To get settlers to move west there was a push to grab as much land as possible in which to build wealth. This often meant large stretches of dry barren land. In Texas and Oklahoma that land begat wealth when oil was discovered and a new land baron was born. Some turned to Cattle and in the West that became land dedicated to harvesting forest and wood. Farmland has never generated much wealth and that is why today most farming is Corporate or now owned by Bill Gates and in turn a new type of sharecropper is born as you know he sure isn’t out there turning the soil.
That was the early days of America and the new Barons came of out Industry, taking raw goods and producing steel, fabric and with that building a new economy from manufacturing. With that came the growth of finance to handle the money from the new marketplace and that is the story behind the Lehman Brothers bank that so famously collapsed in 2008 leading to that massive recession. The Lehman Family were Immigrants and with that opened a dry goods store in the South then in turn became distributors of cotton and then moved into banking and finance as there corporate interests grew and their wealth did alongside it. The Lehman Trilogy is a great book made into an even greater play and there is not at time I don’t go into the Metropolitan Museum to wander the Robert Lehman Gallery which houses some of the massive troves of art he collected in his lifetime. That is what we call “old money”
New money is tech and medicine. That is what remade Nashville as a med and and ed city as the area surrounding the city is loaded with colleges and universities giving it the name, “Athens of the South.” The irony is that the State itself produces few to little college graduates of its own residents and remains in the bottom five in the country with regards to Education. And then a flood came and with that the city rebuilt and became a Tourist/Convention destination that brought in a new kind of money and industry and that fuels much of the growth in that area. With the new competition for companies to relocate and build more jobs with more wages tax incentives, the lack of an income tax is the bribe and the reason many do move there and to Texas as who doesn’t love money? Well that the Bible Belt and the home of the Prosperity Pulpit, they sure don’t. But with it comes the issue of housing. In all honesty housing is just a part of it. The infrastructure which includes roads, trash, water and schools are all part of the larger picture and the ones we ignore when we are in search of a better life. Then once you move and find the cost of living absorbing whatever gains you make that better life seems further out of reach and in turn you are now a hostage as you cannot afford to stay but you cannot afford to leave.
What is also worrisome is that these same places claim to be havens for the ones who want to avoid regulations and stop freedoms, while going out of their way to do just that but on a highly personal level but even in some cases business with states forbidding the states and the municipalities within said cities to do business with banks that promote climate change, want to retain abortion rights or any other civil rights issue such as diversity training as illegal. So which is it? Again I have a neck problem from the constant turning my head to go WTF?
And with that comes the migrants, not the Immigrants as they will be bused out to blue states and a war using people as Chess pieces begins, but the poor from other communities who see the shiny keys and will relocate for better jobs. Despite the fact that the last decade the migration of the American worker has slowed and more are moving out of states that too expensive and this trend seems now focused on the rich who can afford to do so further imperiling stability in once thriving busy urban areas. So the new land barons seizing up property in Wyoming and Colorado and Idaho are doing it while also causing the residents who have lived there for decades to lose their homes and cannot find anywhere to rent or buy in which to remain. This is truly a Catch 22 in every sense of the word as the rich need those workers to serve them. So get those robots going tech geeks.
From trailer parks to multi family and single family housing much of it is being bought up by investors. The push out the current residents/tenants and in turn rent at higher prices or sell and flip at inflated prices. In LA some house flippers are now renting their own inventory as they cannot sell at a profit that you once saw on such shows as Flip or Flop which again is a part of the problem, along with the AirBnb bullshit that takes up a great deal of certain markets, such as Nashville and Austin, which are also what again? Big tourist destinations and college towns that requires housing needs for the long term but still temporary basis.
