, expediting permits, and even direct subsidies like tax breaks

terminalshort: Housing and immigration are two areas where people just can't accept basic economics. You can see some olympic level mental gymnastics routines all over this comments section.

bsder: > 35% of Americans rent their homes. And they almost invariably rent from investors. Therefore if more than 35% of homes are owned by investors this drives down rent. If less than 35% are owned by investors rent goes up.This only holds until the percentage owned by the investors becomes a monopolistic chunk. At that point the investors would rather leave some apartments empty rather than see rents go down.See: all the current RealPage lawsuits

umanwizard: The reasons why the Bay Area is the global capital of technology are absolutely totally unrelated to the quality of infrastructure or the policies of local government there.It’s mainly due to the state of US technological advancement decades ago when the whole thing got started, the general US-level business-friendly environment, and the presence of an extremely prestigious (especially in science and tech fields) university nearby.

terminalshort: The specific reason is that William Shockley's mother lived in Palo Alto. Stanford gets the credit but in reality it had nothing to do with the decision.

slg: But it didn't reference anything, it stated a political opinion like it was a confirmed fact, provided zero evidence to support those assertions, and completely ignored the ways in which the article provides counterevidence.

ms_menardi: This logic assumes that 35% of Americans WANT to rent their home. Which seems odd to me, if only for financial reasons - why would you pay 1400$ for a 1 bedroom apartment when you could pay 700$ in a mortgage for that same apartment if you could have bought it?

triceratops: If you invent a scenario where the mortgage is half the rent then buying is a no-brainer. Does that reflect reality?

testaccount28: 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.

slg: I'm not sure if you're intentionally changing the definition of "affordable housing" in an attempt to make the desire for it seem silly or if you genuinely don't know how the term is typically used. But what you're describing is generally referred to as "market-rate housing" and not "affordable housing".

triceratops: No not really. You just have to restrict the same investor from buying all the housing in an area, and prevent investors from colluding on rents.

triceratops: God forbid bad parts of town ever get good.

estearum: And... how is this relevant?I'm not sure what you're trying to imply here. You should spell it out explicitly.

estearum: > As long as construction costs remain below the value of the units all-in, there's profit motive for developers to build.Not trueReal estate development is extremely capital intensive and therefore it's a question of all-in cost of capital compared to other investment opportunities.

mrcode007: This 1000x. Folks don’t get that the primary market != secondary market. Same as pre-IPO stock holder != IPO time buyer.