The Housing Crisis Solution Hiding in Austin

Summary

Austin ramped housing supply through faster permitting, looser zoning and smaller lot sizes, adding nearly 50,000 rental units and causing a 19% real rent drop. Real estate developer Tom Shapiro contrasts that with investment opportunities: he is bullish on San Francisco (buildings available at half replacement cost) and New York (tight supply driven by rent control hurdles keeps rents rising), while avoiding oversupplied Sunbelt cities like Austin, Nashville and Charlotte.

• Austin enacted supply-side reforms: reduced red tape, allowed three units by right on single-family lots, and cut minimum lot size from 5,750 to 1,800 sq ft.
• The city added nearly 50,000 rental units in 2023-2024, the largest increase among major U.S. cities.
• Inflation-adjusted rents in Austin fell 19% from 2021 to 2025, while builder profits compressed.
• Tom Shapiro calls Sunbelt multifamily markets way oversupplied and is avoiding them; Austin, Nashville and Charlotte face similar dynamics.
• He sees a strong recovery in San Francisco, where investors can buy buildings at half replacement cost with no new supply coming soon.
• New York’s median one-bedroom rent is $5,500 and rising; strict rent-control rules make new development nearly impossible, locking in a supply crunch.
• Mayor Kirk Watson notes Austin's approach was praised by both Vice President Vance and NYC Mayor Mamdani as a nonpartisan model.