Interesting Austin

We’re down in Austin for a visit, and our first day here reaffirms what I’ve believed for a while: Austin is one of the most interesting cities in America.

For one thing, it’s booming. Many tech companies have moved into the Austin area, and the skyline is dotted with construction cranes putting up some very interesting new buildings, like the one in the photo above. Many transplants from other states, particularly California, have followed the tech companies to Austin, resulting in Texas’ capital city dealing with an unprecedented influx of recent arrivals that has created perhaps the hottest–some might say completely overheated–housing market in the United States. If you’re trying to buy a house in Austin, coming from a place like Columbus, prepare yourself for egregious sticker shock and the frustration and disappointment of being routinely outbid by people paying far above the asking price because they also are desperate to buy a home of their own.

From our walk around downtown last night, it’s pretty clear that Austin has a very active population of youngish professionals and tech workers who are looking to have a raucous good on Sixth Street or Rainey Street on a Friday night. There’s an active nightlife, and we had dinner at a really good restaurant that was so busy we couldn’t get in until 9:30 Central Time. That’s like dining in New York City.

But the booming growth and sizzling housing market and partying is going on cheek by jowl with an obvious homelessness problem. Many intersections, highway underpasses, roadway sidebeds, and downtown sidewalks are the site of homeless encampments. The Austin homeless live in tents or under tarps, like the person in the photo above, with their possessions defining their own personal space. It’s hot here now, and it’s hard to imagine how the homeless survive broiling days when the temperature hits the upper 90s. The choice between being out in the blazing sun all day, or sitting in a suffocating tent, isn’t a good one. It can’t be healthy for these unfortunate people, and the encampments raise e, public health, basic sanitation, crime, and personal security issues. But how do you begin to tackle such a huge problem?

The photo below shows a homeless encampment right in front of the Austin City Hall building, at one of the major intersections bringing you into the downtown area. It’s not exactly the kind of image that a city would want to project to visitors, but there’s a lot of things on Austin’s plate right now. The city is trying to deal with the homelessness challenges, an obvious housing shortage, bursting at the seams growth that looks like it will continue indefinitely, a changing political dynamic, and assimilation of a bunch of newcomers into the proudly weird Austin way of life.

As I said: Austin is an interesting city.

Explaining The Housing Market Doldrums

Yesterday I heard a segment of NPR’s Talk of the Nation that discussed the housing market in America.  The host and his guests discussed how housing prices may have bottomed out, how buying a home is cheaper than renting in some areas, how buying a home and making those monthly mortgage payments is a good step toward financial discipline and accumulation of personal wealth, and other factors that weigh in favor of buying a house.  They seemed mystified about why American consumers aren’t flooding into realtor offices to snap up homes at bargain basement prices.

I don’t think there should be much mystery about why the housing market is in the doldrums, however.  In my view, it is almost completely attributable to a lack of confidence and optimism about the future.  Many people in America have been deeply rattled by the economic turmoil of the past few years.  They’ve seen friends thrown out of work and bright young college graduates unable to find a job.  They’ve seen the value of their 401(k) portfolio on a roller-coaster ride and, if they are an existing homeowner, they’ve seen the value of their home fall with the bursting of the housing bubble.  What’s more, over the past few years they’ve heard assurances from economists and politicians about an economic recovery and confident predictions of dropping unemployment rates and robust economic growth, and those bullish assurances and predictions have consistently proven to be unfounded.

The old saying “once bitten, twice shy” applies here.  Americans don’t want to bet right now on economic growth; they understand that we teetering on the brink of dropping into another recessionary period.  They just want to hang on to their jobs, hunker down, and wait until things improve in the real world and not just in some academic’s econometric models.  Signing your name on a 30-year mortgage is a really big step.  Why would you want to do it if you don’t have any confidence that you will keep your job and that better economic days lie ahead?

Closing The Loop

New Albany is a good place to live in that is getting better all the time.  However, it does have one drawback — it’s new, and that means there is still a lot of vacant land on which to create subdivisions, plot out new lots, and build new houses.

This fact poses issues for the owners of existing homes who want to sell their properties.  In the current bad economy, the market for real estate is soft everywhere.  When new homes are constantly coming on line, it just makes the market for selling existing homes that much more challenging.  In that respect, New Albany is different from Upper Arlington and Bexley, both of which are established Columbus suburbs where every inch of available ground has long since been the location of a house.  In those communities, if you want to build a new home, you have to buy an existing home and tear it down to do so.

So, for current New Albany homeowners, the familiar sight of yellow construction equipment, pallets of bricks, and building supplies is a double-edged sword.  We know that adding more new homes is going to affect the market for our homes, but we also know that the ultimate goal has to be to build New Albany out so that the market becomes more fixed.  If you’re like us, and don’t have a house on the market right now, you want developers to close the loop and get the new builds done before you put that “For Sale” sign in your yard.