AUSTIN | Project Updates Thread Part II

[chinchaaa]

Originally Posted by wwmiv

Last I checked, adding overpriced crap doesn’t actually bring the average price down—it raises it according to study after study after study.

So why have rents gone down so much in Austin? Do you not think supply plays a role?

[urbancore]

Originally Posted by wwmiv

Last I checked, adding overpriced crap doesn’t actually bring the average price down—it raises it according to study after study after study.

Respectfully disagree. Supply and demand wins. Increase supply past the point of demand, and prices decrease.


A peer-reviewed study published in The Review of Economics and Statistics analyzed the local effects of new market-rate apartment buildings in low-income areas across multiple U.S. cities using microdata on buildings, rents, and migration. It found that new construction decreases nearby rents by 5% to 7% compared to similar locations farther away or developed later, with the supply shock absorbing high-income households and slowing rent growth rather than accelerating it.

https://escholarship.org/content/qt5...qt5d00z61m.pdf

The authors find that rents for existing rental units within 250 meters of the new development
fall by 5% to 7% compared to rents in buildings farther away, between 250 and 600 meters. As
they clearly state in the introduction, “If there is an endogenous amenity effect, it appears to be
overwhelmed by the standard supply effect.”

I've practiced real estate for 26 years, and I've lived in Austin through 3 downturns and have seen prices DECREASE in my own apartment because builders delivered too many units in the early-mid 80's. Landlord LOWERED my rent for 3 years in a row 1988-91 to keep me. By 1995 rents increased each year because there were zero new products, yet people were still moving to Austin. The lead time to deliver apartments matters quite a bit in these equations. That and location, location, location. Prices in NYC will always be high, because the demand to live there is insatiable...if condos sold for $250k in NYC, everyone I know would buy one....thus increasing the demand even more.

Another personal current example; resale listing in Easton Park will trade for less than buyers paid in 2021($565k). Why? The builders at EP are currently building the EXACT same units, and will be building those units for years to come. Why buy a 5 year old property for $575k (current listed price), when you can buy the exact same unit, brand new, for $550k?

Other sellers are taking less than they paid, and comps show that same unit comps at $525k....so even if the seller could get a full price offer of $575, the property will not appraise for the bank loan. Sellers must decide to rent, keep it, or cut into their equity if they can.

"Affordability" is relative of course. Affordable to who? If it truly isn't "affordable", they won't sell...they will default to the lender....and the lender will auction them off at "market price", whatever that $ is.

See the downturn of 2008 as a recent example. 2-2 condos at Milago pre-sold as low as $350k (2004), after completion the same condos sold up to $500k (2006), then....the same condos sold for as low $290k(2009)...then back up to $800k (2022)....then back down $480k (2025). I've seen units in Milago marketed as short sales or bank owned back in 2009. The market over built condos and demand decreased, prices lowered, then rebounded when demand roared back.

There was a time I couldn't "afford" a $250/month rent (35 years ago)....now I live in a house I couldn't afford if I had not purchased in 2012. It's all relative.


What "study after study after study" can you point to?

[paul78701]

Originally Posted by wwmiv

Last I checked, adding overpriced crap doesn’t actually bring the average price down—it raises it according to study after study after study.

If there aren't enough units available in the $700k range, the folks looking in the $700k range will start looking in the $600k range. That will create more demand in the $600k range, and thus driving those prices up. If there are not enough $600k units available to that level of buyer, they will look down into the $500k range. Etc, etc, etc.

There is a potentially cascading effect to not providing housing at all price points. That is why it is needed at all levels.

[wwmiv]

https://www.frbsf.org/wp-content/uploads/wp2025-06.pdf
https://www.federalreserve.gov/econr...2020044pap.pdf
https://www.localhousingsolutions.or...income-levels/
https://www.tandfonline.com/doi/full...2.2024.2418044


Quick summary: new development tends to markedly increase demand in the immediate area more than it unloads supply. The increase in demand outstrips the increase in supply, and leads to increased rents and mortgages in a hyper-local sense. When an entire market is subject to the same trends (as is Austin), this leads to cost increase spirals EVERYWHERE.