I reprint below this article about a housing issue in Austin, a city I also once lived in. Name an “it” city and I lived in it and found it awful. See I see the bigger picture and when you see what is in background and foreground of a painting you are seeing the Artist’s perspective, until you step into the frame you are not aware of what is within that creation beyond that sight frame. Texas and Tennessee are nightmares politically and with that I am glad I left them in my rear view mirror. I have also lived in both San Francisco and San Diego and again the problems facing that state are less about legislation, taxes and business, as there are real environmental problems that need to be addressed. Add to that the NIMBY bullshit is greater there then likely anywhere else in the country. It is heavily class based and not fueled by Racism as it was in Nashville, Nashville won’t expand public transport as the White rich fear Black people being able to bus in their communities. And do what? Work? No rob them. It is laughable. And much of that fear is promoted by the owner and wealthy Oligarch who owns what? Car Dealerships. Self interests and money trump race every day in the South. But politics aside, home ownership is going to become a thing of the past. And with that what that means to build wealth and have house security is largely a method that will be at risk for most Americans. And Politics will matter as the generous tax subsidies and deductions for home ownership must change (and with that again stiff the rich) and move it to those who rent, and with that be based on income with more buildings also including low income tenants; You know the ones that ride the bus.
Austin is a great place to visit, live there no. But when I read one of the Queer Eye Guy moved there I realized that bubbles apparently cannot be popped or you are so busy you don’t know the reality of where you live. Austin folks is the State Capital and a college town and there is ample ways of knowing facts if you want to, so ignorance in this case is willful. But hey we all have to live somewhere, own it, that is not going to happen anymore for many of us. Live with that.
American dream of owning a home out of reach for many in tight markets
Many middle- and lower-income Americans are left with a dwindling number of options or forced into renting while supply increases for the wealthiest buyers
Tom Perkins in Austin, Texas The Guardian Fri 19 Aug 2022
Samantha Hawkins had a clear vision for her first home: the 29-year-old from Austin, Texas, wanted a detached house surrounded by a yard for her dog, a garden and a stable space where she could put down roots.
By January, when she bid $230,000 on a tiny, yardless condo converted from a rental studio, she had “bent on a lot of the things I valued”. She found herself beaten by investors willing to pay cash far above the listing price, and buy sight unseen in gameshow-like bidding wars.
The 496-sq-ft condo was one of the very few Austin homes she could still afford as prices soared in January. Her offer put her among the finalists, but at the last minute, the seller threw a new curveball: the other bidders had signed an appraisal waiver. Hawkins needed more cash she didn’t have, so she “bowed out”.
Across the US, many have faced similar roadblocks: prices popped as a confluence of forces suppressed supply and inflated demand, leaving many middle- and lower-income buyers with a dwindling number of housing options, or forcing them into rentership.
Now, with interest rates rising and the housing market cooling, things are supposed to be different. So far they aren’t. Nationally, house prices hit an all-time high in June of $416,000, up 13.4% from a year ago.
The challenges Austin buyers are still experiencing show just how difficult the dream of owning your own home has become for a broad swath of Americans.
“I’ve worked really hard the last year or two and made the right choices financially to try to have a chance, but it seems like I can’t really win in this market,” Hawkins said.
The problems plaguing tight markets nationally have all hit Austin. Hawkins is competing with investors who now account for more than 30% of single-family home sales, Airbnb operators and any number of the about 125 people moving to Austin daily amid dizzying job growth. Meanwhile, builders haven’t kept pace with demand and zoning laws limit new multifamily housing that could provide relief.
May’s median sale prices in Austin and surrounding Travis county hit new peaks of $676,000 and $625,000, respectively – up from around $400,000 just before the pandemic. That’s put pressure on the rental market, pushing the median rent above $2,700 and fueling displacement.
And even though Austin’s June home inventory doubled over the prior year as interest rate hikes cooled demand, supply is only increasing for the wealthiest buyers.
The portion of national listings that someone earning $75,000 annually could afford dropped from 40% to 25% between January and June as home prices and mortgage rates climbed, National Association of Realtors’ (NAR) data shows.
