The New York Times Magazine - USA (2021-11-14)

42 11.14.21

own $5 million in assets that he
would rent out for top dollar and
that he believed would double in
value in fi ve years and double again
by 12 years.
Then there was a 35-year-old tech
worker in Long Beach, Calif., who
bought a house in Round Rock for
$300,000 last October. By January
2021, it was worth roughly $400,000;
in February, he bought two more.
His winning bids were two of doz-
ens that his real estate agent, a for-
mer equities trader who now works
primarily with individual investors,
made sight unseen, all of them for at
least $40,000 over the asking price.
‘‘I’m part of the problem,’’ the buyer
acknowledged to me, though he
was not your stereotypical specu-
lator: Despite earning six fi gures,
he drives a 2005 Honda Civic and,
when I spoke to him, was renting a
room for $900 a month, preferring
to save and invest. (Scarred by grad-
uating into the Great Recession, he
aligns with the Financial Indepen-
dence, Retire Early movement pop-
ular on Reddit.) He marveled at how
FaceTime, DocuSign and electronic
transfers made everything seamless,
but because real estate money can
now move so easily, it meant what
he had liked about real estate invest-
ing in the fi rst place — its stability
and relative slowness — no longer
held true. ‘‘We’re gamifying real
estate investment to the point that
it’s almost like throwing money at
the stock market,’’ he told me.
Some Austin real estate agents
have positioned themselves to cap-
italize on all this out-of-town money.
On a steamy 95-degree day in late
June, Matt Holm lifted the winged
door of his Tesla Model X so that I
could hop in the back seat behind
his client, Jon, a man who worked in
commercial real estate fi nancing in
Santa Monica. (Jon asked that I with-
hold his last name because he hasn’t
shared his relocation plans with his
friends and family.) During the pan-
demic, Jon, originally from Madi-
son, Wis., began to rethink what

was keeping him in California. ‘‘I’m

getting a little anxiety about making

a longer-term commitment to L.A.,

just given the political climate, the

tax climate, the homelessness prob-

lem,’’ he told me.

Jon had traveled to Austin three

times in as many months and was

getting a handle on the ‘‘resi’’ mar-

ket. He was looking for a home

where he could declare residency

to take advantage of Texas’ lack of

income tax — but he also wanted to

live elsewhere half the year, and so

he was looking for a place he could

easily rent out and make money on.

And he wanted guaranteed appre-

ciation. ‘‘I mean everything’s an

investment, right?’’ he told me. A

friend of his who had just relocated

to Austin introduced him to Holm,

whose dirty-blond hair was pulled

into a sleek ponytail. He founded

the Tesla Owners Club of Austin in

2013 and proudly referred to himself

as the ‘‘Tesla realtor’’ in town. When

Jon slipped in to look at 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’s nine million square feet

of offi ce being built,’’ Holm said,

as we drove through downtown,

cranes and glass skyscrapers glint-

ing above stalky yellow-limestone

and red-granite buildings. (The Aus-

tin Chamber of Commerce gave a

lower but still shocking fi gure, 6.2

million square feet.) ‘‘And it’s being

built, like, it’s not occupied. So those

jobs are coming. People are telling

me, like, Oh, you know, we peaked....

As far as the metrics, the Texodus is

not slowing down. We’re about to

get a tidal wave.’’

‘‘People haven’t even factored

in the Elon eff ect,’’ he continued, ‘‘I

can’t tell you the number of people

that are saying, Oh, Elon’s building a

factory. Like, no, Elon’s not building

a factory — this is headquarters for

everything Elon. He hasn’t offi cially

announced it, and I don’t know any-

thing behind the scenes, but I can

see very clearly the people that are

moving here, and they’re not factory

workers.’’ (Indeed, in October, Musk

made it offi cial.)

Holm and Jon spoke the same

language. They analyzed every

parcel for how to maximize prof-

its and shared tips for minimizing

taxes. Walking through a cavernous

tiled-and-carpeted two-story in Tra-

vis Heights, Holm suggested that

with its many bedrooms, it would

make an excellent Airbnb. Although

Austin and the state stipulated that

owners could rent only their home-

stead and only for a maximum of six

months a year, ‘‘that could be every

weekend,’’ Holm said.

‘‘The investor I know that’s kill-

ing it 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 B.S.ing him on the numbers.

And fi nally, he believed me, and now

he has 13 Airbnbs.’’

‘‘How does he do that?’’

‘‘Because he’s bought them all

in the ETJ’’ — the Extraterritorial

Jurisdiction, a broad swath of unin-

corporated land bordering Austin

that isn’t subject to the city’s short-

term rental restrictions. ‘‘Dripping

Springs is about 30 minutes west of

here, and it’s the wedding capital of

Texas,’’ Holm said. ‘‘You see these

people getting married with cowboy

boots on and a wedding dress, and

they’re on top of a hill and all that

[expletive]. That’s where they are.

But there’s like no hotels out there.

... Well, if you can get a big-ass house
out there where the entire wedding
party can stay together, jump in the
pool after the wedding... there’s
almost a completely unlimited mar-
ket.... He doesn’t take any Airbnb
bookings that don’t gross rent
$30,000 a month.’’
‘‘I like this place,’’ Jon said of the
house. At 3,000 square feet and $1.2
million, this home was over Jon’s
budget. The question was how much
was he willing to live in his invest-
ment. ‘‘I don’t need so much house

unless I was really going to take on

the project you describe,’’ he said.

‘‘But that puts me in a bit of a conun-

drum, because I am living here six

months a year. You don’t want it to

be a complete party house either.’’

Next up was a condo with clean

white walls, black fi xtures and gray

oak fl oors. At $1 million, it didn’t off er

the same opportunities for moneti-

zation: He couldn’t build, and there

were fewer rooms to rent.

‘‘Everybody is from San Francisco

today,’’ the seller’s agent said when

we got there. ‘‘What about you guys?’’

espite the competitive market,

despite having to work double the

hours and write triple the off ers,

Open House’s agents were moving

cash-strapped millennials and some

Gen Z’ers into houses in record

numbers: 130 so far this year, 88 per-

cent of them fi rst-time home buyers,

at an average price ($369,000) far

below the Austin metro median of

$450,000. Because they were encour-

aging clients to think of property

fi rst and foremost as an investment,

their young charges were going after

what they could, buying new homes

in neighborhoods with homeown-

ers’ associations, older condos with

perhaps-less-than-ideal natural light

and suburban fixer-uppers that

reeked of cigarette smoke. Anything

to break in and start building equity.

At those price points, Open

House clients were inevitably snap-

ping up stock in once-aff ordable

neighborhoods. For the last decade,

East Austin, the historically Black

and Latino neighborhood atop the

city’s less-desirable clay soil, has

15

bids

18

bids

Listing price

$549,900

Listing price

$475,000

Sold

$735,000

Sold

$475,000

Offer

$600,000

Offer

$425,000

(^12) Thompson Street, Govalle (^13) Basswood Lane, Windsor Park

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