Plunging Home Prices, Fleeing Companies: Austin's Glow Is Fading | Hacker News Reader

Plunging Home Prices, Fleeing Companies: Austin's Glow Is Fading

msn.com

29 pointselsewhen44 comments

Austin fixing its affordability crisis with more housing supply and MSM paints it as a bad thing. ATX is as great as it's ever been. Samsung continues to expand its footprint, Tesla HQ still ramping up production (plus lithium refinery in Corpus), Apple expanding with new 82K sq ft building, and fastest growing startups (by headcount) are based there:

https://www.signalfire.com/blog/state-of-talent-tech-trends

I don't know if house prices went down because more houses responds to any more than a small corner of the article, which already mentions this, or how astroturfing an AI search engine corporate blog with innumerable chart crimes is better than "MSM"

also possible it was a typo of msn, as that's where the original link is

When atrocities like fractional real state investing (aka house shares, for people who want to rent without buying a whole house) are starting to pop up, it's no wonder some groups keep pushing for rents to go still higher.

https://www.vox.com/money/23620847/fractional-real-estate-in...

One difficulty of lower-the-rent politics is that if you actually succeed in lowering rents, the news will report it as a bad thing.

In this case its housing prices that plunged, not rental rates. Are they correlated?

They aren't always correlated but they are in this case - Austin's rents are down because of new construction.

(Which news headlines call "multifamily oversupply".)

That's cause everyone actually wants to own a home that appreciates in value, they just want their entry point to be low.

Or that at least maintains value so you don't take a massive loss in the case you have to move.

Idk if your home value went down, the whole market probably did too. So the house you’re trying to get next probably also is on sale.

If you are underwater on the loan then you ain't moving.

I don’t see how it helps anyone but property investors when prices go up. Everyone has to live somewhere.

All homeowners are property investors, and it's their largest asset. If their children expect to inherit then they're also long-term property investors.

Georgism is based on land taxes to avoid this distortionary motive.

But prices go up at the same time so what's the difference. It's better than renting, but house prices going up isn't beneficial.

There’s still arbitrage to be had - gains are often in percentage terms so when you downsize or move to a cheaper area you pocket the difference. You could also own more than one property, do sweat equity to increase value etc. I could go on.

If you own, chances are the house is your largest investment.

If you rent, then sure.

A sustainable and socially beneficial housing market has pretty flat prices, not meaningfully rising ones. Buyers put assets into a house not for an arbitrary gain on its resale value, but (1) so that they no longer need to pursue ongoing income for your own housing, or (2) so that they can sell flexible housing opportunities to renters. Both of these are sound, profitable investments grounded in developing actual value for people. This is essentially the natural state of housing when supply and demand are approximately in equilibrium (ignoring physical decay and subsequent depreciation). Even in the current housing crisis, many communities outside of major metros still looks this way.

Housing as an abstract investment that perpetually and magically gains resale value with no material change in what its underlying real property is a modern fiction and is essentially just the result of a prolonged speculative bubble becoming culturally normalized.

So yes, housing is a large investment for people, and very often their largest, but in a functioning and sustainable market, that investment is not valued by gross appreciation in resale value (the topic of discussion) but in ongoing dividends and value delivery.

The GP is right to be skeptical.

> Housing as an abstract investment that perpetually and magically gains resale value with no material change in what its underlying real property is a modern fiction and is essentially just the result of a prolonged speculative bubble becoming culturally normalized.

The underlying value increase is mostly from land value, not the actual house itself, which should depreciate. Increasing land value should be a good thing because it means the surrounding area is improving or becoming more productive.

But if it's uncaptured (especially by restricting construction in the neighborhood) it causes value increases which only benefits the current homeowners, and then only if they're lucky.

There is a lot of ‘shoulds’ here, and blanket assumptions that don’t line up with observed reality.

I know of numerous people that bought precisely because of expected gains.

I’ve also personally observed these ‘prolonged speculative bubbles’ occur 4 different times in the United States alone in the last 30 years, and know the same has occurred in China, several well populated area of Canada, India, Singapore, and Japan as well.

If it’s so common, what is your point exactly? Because you seem to be denying a very large and very obvious part of the actual market reality.

It doesn’t always go up and to the right of course, and I’ve seen numerous folks be ruined too.

I own my house, but so what? If I sell it I have to buy another house and they're all going up

If you have 2 you can sell one and live in the other.

Hardly "everyone" wants that.

It's a small drop from a pandemic peak that was far above pre-pandemic levels. After this small drop, it's still far above that.

And that probably is at least somewhat because of all the apartment building going on, which is a positive thing.

One notable company "fled" - Oracle, this week.

I don't even think I've heard that Oracle is reducing its head count in Austin. There's currently 4200 Oracle employees based in Austin.

I interviewed with them for an Austin based position and they were lowballing really hard on the offer. I suspect the workforce is just too expensive for them now.

Were they lowballing or are those salaries just the new market rate?

This was in 2017 before a lot of tech moved to ATX. Back then it was IBM, Rackspace and a few startups + remote folks. Oracles offers were incredulously low even at that time.

Ah I see

Austin will continue to grow. Texas is the second largest US state by size and economy, and Austin is where the left leaning tech folks generally tend to go when they are considering Texas based opportunities.

