Austin woman berates California tech workers for inflating the city’s housing market during the pandemic – Yahoo Finance

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Austin woman berates California tech workers for inflating the city’s housing market during the pandemic

Austin woman berates California tech workers for inflating the city’s housing market during the pandemic

California used to be the state where people could go to make their fortune. But now, the Golden State is no longer home to a “gold rush.”

Data from the U.S. Census Bureau shows that California lost 75,423 residents in 2023, a steady migration pattern that began during the pandemic. Many of those people fled to Texas, Florida, and other states that were deemed cheaper and didn’t have state income tax.

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One TikToker wanted to highlight what happened to the cities that saw an influx of people who fled the Golden State. Dani, who goes by @gasstationnachos_ on TikTok, posted a video about how Californian tech workers “cooked” the Austin real estate market by buying up their cheap homes during the pandemic, leading to inflated prices and a low supply of homes.

Now, with tech giant Oracle moving its headquarters out of Austin and major Tesla layoffs happening in the city, Californian techies are leaving the city in droves — but without much of a return on their housing investments.

“This is what you get for trying to take advantage of people who are just trying to buy in their city or their state that they’ve lived in their whole life,” Dani said in her viral video.

Here’s what you can learn from the mistakes of the real estate boom from the Golden State migration.

The market doesn’t always go up

Due to an inventory shortage in Austin, home prices have skyrocketed, according to the Wall Street Journal (WSJ).

But now, those prices are starting to fall. The WSJ reported that Austin home prices increased 60% from 2020 to 2022. Yet, despite an 11% drop in 2024, the prices remain near “record levels” because of the lack of supply.

“They’re still delusional,” Dani said of the California homeowners in Austin. “They’re trying to sell houses for crazy, crazy inflated prices, and that’s not going to work.”

But due to the increase in home buying, the apartment industry came swooping in to capitalize on a population looking for places to live. There has been so much construction to build apartments, that rental rates decreased in Austin by 7.4% since last year, according to listings website Apartment List.

Dani pointed out that the inexpensive rentals make selling a home even harder for the Californians to sell their property because no one will lease or buy a home that’s thousands of dollars, when they can rent an apartment for much less.

One commenter on Dani’s video believes this is karma. “I am a third-generation Austinite that was priced out. I look forward to the market correction,” they wrote.

If you’re looking to buy a home and rent it in another state that’s gaining in popularity, know that you may not be the only one. As the housing market heats up, you may need to take a loss when you want to sell or rent.

Plan for an emergency fund that’ll to cover three to six months’ worth of the mortgage and expenses before you purchase your home, just in case you wind up in a similar situation.

Read more: Jeff Bezos and Oprah Winfrey invest in this asset to keep their wealth safe — you may want to do the same in 2024

Factors outside your control

Dani believes that many of the Californians who came to Austin did so in order to buy cheap real estate and then Airbnb it out to make quick and lucrative returns on their investment.

In response, the city of Austin cracked down on Airbnbs to check that these properties had short-term rental licenses before they were listed on the platform, according to the local NBC affiliate, KXAN.

Though the city backed down after a lawsuit in New York City around this issue, it spooked property owners who relied on Airbnb for their incomes, KXAN reported.

Cities often enforce short-term rental rules to deter homeowners from renting their homes on Airbnb. The hope is that this will encourage people to lease their homes out for the long-term to increase a city’s housing inventory.

Buying physical property can be a nightmare for unforeseeable reasons, such as with these government crackdowns. Another way you can still get involved in the housing market, but without as much hassle, is by investing in real estate investment trusts (REITs).

Not only are they beginner-friendly, you can invest small amounts of money to start. It essentially gives you exposure to the real estate market without having to actually own (and manage) the property.

Just like any stock, your shares increase in value, or you get dividends, depending on the REIT you invest in. It’s an easy and affordable way to start your real estate portfolio.

If you notice one REIT portfolio isn’t performing well, you can always pull your money out. This is a much easier solution than trying to sell the empty house you bought to rent out on Airbnb.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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