AUSTIN | Economic Development

[H2O]

Originally Posted by the Genral

. It was surface parking with stubby buildings vs parking podiums with tall buildings on top.

I fixed that line for you.

[StoOgE]

Originally Posted by freerover

Not until we raise the profile on a few rich lawyers that are stopping it. Council has to pass land use on 3 votes. They passed it on 2 until Fred Lewis sued and got it stuck in court.

Agreed, but we do have a *lot* of undeveloped land especially East that will always keep us from getting San Fran crazy.

I was actually surprised to see pretty nice construction from the high 100s and 200s near McKinney Falls a few weeks ago. Maybe if you want to live in the 04, 03 or 02 zip codes, but you can be reasonably close to downtown at an affordable price.

Not to say we don't need to do a LOT more as a city to combat this, but we at least are not a peninsula.

[We vs us]

Originally Posted by Dariusb

Just wondering but do any of you worry about the affordability issues? Do you think it could run into a San Francisco like situation with people fleeing the city to live in distant towns and facing extremely long commutes or no?

Yes, I'm worrying about it. We aren't an exact analogue to SF, and of course much cheaper comparatively, but that doesn't mean we're not caught up in the same systemic problems.

The cost of a median family home in the Austin metro jumped 23% (!!!) from 2019 to 2020. In one year! It's true that we're in the middle of a once in the lifetime pandemic, and that's skewing all sorts of market behaviors. But that's still freakin' nuts. If it continues like that -- and of course it will, and might get worse -- a whole slew of normal people are going to be pushed to Taylor and Elgin and Jarrell and San Marcos -- and by that point, you might as well move to San Antonio or Waco or College Station.

[Dariusb]

Originally Posted by We vs us

Yes, I'm worrying about it. We aren't an exact analogue to SF, and of course much cheaper comparatively, but that doesn't mean we're not caught up in the same systemic problems.

The cost of a median family home in the Austin metro jumped 23% (!!!) from 2019 to 2020. In one year! It's true that we're in the middle of a once in the lifetime pandemic, and that's skewing all sorts of market behaviors. But that's still freakin' nuts. If it continues like that -- and of course it will, and might get worse -- a whole slew of normal people are going to be pushed to Taylor and Elgin and Jarrell and San Marcos -- and by that point, you might as well move to San Antonio or Waco or College Station.

I've heard of my area(Temple) being seen as a cheaper alternative but could you imagine living in Temple and commuting to Austin every day?

[Novacek]

Originally Posted by We vs us

Yes, I'm worrying about it. We aren't an exact analogue to SF, and of course much cheaper comparatively, but that doesn't mean we're not caught up in the same systemic problems.

The cost of a median family home in the Austin metro jumped 23% (!!!) from 2019 to 2020. In one year! It's true that we're in the middle of a once in the lifetime pandemic, and that's skewing all sorts of market behaviors. But that's still freakin' nuts. If it continues like that -- and of course it will, and might get worse -- a whole slew of normal people are going to be pushed to Taylor and Elgin and Jarrell and San Marcos -- and by that point, you might as well move to San Antonio or Waco or College Station.

Austin has big, long time problems with the ldc, but a lot of the recent jump has been interest rate related. That factor at least probably won’t repeat (we seem to have hit the practical floor).

[the Genral]

Originally Posted by H2O

I fixed that line for you.

I was referring to 405 Colorado and 3rd and Shoal, Capitol Tower. You are right about the majority though.

[We vs us]

Originally Posted by Novacek

Austin has big, long time problems with the ldc, but a lot of the recent jump has been interest rate related. That factor at least probably won’t repeat (we seem to have hit the practical floor).

I'd love to see numbers on that . . . because TBH I'm skeptical that what we're seeing is a product of financial incentives alone.

Agreed that 23% YOY is insane and might not be repeatable. But all of the elements that have gotten us to this spot aren't going away and will continue for the foreseeable future.

[ATX2030]

Another day and another article about.....

https://www.nbcnews.com/business/bus...texas-n1255330

[undergroundman]

Originally Posted by Novacek

Austin has big, long time problems with the ldc, but a lot of the recent jump has been interest rate related. That factor at least probably won’t repeat (we seem to have hit the practical floor).

I believe the same interest rate is available in the following cities below, however note the y-o-y decline in median home prices in those cities. Why such a discrepancy between Austin's 23% growth if it's mostly attributed to the interest rate?

Longview, Texas
1-year price change: -9.90%
2-year price change: -2.91%

Redwood City, California
1-year price change: -1.04%
2-year price change: -5.20%

San Mateo, California
1-year price change: -0.65%
2-year price change: -6.09%

Fremont, California
1-year price change: -1.09%
2-year price change: -4.79%

Laredo, Texas
1-year price change: -4.31%
2-year price change: -1.79%

[mumu]

Are there rumors or updates on where the land development code revisions stands? I know there was a lawsuit that held things up but I haven't heard anything about it in almost a year now.

[Novacek]

Originally Posted by We vs us

I'd love to see numbers on that . . . because TBH I'm skeptical that what we're seeing is a product of financial incentives alone.

