This image is from a Twitter… uh, X-Twi… a TwiX post by one Amy Nixon, @texasrunnerDFW. (It’s not the property of TNFN; the laws appear unclear on who exactly owns it. But if Amy objects, we’ll take it down as a matter of simple courtesy.) It shows a startling disparity in Austin, Texas between homes available for sale and AirB&Bs for rent: 3329 homes for sale, 12,127 AriB&Bs for rent.

You’d think this means people should sell the AirB&Bs or something, and that they’re either greedy or stupid.

But after a little research and analysis, this just tells me that Austin needs more houses. Which it won’t get.

No, don’t hate me yet. Read first.

If this were true of, say, Bangor, Maine (pop. 31,753), it would mean the city was almost abandoned and people were desperate. Austin, however, has over two million residents in the metro area. Given a local average of just under four persons per household, and including apartments with the houses, there’s still a sufficient availability of new units for sale.

The problem is, almost none of them are starter homes. They’re luxury McMansions built by retired Boomers, priced sky-high, and they aren’t selling because there’s not enough money out there for people to buy them with, especially given our current interest rates. So, for the moment, the local real estate conglomerates are making whatever they can off the short-term rental market so they don’t go bankrupt. That’s what’s driving that huge number of AirB&Bs.

Long term, this is a land use problem. McMansion demand is low and there are far too many of them, each taking up a massive amount of space. Whole developments could be razed and repurposed into affordable starter homes or apartment/condo complexes, then resold at a price folks could actually pay. The trouble is, the local developers can’t raise the money to do this because all their cash is tied up in worthless McMansions. And normal people like you and me never could afford to.

But the immediate smart solution is to lease them out creatively at a low rate to groups of people who don’t mind cohabiting – artist communes, close friends, and so on. Meanwhile, as McMansion prices gradually drop, more apartments and starter homes should be constructed until people can save up enough to upgrade.

The problem with building new is the obscene price of materials right now: over $100 for a sheet of plywood, and so on. Nobody can afford to do it. If they could, regular people would be constructing starter homes all over the place, and housing prices would drop accordingly.

So: Why are materials prices so high?

It’s actually a carryover from when interest rates were still low, 2020-1. Existing stockpiles were bought out by bored folks sitting at home unable to work, and nobody was out there harvesting replacement timber. Demand has remained constant, but even paying overtime harvesters can’t catch up. Now that interest rates are sky-high, no new projects will start, and prices will gradually drop again.

But in that time, McMansions will keep being unloaded by retiring Boomers, and the rest of us can’t afford them, so we’re making other arrangements. The demand for housing keeps going up, the supply of empty and useless McMansions keeps increasing. ‘Affordable’ houses aren’t any more, and because they aren’t being built fast enough, they won’t be any time soon.

I dunno. Maybe a bunch of us should move to Austin and share a McMansion. But Texas is so damn hot!

TL;DR: It’s not greed so much. It’s poverty, plus too darn many Boomers.

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You can send cash to PayPal in order to help support my writing, set up a subscription donation at Patreon, or buy me a coffee. Alternately, if you’re an Austin property developer, consider donating a surplus McMansion to me and my artist and writer friends. We’ll find a way to make it tax deductible. Win-win!