Personally it feels overhyped. My current favorite Texas city is Houston which is much larger, more affordable and more diverse.

It's larger to a fault. Houston is so spread out it might as well be 5 different cities you're talking about. Driving in Houston is a nightmare.

And the only thing worse thank driving in Houston is walking! It’s easy to find yourself in amid a sea of highways with no real way of walking in or out.

Dallas, which isn’t quite as bad Houston in this regard, I could almost see the restaurant I wanted to eat at from my hotel, and I had to get in my car and drive there because there was no real way to walk. Mind you it’s not always great in more pedestrian friendly areas but some are worse than others.

Haven’t spent a lot of time there in years but seems a pretty unattractive place (for me) to live in general. Austin would be my choice in TX but would be pretty low overall.

Houston is practically a state, size and population wise.

> My current favorite Texas city is Houston which is much larger, more affordable and more diverse.

I really feel Houston is one of the most underrated cities in the US. Even if you're left leaning, most of the cities in Texas are too. So if Austin is a consideration it seems reasonable to consider Houston too. I used to live in Dallas and enjoyed my time there. It's also never too far away from any city in the US in terms of flying time. Those three Texas cities are very livable/affordable and people are quite nice.

Aren’t cities in Texas more or less governed by Texas state law? I’m not sure if call that left-leaning, exactly.

Yeah that's a very fair point. My original point is that the municipal government tends to be run by left leaning people but your point about the state laws sort of invalidates my point.

If you’re in tech and “inside the loop” driving isn’t a problem. You can use a scooter. If Houston could fix its air quality and climate (100F w/ 90% humidity for 4 months:year) - it would be much more attractive. It’s brutally hot - it’s the tropics.

Living currently in ATX in an (overpriced) apartment because the housing market went insane about 2018 but still isn't investible.

Pros:

- You can say you live in ATX

- A few interesting local characters still exist

- Wide open parks

- Many record stores

- Infinite choices of tacos

- People seem taller and moderately more attractive than elsewhere

Neutral:

- Everyone has a dog

Cons:

- Fugly high-rises being slapped together and replacing local anchor establishments

- Lots of traffic and perpetual construction

- The roads are really bad

- Grocery prices went insane

- Don't even bother going to a bar. The prices are crazy. Back in my day (grandpa voice), I remember when a bottle of beer on 6th St. was $1.50 in 2003 ($2.55 in 2024 money). SXSW raises that to $10.

- Doesn't get visited by every music act

- Summers are hot AF. Another El Nino this year means 110 F / 43 C for 4-5 months. It was cloud today and 80 F / 27 C with 66% humidity.

- Don't be a woman or have a medical need for an abortion

- Don't drink the water. Get an RO system and a water software because the water is bad

- Don't live in a flood zone

- Don't live on a ground floor or in a home near downtown unless you want unhoused people or addicts stealing your stuff

- The average IQ seems below 100: office workers, Airbnb visitors, and conspicuous dumb money moved in from elsewhere

- The population has increased greatly but the number of doctors, bookstores, and similar service businesses haven't kept up

- Some of the most gerrymandered voting districts in the entire US

- Whole Foods HQ store is run by accountants not by foodies: they sell 4 variations of essentially identical conventional pesto but no walnut or kale pesto, and don't sell any form of pita bread. Customer service is really bad. It's a simulacra of its former self pre-Amazon. Thankfully, there is Trader Joe's

- Amazon package delivery, DoorDash, Favor, and UberEats fail to deliver reliably. You'll find better service in Ecuador or Czechia

If you want reasonable housing, head down to Seguin. Zillions of new homes there for $300k. Amazon delivery and Uber work there too.

> Home prices have dropped 18% from the pandemic highs seen in May 2022, the most among the 50 largest US metro areas, Redfin data show. Even so, the city ranks as one of the least affordable housing markets.

One of the least affordable housing markets has prices drop 18%? That means demand is high and construction is outpacing. That's a huge positive.

Austin wasn't for me, but it was clearly booming and it seems it still is.

In comparison, on the same metrics zero-construction SF is down 20%. Look for yourself:

- https://www.zillow.com/home-values/10221/austin-tx/

- https://www.zillow.com/home-values/20330/san-francisco-ca/

Though actually, now that I said all that I decided to see how much interest rates affect this and it seems that it explains a significant chunk if you try to keep the monthly payment the same.

> Though actually, now that I said all that I decided to see how much interest rates affect this and it seems that it explains a significant chunk if you try to keep the monthly payment the same.

This is an underappreciated point. As you say, the price in housing that sets the supply-and-demand curve is the monthly payment, not the purchase price. (Except for those who can pay cash, or those who are buying as an investment.)

Investors and owner-occupiers buy for different reasons. Investors are much more sensitive to rates and outlooks.

One way to measure investor vs owner impact on prices is speed of sale. While prices are down 3% in SF, house get pending offers in 18 days on average -- much faster than one might expect for owner-occupiers.

I'd guess that unless houses are taking 45 days to sell, it's probably an investor-driven market.

You mean the brilliant plan of going to the literally middle of nowhere, in a state run by revanchist anti-government lunatics, that alternates between staggering heat and debilitating ice storms, all to escape taxes, didn’t work out as planned? Color me shocked.

there are almost never ice storms here

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