Tag Archives: Housing

Why Austin is #1 in Attracting Tech Workers

Austin, already a significant tech center, is the biggest beneficiary of tech workers being able to live anywhere and work remotely:

Austin is the top beneficiary of tech-related migration in the past 12 months, according to data from Microsoft Corp.’s LinkedIn profiles. Nashville and Charlotte also saw noteworthy migration rates.

Why is Austin #1? Tech workers are finally able to live where they want, and it turns out they have similar preferences to other Americans. The southwest has seen a huge influx of people in recent years, regardless of their occupation. Sun, warmth and cheap housing are powerful draws.

The typical house in San Francisco is nearly 3 times the price of the average Austin house. If you moved to SF for a job and the job no longer requires that you be there, you may leave and pocket the difference.

But there are lots of cheap sunbelt cities. Austin wins due in large part to the presence of a major university. This is something all major tech centers have, whether it’s San Francisco, Boston, New York, or Beijing. Companies often grow out of these universities, and college towns tend to have amenities that attract educated workers. Miami lacks a first rate university, hampering its prospects of competing with the likes of Austin.

Even before COVID, I noticed a strong trend to remote work in the tech sector. I worked in medical software for nearly 15 years. At the beginning, working from home was never allowed. By the end, I was remote 75% of the time.

The tech sector has reconfigured itself during COVID to operate remotely and is unlikely to go back. As an investor in startups today, I’ve seen venture capital firms start to hire anyone regardless of where they live. Will they fire these employees or force them to move once COVID is over? Not likely. Also, investors are finding they can meet with a lot more companies over Zoom than if they had to travel between offices. These efficiency improvements aren’t going away.

What venture firms do affects the whole tech sector. Many often required startups they invested in to move to SF. But that’s a thing of the past.

I’ve actually never been to Austin, but I hope to soon! I took a class at UT-Austin online this spring, and it was superb. Austin has clearly invested in education, and now it’s reaping the rewards.

Dig into these posts for more on tech and startups:

Photo: “Austin Texas” by adactio is licensed under CC BY 2.0

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Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account. I will also get a fee waiver for 90-365 days, depending on what type of account you open.

iHerb

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Misfits Market

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What If Homelessness Is Caused by Brain Injuries?

A couple of months ago, a man approached me on the street near my home. He asked for a bit of money, and although I usually never do, for some reason I gave it to him. I later saw him on a regular basis near the neighborhood grocery. I found out his name was John* and he used to work in construction. Several times a week, I’d run into him and stop and chat for a few minutes.

One day, I noticed he had large purple bruises on his forehead. He told me he had tripped over his shoelaces and gone down hard. Especially if someone is exhausted and cold, it’s easy to see how this could happen. He had been to the hospital, but they dismissed him quickly, perhaps because he was homeless.

He had lived in our town for 48 of his 53 years, and only become homeless recently after losing his job, like so many others. It troubled me to think that after a lifetime of contribution, our town had cast him aside so readily.

I was reminded of John yesterday when I heard that over half of homeless people may have brain injuries. Skeptical, I decided to do some digging. I found a metanalysis in The Lancet that confirmed this astounding figure:

The lifetime prevalence of any severity of TBI [traumatic brain injury] in homeless and marginally housed individuals (18 studies, n=9702 individuals) was 53.1%

This is much greater than the general population:

The lifetime prevalence of TBI in homeless and marginally housed individuals is between 2.5-times and 4.0-times higher than estimates in the general population. Moreover, the lifetime prevalence of mo­derate or severe TBI in this population is nearly ten-times higher than estimates in the general population.

It’s difficult to say whether the brain injuries are a cause or effect of homelessness. But, homeless people tended to have their first TBI at a young age. To me, this argues that brain injuries are a cause of homelessness:

Age at first TBI ranged from 15 years to 19.9 years, and we calculated a weighted mean age of first TBI of 15.8 years.

Perhaps the relationship works both ways:

TBI could increase the risk for homelessness, and homelessness could increase the risk for incident TBI.

It’s common for us to blame the homeless for their condition. After all, many are addicted to alcohol and drugs, aren’t they? But that too may be related to head trauma:

several characteristics of homeless and marginally housed populations (eg, residential instability or substance use) were associated with sustaining TBI

Another study from Canada found similar figures, and noted that the first TBI usually happened before they became homeless:

The lifetime prevalence among homeless participants was 53% for any traumatic brain injury and 12% for moderate or severe traumatic brain injury. For 70% of respondents, their first traumatic brain injury occurred before the onset of homelessness.

A British study found that homelessness was not a significant predictive factor for head injuries. However, it didn’t address the question of whether the homeless had a TBI before becoming homeless.

Imagine two people, one with an stable and well-off family and one with a chaotic and impoverished family (or no family at all). They both hit their heads. One gets support and good medical care, but the other may wind up homeless.

I sometimes wonder if that’s what happened to John. Did he get hurt, wind up homeless, and then find himself in a position to get hurt again?