What is happening is not a market supplying housing for internal demand, but a market supplying housing for relocational demand (e.g. rich people from elsewhere) who can afford those cost increase spirals whereas the internal demand (e.g. people from here) are displaced to cheaper markets.

[Lobotomizer]

Originally Posted by wwmiv

https://www.frbsf.org/wp-content/uploads/wp2025-06.pdf
https://www.federalreserve.gov/econr...2020044pap.pdf
https://www.localhousingsolutions.or...income-levels/
https://www.tandfonline.com/doi/full...2.2024.2418044


Quick summary: new development tends to markedly increase demand in the immediate area more than it unloads supply. The increase in demand outstrips the increase in supply, and leads to increased rents and mortgages in a hyper-local sense. When an entire market is subject to the same trends (as is Austin), this leads to cost increase spirals EVERYWHERE.

What is happening is not a market supplying housing for internal demand, but a market supplying housing for relocational demand (e.g. rich people from elsewhere) who can afford those cost increase spirals whereas the internal demand (e.g. people from here) are displaced to cheaper markets.

I see you have turned to the dark side. Much Nimby I sense in you.

[urbancore]

Originally Posted by wwmiv

https://www.frbsf.org/wp-content/uploads/wp2025-06.pdf
https://www.federalreserve.gov/econr...2020044pap.pdf
https://www.localhousingsolutions.or...income-levels/
https://www.tandfonline.com/doi/full...2.2024.2418044


Quick summary: new development tends to markedly increase demand in the immediate area more than it unloads supply. The increase in demand outstrips the increase in supply, and leads to increased rents and mortgages in a hyper-local sense. When an entire market is subject to the same trends (as is Austin), this leads to cost increase spirals EVERYWHERE.

What is happening is not a market supplying housing for internal demand, but a market supplying housing for relocational demand (e.g. rich people from elsewhere) who can afford those cost increase spirals whereas the internal demand (e.g. people from here) are displaced to cheaper markets.

Thanks for these, I will look into them shortly, and I'll address them. I'm curious if you are able to look into my claims, and what your thoughts are. Where do I have it wrong, specifically?

My first thought is, you mentioned that the original units in question were not "affordable", correct?

Then in your summary, you say that demand is driven up. How could that be possible if they are not affordable? There are plenty of examples in Austin where DT condos were listed at "affordable" prices and they flew off the shelves (Milago, 360, etc)....and there are examples of DT condos that were NOT affordable, and they took literally years to sell out. (Austonian, W, 4 Seasons)

How would you address the problem? Can you explain why rents and sale prices in Austin are decreasing...and have decreased for a couple years now, if it's not supply v demand?

[ROCrot]

Originally Posted by urbancore

Respectfully disagree. Supply and demand wins. Increase supply past the point of demand, and prices decrease.


A peer-reviewed study published in The Review of Economics and Statistics analyzed the local effects of new market-rate apartment buildings in low-income areas across multiple U.S. cities using microdata on buildings, rents, and migration. It found that new construction decreases nearby rents by 5% to 7% compared to similar locations farther away or developed later, with the supply shock absorbing high-income households and slowing rent growth rather than accelerating it.

https://escholarship.org/content/qt5...qt5d00z61m.pdf

The authors find that rents for existing rental units within 250 meters of the new development
fall by 5% to 7% compared to rents in buildings farther away, between 250 and 600 meters. As
they clearly state in the introduction, “If there is an endogenous amenity effect, it appears to be
overwhelmed by the standard supply effect.”

I've practiced real estate for 26 years, and I've lived in Austin through 3 downturns and have seen prices DECREASE in my own apartment because builders delivered too many units in the early-mid 80's. Landlord LOWERED my rent for 3 years in a row 1988-91 to keep me. By 1995 rents increased each year because there were zero new products, yet people were still moving to Austin. The lead time to deliver apartments matters quite a bit in these equations. That and location, location, location. Prices in NYC will always be high, because the demand to live there is insatiable...if condos sold for $250k in NYC, everyone I know would buy one....thus increasing the demand even more.

