I think Austin, TX is just a great proof point for this over the past 5 or so years. We built a ton of housing over the past 5 years, and last I read rents have fallen 22% and house prices have also gone down considerably (though they were so insane during the pandemic I still think they've got a way to go).
I may consider myself liberal, but general housing policy by most liberal leaders has been a total disaster and should be recognized as such.
Looking at the Case-Shiller index for Austin[1], Dallas[2], NYC[3], SF[4], and LA[5], it doesn’t seem like Austin’s prices have grown any less in the last five years. They’ve basically all nearly doubled in that time. If there is any improvement it’s too small for my eyes to see. In fact, SF seems to have had the lowest price growth (perhaps due to fears about crime?).
You're reading a lot into the wobbles in the plot, when you probably want to be looking at the total change over the last 5 years. Here's the change by city, Q4 2019 - Q4 2024:
Austin: 346 -> 510. 510/346 = 1.47
Dallas: 192-> 295. 295/192= 1.53
NYC: 203-> 318. 510/346 = 1.56
SF: 271-> 361. 510/346 = 1.33
LA: 291-> 443. 510/346 = 1.52
These numbers are all pretty close imo, clustered around 50% growth in the last 5 years. Austin in particular grew 47% over the last 5 years, for a annualized growth rate of ~8% -- that is some _crazy_ growth for real estate, when the long term average in the US is about 3% annualized. IMO SF is the only remarkable datapoint, with 33% growth -> ~6% annualized growth. Even that is still high though.
It would be easier to visualize if we can plot them all on top of each other, but I didn't find an easy way to do that.
The problem with such calculations is that they're very sensitive to the chosen starting point: compare the growths in the most recent 3 instead of 5 years:
I ran into this problem yesterday trying to calculate changes in federal spending over time. One user claimed that inflation-adjusted spending had sharply declined between 2000 and 2010 - which was true. But I had already calculated that spending had sharply increased from 1990 to 2023. I couldn't understand how we had reached such different conclusions until I looked at the IRS data book and saw that there was a slump in 2010 (presumably due to the effects of the Great Recession) and a huge spike starting in 2020.
If we're looking for a trend that follows a specific city instead of specific year and city, then I agree. For that purpose I think I'd like to run this same calculation for the 5 year interval 2019-2024, and 2018-2023, and 2017-2022, etc, to see if there is a trend that is unique to the cities, as opposed to the cities in a certain year.
However, my interpretation of the original claim about Austin is "Austin house prices have grown less in the last 5 years than other places". That claim is pretty specific, and can be examined by looking at just the start and end points. Looking at the end points, it seems incorrect.
You're looking at the start and the end of the plots and totally ignoring what happens in between. If Austin had followed the linear trendline from Q4 2019 to Q2 2022 (increase of 22.7/Q) then it would have been at 800 in Q4 2024.
I can't edit this comment, so instead I'm replying.
>They’ve basically all nearly doubled in that time
This statement is incorrect. In another comment I did the math, and most of them had about 50% growth in the last 5 years, with SF being the outlier with 33% growth. Sorry for the mistake, my eyeballs are not as good as my math.
That means that over the last five years, Austin real estate prices could still be up more than other cities. It looks like they went from $400K average prices in 2020 March to $600K now, but the peak is $680k. Is that because it took builders a while to catch up with a sharp increase in 2020, and now they "caught up"?
I don’t understand how rents actually go down in a market. My landlord has raised rent every year save for when covid laws prevented that. It is their incentive to always raise rent even when articles about my city claim “rents went down 5%” or whatever this past year. Whose rent? Expensive commercial landlord new construction rents where they try and hide the price anyhow with two months free on the first year? The rent that therefore only matters for the bank to put a valuation on that property because people move in year 2 at these sort of properties to avoid paying that full rent? Maybe that is what they are referring to. No one I know has ever had a call from their landlord telling them to pay less money next month due to the declining value of their asset.
In a high demand market though? My landlord had like 3 tenants go over the last couple of years and they had a new one moving in that month basically to no affect on their cashflow. Whenever I applied for apartments in this town it was always tour the place and be prepared to sign a lease right there because you have no time to think before someone else bites. Maybe thats true when you have a failing local job market but that isn’t the case in high housing cost regions by definition.
We reduced rent during COVID both for a present tenant and for the following tenant. Generally those statistics are across all units while individual experiences can be wildly different.
[Edit] FWIW that was based on the rental market rather than anything related to asset value.