“The higher inventory is promising, but not for middle- and lower-income groups,” said Nadia Evangelou, an economist with NAR.
There’s some evidence of that on the ground. Austin realtor Sherry LeBlanc, who focuses on finding homes for first-time buyers, recently listed a house that could have fetched $515,000 last year for $435,000 with the expectation that middle-income buyers would snap it up. Instead, showings were slow and only investors bid.
“Families are scared off by interest rates,” she said. “They say, ‘Well, shit, that’s out of my budget.’”
For those like Hawkins stuck in rentership, the crisis hits on a financial level. Homeownership is a key instrument for wealth building and security, and loss of access to it represents a “breach of the social contract”, said Austin realtor Socar Chatmon-Thomas.
“It’s pissing me off because somebody who went to school, got a degree, or otherwise did everything right and now has a job making $60,000 can’t buy a home,” she said.
Investor demand
Even with a six-figure tech salary, Courtney McKinley couldn’t buy in the city. The parks, restaurants, pools and friends that attracted her to a rental in Austin’s Zilker neighborhood were off the table as the lowest house prices had inched toward $1m.
But even as she looked around the city’s edge and suburbs, she couldn’t top the cash offers. A $350,000 bid on an over 40-year-old townhouse that “needed some help” was beaten by an investor who offered $50,000 more in cash. Weeks later, she lost on a dilapidated townhome despite including a $50,000 escalation clause. The next month, an offer $30,000 over asking price on a sun-filled, three-bedroom home that felt perfect was turned down. “That was a heartbreak moment. I cried after that one,” McKinley said.
After more dead ends, she finally won with a $400,000 bid for a two-bedroom that needed a new kitchen, patio, floors and other improvements. It’s in Pflugerville, a sprawling suburb of strip malls and big box stores that’s in a “kind of isolating” location, McKinley said. Ultimately, however, she says she feels lucky: friends have put in up to 15 offers and still don’t have a house.
“It was a rollercoaster, but no matter how difficult and frustrating it was, at least I’m building equity now,” she said.
For middle-class Austinites like McKinley being outbid by cash offers in Austin, this much feels clear: investors are part of the problem.
While some argue the percentage of investor-owned single family purchases nationally remains low, tight “sun belt” markets like metro Austin have seen it double from about 15% throughout the mid-2010s to over 30% in 2022’s first quarter. And investors often target the type of homes that middle-income earners like McKinley are seeking, as well as those in lower-income, minority neighborhoods
“Investors are not focused on the higher end of the market,” said Georgia Tech urban planning professor Elora Lee Raymond. “It’s entry-level homes that are being snapped up and are incredibly difficult to purchase at this time.”
Beyond having the resources to place higher bids and pay with cash, investors often buy homes sight unseen, and typically skip appraisals and inspections. Some companies also use algorithms to place bids within hours of homes being listed, and Wall Street-backed institutional investors are viewed as particularly problematic.
The five largest private equity buyers added 76,000 homes to their portfolio between March 2018 and September 2021, and their model has been derided by critics as “industrial housing” as they maximize profits by raising rents and skimping on maintenance.
A June US House committee investigation highlighting private equity’s role in local housing crises noted corporate landlords in Atlanta were up to 205 times more likely to evict tenants, and increased rents by an average of 37-57% within a year of purchasing properties.
However, it’s virtually impossible to quantify how much investors are pushing up home prices, and the situation is a “chicken and egg” question, said Thom Malone, an economist for real estate data analyst CoreLogic.
“Where investors go, prices go up, but to what extent is this because the prices were going up because demand increased?” Malone asked. “It’s probably a bit of both.”
Meanwhile, another breed of investor is depleting stock in tourist-friendly areas: short-term rental operators. Though the city says Airbnb owners operate about 3,000 units, housing advocate Inside Airbnb gleaned the company’s listings and found about 12,000, including 10,000 whole home units. And that accounts for one company – the true number of short-term rentals is probably much higher.
