‘I have to rent out this house for $10,000’: Expert says real estate is ‘cooked.’ Here’s what it means for you
An Austin resident is warning that her city’s real estate market is “cooked”—and offers insight on who’s to blame.
TikTok user Dani (@gasstationnachos_) posted a video last week to “start the conversation” about the state of Austin’s real estate market. It has since amassed 546,000 views and more than 3,000 comments. “I have not seen anyone talk about what’s going on in Austin right now,” she says. “Austin real estate right now is [expletive] cooked.”
Dani says the situation didn’t happen organically. “It’s peoples’ fault that it’s this way,” she says. She explains that a large number of people from California moved to Austin during the pandemic, and, in her opinion, they tried to take advantage of the situation financially. “The thing is, they tried to take advantage of us,” she says. “They said your real estate is super cheap here, let me sell my house and come here and buy multiple houses and try to use them as Airbnbs, flip them, sell them.”
But while the housing prices might’ve appeared low to incoming Californians, Austin’s real estate market was overpriced at the time, Dani explains. “We had no inventory, so prices were super inflated,” she says.
Two problems
Dani says, “The problem is two things. We’re having a ton of tech layoffs. This city’s economy is based in tech. So a lot of people are moving away. And also a lot of the people who have money and came here for various reasons during COVID are also leaving, because they’re like, this is not what I thought it was going to be.”
It could also be the locals, she says. “We’re probably going to be really mean to you, because there’s a lot of reasons why they just don’t fit in. The locals aren’t very nice,” she says.
Furthermore, “Because of that, you have these people that have multiple mortgages because they bought multiple properties,” she says. Also, “travel is going way down, so less people are using AirBnB. And so people are saying, 'I need to find a long-term renter. But the thing is, their mortgages are [expletive] huge, so they bought for a super inflated price.”
That leads to high rental prices. “I’m seeing houses that are in the city going for $7,000, $8,000,” Dani says. “It’s crazy. But nobody’s going to pay that. Nobody’s going to rent a house for that much. So then they stay on the market forever. And then the people try to sell it. They’re still delusional, so they’re trying to sell houses for crazy inflated prices. That’s not going to work either, because interest rates are high. Nobody’s going to pay the inflated prices like they were two years ago.”
More apartments equal lower rents
Additionally, low interest rates during the pandemic resulted in more apartments being built. That lowered rents. “Because of that the whole city is for lease,” Dani says. “They’re not realizing, or they’re not admitting, that they’re going to have to sell for a loss. So if you have an apartment right now, one that’s owned by one of those big companies, you’re in a good spot.”
It comes down to this, Dani says. “I’ve seen people who, year to year, their rent goes down $200-$600,” she says. “So nobody’s going to rent your apartment or your house for $7,000 a month, when I could go live in the same neighborhood in an apartment for $1,200 a month.”
@gasstationnachos_ Austin real estate is cooked!! #texas #austinrealestate ♬ original sound - Dani
A market correction
In the comments, users expressed interest in what some view as a forthcoming “market correction.”
One commenter wrote, “I mean, they are just going to bleed themselves dry. Every month without a sale or renter is money thrown away…”
A second user wrote, “Good, I am a 3rd generation Austinite that was priced out. I look forward to the market correction.”
A third user wrote, “I just got a renewal offer for $300 less than my rent. This has NEVER happened.”
Another user said, “Hedge funds buy up housing at above market value, which artificially inflates pricing, effectively manipulating the market.”
One user echoed Dani’s Airbnb analysis. “I’ve started staying in hotels again because the covid cleaning fees have stayed 5 years later. It’s sad because ab&b use to be used for supplemental income and not for primary income,” they wrote.
However, other users questioned Dani’s real estate credentials. “No data, just vibes and personal experience,” wrote one user.
As Dani says in her video, Austin experienced an apartment boom during the pandemic due to low interest rates and high demand. The resulting low occupancy rates did indeed result in apartment concessions and lower rental prices. And Austin’s status as an attraction for Californians is also fading due to a variety of factors.
The Daily Dot reached out to Dani via TikTok direct message for comment.
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