I haven’t seen him lately, despite looking for him over and over. I hope he found a nice place to stay this winter, and I hope to see him again.

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*Not his real name

Photo: “Thomas (Tomaso) is Homeless” by Franco Folini is licensed under CC BY-SA 2.0

What Does the Pandemic Mean for Real Estate Investments?

A health and economic crisis is scaring nearly everyone right now, including investors. Stocks recovered in record time, but what about investments in real estate? Are they doomed, or is the bad news perhaps a bit overblown?

I invest in real estate through Fundrise, which allows me to spread my money across many projects nationwide. I prefer this to the concentration risk I would face in, for example, owning an apartment building in New York City, where a recent rent law change has substantially reduced the value of buildings.

But regardless of how diversified you are, the pandemic is impacting all aspects of life…and business. So I set out today to gain more understanding of how these changes would affect my real estate investments.

The national picture for apartments, which is most of what Fundrise owns, is surprisingly good. Vacancy rates in major markets including Dallas, Los Angeles and Washington DC, all areas where Fundrise has many buildings, are not all that elevated. This squares with my returns in Fundrise, which were over 7% in 2020 despite just about the worst market conditions imaginable.

Indeed, despite the strong and sustained lockdown measures in LA, its vacancy rate is comparable to that of Dallas, an area that locked down a lot less. Dallas, LA and DC all have a vacancy rate around 5%. Only LA is materially above its Q1 2019 vacancy rate, and keep in mind that LA has had a serious housing crisis for many years.

Of these three markets, LA definitely concerns me the most, with higher unemployment. But prices have held up so far.

So, what’s the upshot? National unemployment is up but still not extremely high, and the higher end apartments Fundrise tends to own are less likely to be occupied by those in leisure/hospitality, who may struggle to pay their rent right now. Add that to the fact that more vaccines are being deployed daily, bringing the beginning of the end of this health crisis.

So, I see the outlook for residential real estate investments as fairly bright, all things considered. To sell now in the face of slight weakness and a coming end to the pandemic simply wouldn’t make sense.

I intend to sit tight.

Note: If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account. I will also get a fee waiver for 90-365 days, depending on what type of account you open.

Photo: “Boarded up & masked – 10th Avenue, New York City” by Andreas Komodromos is licensed under CC BY-NC 2.0

Is Zoning Keeping Poor People Poor?

I recently subscribed to a newsletter from the journalist Matthew Yglesias that has turned out be outstanding. A message I received this morning really struck me. Yglesias argues that the best thing we can do for the poor, given that housing is their biggest expense, is to build housing like crazy:

This is diametrically opposed to the narrative we so often hear, that new development replaces the urban poor with, well, people like me. Yglesias’ argument makes sense in terms of basic supply and demand. New York is creating 3.9 jobs for each new housing unit. In San Francisco and Silicon Valley, the numbers are far worse, at over 6 jobs per new housing unit! (And sure enough, SF/Silicon Valley is more expensive than NY.) Unless the average household size is about 4 in the case of NYC or 6 in SF/Silicon Valley, this simply won’t work. There will be more workers who need apartments than there are apartments.

What happens then? You guessed it: your rent goes up. However, I was greatly encouraged by this tidbit:

Now, you’re on my territory! I’ve lived in Hudson County, NJ for about 6.5 years and love it here. And I did notice that we seem to build a lot more than New York does. But you know what they say: the plural of anecdote is not data.

The data is in! And it’s striking, especially since Brooklyn’s population is around 2.6 million and ours is under 700,000! Dividing Brooklyn’s roughly 2,559,903 residents by 9696 new permitted units gives us 264 residents per new apartment allowed to be built. In Hudson County, that ratio is approximately 672,391 residents divided by 8,238 units, or 82 residents/new unit.

We are building housing more than three times as fast as Brooklyn, our nearest competition!

So, is all of Hudson County a noisy construction site surrounded by snarled traffic? Hardly! There are countless parks, a beautiful waterfront walkway, and lively, pedestrian-friendly streets. It’s actually not so different from Brooklyn, except it’s cheaper and arguably safer, especially these days.

Yglesias’ argument also makes sense given an inside view into NYC development that I happen to have: my friend Tim* is a commercial real estate broker in New York City. He often works with owners of lower productivity industrial real estate in poorer parts of the city that were recently upzoned to allow apartments. A typical client might be the owner of a small factory that is not very profitable, who can do better selling his land to a developer who will build apartments. The factory can move somewhere cheaper nearby (hello, New Jersey!) and people can have places to live.

My one bone to pick with Yglesias’ otherwise excellent article is:

I think a lot of sensible people have different opinions on that one!

Check out Yglesias’s website here. Tons of great reporting of the sort we don’t see enough of!

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*Not his real name

Photo: “MichaelPremo_MsWard-4364” by michaelpremo is licensed under CC BY-ND 2.0