Another personal current example; resale listing in Easton Park will trade for less than buyers paid in 2021($565k). Why? The builders at EP are currently building the EXACT same units, and will be building those units for years to come. Why buy a 5 year old property for $575k (current listed price), when you can buy the exact same unit, brand new, for $550k?

Other sellers are taking less than they paid, and comps show that same unit comps at $525k....so even if the seller could get a full price offer of $575, the property will not appraise for the bank loan. Sellers must decide to rent, keep it, or cut into their equity if they can.

"Affordability" is relative of course. Affordable to who? If it truly isn't "affordable", they won't sell...they will default to the lender....and the lender will auction them off at "market price", whatever that $ is.

See the downturn of 2008 as a recent example. 2-2 condos at Milago pre-sold as low as $350k (2004), after completion the same condos sold up to $500k (2006), then....the same condos sold for as low $290k(2009)...then back up to $800k (2022)....then back down $480k (2025). I've seen units in Milago marketed as short sales or bank owned back in 2009. The market over built condos and demand decreased, prices lowered, then rebounded when demand roared back.

There was a time I couldn't "afford" a $250/month rent (35 years ago)....now I live in a house I couldn't afford if I had not purchased in 2012. It's all relative.


What "study after study after study" can you point to?

Fantastic and knowledgeable response.

[Urbannizer]

The Belvedere Phase I

[Urbannizer]

Bankruptcy case dismissed over land that holds the downtown IHOP

The bankruptcy case of the World Class Holdings entity that owns downtown Austin’s IHOP restaurant has been dismissed, possibly opening up a pathway back to foreclosure of the property that could one day hold a big skyscraper. World Class CEO Nate Paul says he's eager to make debt payments — but lenders aren't taking them.

The IHOP still has a few more years on its lease — perhaps perfect timing for a developer to take it to new heights when the real estate sector improves.

[ROCrot]

Originally Posted by Urbannizer

"World Class CEO Nate Paul says he's eager to make debt payments"

Okay, then... Mr. Crooked Pants says he wants to pay what he owes in order to regain control of the land... but then what? He hasn't developed squat.

When he has still a rising star on the local real estate scene... namely prior to being busted and all his shenanigans became public, he had been acquiring properties left and right and claiming to have a "buy and hold strategy."

Welp, he held onto the properties through the runup in values, including during the pandemic, but neither developed anything (and charge top dollar for rents) nor sell at the market high... a.k.a. "buy low, sell high."

Instead, he just formed a series of shell companies to obfuscate the true financial condition of "World Class Holdings," among other reasons, and the only thing he seemed to ever build was a house of cards.

[The ATX]

Originally Posted by ROCrot

Okay, then... Mr. Crooked Pants says he wants to pay what he owes in order to regain control of the land... but then what? He hasn't developed squat.

When he has still a rising star on the local real estate scene... namely prior to being busted and all his shenanigans became public, he had been acquiring properties left and right and claiming to have a "buy and hold strategy."

Welp, he held onto the properties through the runup in values, including during the pandemic, but neither developed anything (and charge top dollar for rents) nor sell at the market high... a.k.a. "buy low, sell high."

Instead, he just formed a series of shell companies to obfuscate the true financial condition of "World Class Holdings," among other reasons, and the only thing he seemed to ever build was a house of cards.

That sums it up pretty well.

[Urbannizer]

Tru By Hilton

[foreverrushing31]

I still just can't believe that damn empty wall on the Guad side. Insane.

[Urbannizer]

Palace Laundry

Structure finally up. Now opening sometime this year.

[ROCrot]

Originally Posted by Urbannizer

Palace Laundry

Structure finally up. Now opening sometime this year.

I've already imagined gillynova's vid on Insta from his visit after it opens.

[Urbannizer]

6th&Blanco

[randalls]

Nice to see this one coming along. This block has had non-stop construction for a few years with everything that went up across the street as well. Can't wait for the street to be free and clear when this one is done.

[Urbannizer]

Some shots today from ground level