Will real estate ever return to normal?

Then there was a 35-year-old technician in Long Beach, Calif., Who bought a house in Round Rock for $ 300,000 last October. In January 2021, it was worth around $ 400,000; in February he bought two more. His winning offers were two of the dozen that his real estate agent, a former stock trader who now works primarily with individual investors, made an invisible sight, all for at least $ 40,000 more than asking price. “I’m part of the problem,” the buyer admitted to me, even though he wasn’t your stereotypical speculator: despite his six-figure income, he drives a 2005 Honda Civic and, when I spoke to him, was renting. a room at $ 900 per unit. months, preferring to save and invest. (Marked by graduating in the Great Recession, he aligns with the popular Financial Independence, Early Retirement movement on Reddit.) He marveled at how FaceTime, DocuSign, and e-transfers made everything transparent. , but because real estate money can now flow so easily, it meant that what he liked about real estate investing in the first place – its stability and relative slowness – was no longer true. “We’re gamifying real estate investing to the point that it’s almost like throwing money on the stock market,” he told me.

Some Austin realtors have positioned themselves to capitalize on all that out-of-town money. On a scorching 95 degree day in late June, Matt Holm lifted the wing door of his Tesla Model X so I could get into the back seat behind his client, Jon, a man who worked in commercial real estate finance. in Santa Monica. (Jon requested that I remember his last name because he did not share his relocation plans with his friends and family.) During the pandemic, Jon, from Madison, Wisconsin, began to rethink what was holding him back in California. “I’m a little anxious about making a longer term commitment to LA, just given the political climate, the fiscal climate, the homelessness issue,” he told me.

Jon had been to Austin three times in as many months and was starting to familiarize himself with the “resin” market. He was looking for a house where he could declare his residence to take advantage of the absence of income tax in Texas – but he also wanted to live elsewhere half the year, and so he was looking for a place that he could easily rent. and earn money. . And he wanted guaranteed appreciation. “I mean everything is an investment, isn’t it? ” he told me. A friend of hers who had just moved to Austin introduced her to Holm, whose dirty blonde hair was pulled back into a sleek ponytail. He founded the Tesla Owners Club of Austin in 2013 and proudly introduced himself as the “Tesla Realtor” of the city. When Jon crept in to look for a short-term rental, Matt told me that Jon would like to spend $ 500,000 to $ 700,000, “but he’s going to spend 1.3 to 1.5 by the time he’s done.” .

“There are nine million square feet of office space under construction,” said Holm, as we walked through downtown, cranes and glass skyscrapers glistening above yellow limestone buildings and in red granite. (The Austin Chamber of Commerce gave a lower but still shocking figure of 6.2 million square feet.) “And that’s in construction, like, it’s not busy. So these jobs are coming. People tell me, like, Oh, you know, we’ve peaked. … On the metric side, the Texodus does not slow down. We’re about to have a tidal wave.

“People didn’t even take the Elon effect into account,” he continued, “I can’t tell you how many people say: Oh, Elon is building a factory. Like, no, Elon isn’t building a factory – it’s all Elon’s headquarters. He hasn’t officially announced it, and I don’t know anything behind the scenes, but I can see very clearly the people moving here, and they’re not factory workers. (Indeed, in October, Musk made it official.)

Holm and Jon spoke the same language. They analyzed each plot to find out how to maximize profits and shared tips for minimizing taxes. Walking through a huge tiled and carpeted floor in Travis Heights, Holm suggested that with its many rooms, this would make a great Airbnb. Although Austin and the state have stipulated that owners can only rent their property and only for a maximum of six months per year, “it could be every weekend,” Holm said.

“The investor I know who’s killing him right now is a systems guy,” he continued. “And I told him for four years that he had to get into the Airbnb business and he thought I was ringing him on the numbers. And finally he believed me, and now he has 13 Airbnbs.