In one east Austin neighborhood, Airbnb in June controlled about 12% of the housing units, Inside Airbnb found. While about 270 units were available for long-term rent during a 2020 US census survey, more than 1,300 whole home units were available on Airbnb in June.
“Even without some economic researcher looking into it, common sense tells you that these are entire apartments that are no longer available, and people will be directly or indirectly displaced,” said Inside Airbnb founder Murray Cox.
Short supply
The signs of a construction boom are evident across Travis county, the fifth-most populous county in Texas. Along the metro region’s edges, new neighborhoods and strip malls are multiplying, while closer to the city core in south Austin, expensive new condo buildings have sprouted among the old restaurants, strip malls and pawn shops on Congress Avenue.
Though Austin has grown at an exceptional clip for decades, the recent population spike is partly driven by tech: Oracle, Tesla, Meta, HP Enterprise and many more have relocated or opened offices here. That’s coupled with demand from New York and California buyers who relocated during the pandemic, and millennials entering the market.
Monthly new construction home closures in Austin in 2021 were up by 53% from pre-pandemic highs, CoreLogic data shows, but the city is struggling to build its way out of the crisis: supply chain squeezes and labor shortages observers pin on Trump’s immigration policies have slowed the construction cycle.
“Supply is a tortoise and demand is a gazelle, so when there’s a sudden increase in demand, it takes years for new supply to come on the market, and in the meantime there’s this huge surge in prices,” said Jake Wegmann, a University of Texas regional planning professor.
A recent proposal to overhaul Austin’s zoning ordinance would have allowed for more apartment buildings, increased the number of townhomes and simplified the approval process. The changes would allow the city to build “thousands more units” annually, but Nimby-ism and anti-growth forces shut it down, Wegmann said.
“I don’t want to make it sound like this would’ve solved everything, but we’re really tying our own hand behind our back,” he added.
‘I pray every night’
Soaring home prices ultimately create pressure lower in the market, hitting the city’s most vulnerable the hardest. Six months ago, Paola Valdez and her husband made the last $500 payment on their three-bedroom trailer set in a south Austin mobile home park. The extra money was welcome as the couple raised two young kids, and they were proud to own the home outright.
But everything changed in early July. The California investor who recently purchased the Congress Mobile Home Park handed 60-day eviction notices to its residents, and leaving isn’t easy – Valdez’s trailer can’t be transported because it’s 30 years old.
A new, smaller trailer is $1,500 a month plus the lot fee, and three-bedroom apartments in her neighborhood top $3,500 a month. The family is at a loss over what it will do next, but Valdez expects her days of staying home to raise the kids are done.
“One day you’re fine, you’ve paid off your home and you’re making a nest, then all the sudden you’re bombarded with ‘You’ve got to leave in 60 days’,” Valdez said. “I’m trying to stay strong. I pray every night.”
As median rent jumped 48% year over year, state records analyzed by the Guardian data show Travis County evictions hit record monthly highs in March and April. That’s partially fueled by investors purchasing apartment buildings with affordable rents and turning them into pricey condos, said Mincho Jacob, a spokesperson with housing advocate Basta Austin.
“That’s destroying the heart of Austin because people with long roots here are evicted and forced out,” he said.
There are few tools to do anything about it in Texas where the Republican-controlled legislature largely banned rent control, and though housing advocates have had some success in warding off developer purchases of affordable housing, it hasn’t been enough. Similarly, wide-scale displacement continues even though Austin voters since 2018 have approved $550m for affordable housing and anti-displacement measures.
Another link between the higher home prices and rental pressure is those like Hawkins, who have been shut out of ownership. But with a recent salary increase in her career, she’s regrouping and saving money, and says she’s determined as ever to own.
“It’s been a goal of mine for a really long time, and since there’s been so many failed attempts, I just want to prove to myself that I can do it,” she said.