Almost anyone within the housing industry will let you know that there’s a shortage of tens of millions of homes and that the one option to stop the rapid increase in prices and rents is to construct.
Austin, Texas, does this.
The median asking rent, or the initial rent amount a landlord asks for a property, fell nearly 18% in Austin last month in comparison with a 12 months ago. accordingly Redfin. In its evaluation, Redfin stated that this was the biggest decline of all of the metropolitan areas examined.
“Authorities in the Texas capital have approved the most new construction in the country to keep up with rising demand during the pandemic,” the evaluation says. “Demand has now stabilized, but many new apartments are still coming onto the market, so asking rents are falling.”
At the identical time, the country’s median asking rent increased, albeit by lower than 1%. But after rents rose significantly lately in the course of the pandemic, the development boom stagnated and even pushed them down in some parts of the country.
“Almost everything in our lives costs more than it did two years ago – but rents have largely remained stable thanks to the construction boom, especially in the Sunbelt states,” said Sheharyar Bokhari, senior economist at Redfin. “We’re seeing rents increase a bit now as new construction slowly slows down, but asking rents will likely remain relatively stable for some time as there is still a backlog of new housing coming onto the market.”
With construction so strong within the Sunbelt because of less stringent regulations, Austin wasn’t the one boomtown to see rents drop by double digits. In Jacksonville, Florida, the median rent fell 13 percent in August in comparison with a 12 months ago. In Tampa, rents fell nearly 6 percent, and in Dallas, rents fell greater than 3 percent. Not to say, a few of these boomtowns in Florida and Texas are inundated with an oversupply of condos, which suggests much more supply.
Whatever the case, we understand it’s not nearly rent in Austin. Real estate prices in the town have dropped nearly 5% within the last 12 months. per Zillow. That’s a stark change from just over two years ago, when the typical home price in Austin was at its peak. It seems that constructing more homes is working, and that is great for the typical American — perhaps not for investors. Either way, the trend won’t last long.
Thomas Ryan, economist at Capital Economics, recently wrote: “The Sunbelt will continue to attract strong economic immigration, so the current oversupply of housing should be quickly absorbed. And with new construction already declining in the region, oversupply should be less of a problem in the long run. As a result, we expect housing prices in the Sunbelt to recover. In fact, in places like Austin, Dallas and Jacksonville, the worst appears to be over.”
Still, what housing policy analysts, urban economists, and the “yes, in my backyard” crowd have been saying for many years is finally gaining traction: the important thing to containing costs is constructing more housing. And perhaps Austin has something to do with it.
It’s no coincidence that Vice President Kamala Harris recently promised to finish the country’s housing crisis by the top of her first term if she is elected president. Or that former President Barack Obama said of her housing plan on the Democratic National Convention: “She knows, for example, that if we want to make it easier for young people to buy homes, we need to build more housing — and we need to get rid of some of the outdated laws and regulations that have made it harder for working people in this country to build housing. That’s a priority, and she’s put forward a bold new plan to do just that.”