Agreed that 23% YOY is insane and might not be repeatable. But all of the elements that have gotten us to this spot aren't going away and will continue for the foreseeable future.

Not alone, but undoubtedly a factor.

The average 30 year rate in December 2020 was 2.68. It was a point higher a year before that.

http://www.freddiemac.com/pmms/pmms30.html

Financing 400k in Dec 2019 would have cost you ~1800 month. For that same payment in Dec 2020 you could have financed 450k.

It's not quite a 1 for 1 substitution due to down payments and such. But it's undoubtedly an inflationary pressure. Many buyers found the amount they could afford suddenly increased, but sellers knew that and quickly compensated (and buyers competing in bidding wars were able to bid each other up higher).

Originally Posted by undergroundman

I believe the same interest rate is available in the following cities below, however note the y-o-y decline in median home prices in those cities. Why such a discrepancy between Austin's 23% growth if it's mostly attributed to the interest rate?

If there's falling demand in an area, increased buying power can only partially compensate.

Though if interest rates had stayed level, likely prices would have fallen even further in some of those markets, if some buyers would have remained priced out of even those levels.

[Novacek]

Originally Posted by Dariusb

I've heard of my area(Temple) being seen as a cheaper alternative but could you imagine living in Temple and commuting to Austin every day?

I certainly wouldn't want to, but it's not that outside the range of long distance commutes in other metros. South Austin would be really hard, but to job centers in North Austin (like the Apple Campus) would be about an hour or so one way.

[undergroundman]

Originally Posted by Novacek

If there's falling demand in an area, increased buying power can only partially compensate.

Though if interest rates had stayed level, likely prices would have fallen even further in some of those markets, if some buyers would have remained priced out of even those levels.

Precisely, in a given set of regions, it's the demand driven by region-specific factors that is the primary cause for the fluctuation in home prices, i.e. business sector growth, and not the uniform interest rate that is available across those same set of regions. To suggest that the spike in home prices in Austin is primarily the result of low interest rates isn't very accurate. We don't see the same 23% spike in other cities with the same interest rates. Hint, we're talking about percentages.

The rapid increase in home prices in Austin is primarily due to the inventory supply/demand imbalance caused by the growth in the economy bringing a flood of people to the region. It would have spiked regardless of the interest rate. That was the case in San Fran over the last 25 years with higher interest rates and it is the case now in Austin.

[Novacek]

Originally Posted by undergroundman

Precisely, in a given set of regions, it's the demand driven by region-specific factors that is the primary cause for the fluctuation in home prices, i.e. business sector growth, and not the uniform interest rate that is available across those same set of regions. To suggest that the spike in home prices in Austin is primarily the result of low interest rates isn't very accurate. We don't see the same 23% spike in other cities with the same interest rates. Hint, we're talking about percentages.

The rapid increase in home prices in Austin is primarily due to the inventory supply/demand imbalance caused by the growth in the economy bringing a flood of people to the region. It would have spiked regardless of the interest rate. That was the case in San Fran over the last 25 years with higher interest rates and it is the case now in Austin.

Of course interest rates influence economic activity. That’s literally the entire reason the fed raises and lowers them. This is settled economic science.

You’re claiming prices in Austin would have spiked the same 23% if interest rates had stayed the same ? Or increased?

Over the past 25 years, interest rates have been cut by almost two thirds. And yes, that’s been one of the factors influencing real estate price increases in California and elsewhere.

[undergroundman]

Originally Posted by Novacek

Of course interest rates influence economic activity. That’s literally the entire reason the fed raises and lowers them. This is settled economic science.

I never said it doesn't influence the macro economy. You said it was the primary reason why home prices in Austin have spiked, which it isn't.

Originally Posted by Novacek

You’re claiming prices in Austin would have spiked the same 23% if interest rates had stayed the same ? Or increased?

Over the past 25 years, interest rates have been cut by almost two thirds. And yes, that’s been one of the factors influencing real estate price increases in California and elsewhere.

Yes that's what I'm saying. If you look at the historical chart of mortgage rates over the last 25 years, you will see that the rates levels off for 5-years stretches at times. During each of those 5-year stretches, home appreciation in San Fran did not stop going up. How do you explain that?

[Novacek]

Originally Posted by undergroundman

I never said it doesn't influence the macro economy. You said it was the primary reason why home prices in Austin have spiked, which it isn't.

No, I didn’t.

I said “a lot”. Not “primary”.

Probably roughly 10% of that 23%, from the numbers.

[undergroundman]

Originally Posted by Novacek

No, I didn’t.

I said “a lot”. Not “primary”.

Probably roughly 10% of that 23%, from the numbers.

[The ATX]

Let's not turn this into the Transportation thread.

[Novacek]

Originally Posted by undergroundman

Out of my ass?

I literally just ran through the calculations for you.

[WesternSon]

I think there is something to the interest rate discussions, because while home prices were up 25%. My current apartment could be lease for 30% less than what I signed up for just 1.5 years ago, and I live in a central Austin, high-end building.