SFR had no decreases during those years in the US. Markets like the Southeast had 7-14% increases every year. SFR companies were doing “cash for keys” because rates were increasing so quickly that it was better business to buyout a lease from the current tenant and bring in a new one at a 14% increase.
It's not clear what you're trying to say. The GP said they weren't sure how rents went down. As an at-the-time-I-referenced landlord we reduced rents. Or tenants may have been privileged people who didn't need it but it seemed like the right thing at the time. Mostly because the impartial rent statistics source we repeatedly used indicated rents had gone down for the market local to the unit we offered. Maybe this is why we got out, because we weren't practicing exuberant total maximization of what we could extract. We got in because my partner was sentimental about the unit and felt we could hold aside a small part of the market to be a little kinder and more human. What triggered us getting out, in fact, was hostile policy enacted by Seattle that frequently poisoned the relationships with our tenants. That is, with the same behaviors we began being treated very poorly. I'm off the opinion that Sawant was in the pocket of large corporate holders given what I understand of the effectiveness with which she had consolidated the Seattle rental markets into a smaller set of hands.
> What triggered us getting out, in fact, was hostile policy enacted by Seattle that frequently poisoned the relationships with our tenants. That is, with the same behaviors we began being treated very poorly.
What policies are you referring to? What kinds of things happened?
Sorry for the delay. I'd written up a response and then refreshed on accident which lost my work. Additionally, there's a lot of emotional baggage that comes with this subject. Some of our renters behave particularly badly a couple of whom lived with my partner and my child in our home.
The biggest problem as a landlord was that many of the laws were changed without any kind of grandfathering. This effectively rewrote some of my contracts. It had a lot of weird effects that I won't go into and took away many of our previously held property rights.
One thing that happened is that we offered a low-income individual, a $700 less than market discount to give the tenant and their medically complex child a safe place to weather the pandemic. During the pandemic the city introduced laws constraining rises in rent. Because my lease was written up without recognizing the discount, I would have had to pay $4,000 to the tenant to resume charge once the pandemic had passed as was the original agreement.
Also, during that period, there was a movement to reduce the ability of landlords to stop renting to particular people so that once you rented once you had to continue renting. For a while you couldn't even stop renting to sell your unit. That has thankfully been fixed very recently.
There are a lot of timelines enforced by the city. These can have complex interactions with human factors despite being good rules on the face of them. Great laws include that school-age children and their families as well as any school employee cannot evicted (including letting the lease end) during the school year so those 12 month contracts you write up for somebody in that class must be renewed in perpetuity or at some point changed to a shorter or longer term to align with summer. We had one tenant who got so paranoid by the legally mandated language (at the time) that they tried to force us to admit that we are trying to kick her out for 4 months before deciding to leave. We had no intention of kicking her out or ending her lease at any point. We did feel like we needed to retain that opportunity if we fell on to hard Financial times because that particular unit couldn't be sold with someone in it due to rental cap limitations of the HOA.
Tenants get free legal representation, which is pretty good. They're much less likely to have the capital to retain legal representation. We have had tenants, as friends of friends informed us after the fact, lie and verbally abuse us in order to try and trick us into violating the rules so they can trigger the 4K payout. On the other hand, the city communicates poorly and is often misleading so that landlords are required to have City specialized lawyers to navigate some of the most simple interactions. The real estate agent we just used to sell our unit noted that there's been a steady movement of small landlords out of the market. The only way it makes sense to keep up with all the changes is if you can scale the extra cost of keeping up across many units.
We got into it because we wanted to give a friendly human relationship to people who needed shorter-term housing and didn't have the capital to purchase. It has strained our marriage and our finances. We'll come out of it well off, but we would have been happy to continue being what almost all of our tenants have called the best landlords they've ever had.
Anyway, I'm meandering and this has gotten long. Sorry again for the delay.
> I may consider myself liberal, but general housing policy by most liberal leaders has been a total disaster and should be recognized as such.
? Private development is the heart of liberalism. We haven't had anyone but liberal leadership since, like, LBJ I think? And he was also a liberal acting out of character. Any alternative would surely imply public investment in housing. No, re-zoning is not going to make a dent in homelessness.
I'm aware that you're referring to liberal in the sense of "loyalist democrat" or whatever, but the reality is that both parties have virtually the same policy when it comes to housing: blame the market, act as though the market will still answer our problems even though it hasn't in the past, and feign helplessness that the government can directly influence housing in the first place outside of zoning. I.e., liberalism.
I may consider myself liberal, but general housing policy by most liberal leaders has been a total disaster and should be recognized as such.