Then there was a 35-year-old technician in Long Beach, California, who bought a $300,000 home in Round Rock last October. As of January 2021, it was worth approximately $400,000; in February he bought two more. His winning bids were two of dozens hidden by his real estate agent, a former stockbroker who now works primarily with individual investors, all for at least $40,000 over the asking price. “I’m part of the problem,” the buyer conceded, though he wasn’t your typical speculator: Despite making six figures, he drives a 2005 Honda Civic and, when I spoke to him, was renting a room for $900 a month, dear save and invest. (Scarred by his graduation during the Great Recession, he joins the Financial Independence, Retire Early movement popular on Reddit.) He marveled at how FaceTime, DocuSign, and electronic funds transfers made everything seamless, but because real estate money is now so easy to move , it meant that what he had loved most about real estate investing—its stability and relative slowness—was no longer true. “We play real estate investing 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 take advantage of all that out-of-town money. On a hot, 95-degree day in late June, Matt Holm raised the gullwing doors of his Tesla Model X so I could hop in the back seat behind his client Jon, a man who worked in commercial real estate finance in Santa Monica. (Jon has asked that I withhold his last name because he hasn’t shared his relocation plans with friends and family.) During the pandemic, Jon, originally from Madison, Wisconsin, began reconsidering what kept him in California . “I get a little scared of making a long-term commitment in LA just because of the political climate, the tax climate, and the homelessness problem,” he told me.
Jon had made three trips to Austin in as many months and got to grips with the “Resi” market. He was looking for a house where he could declare his residency in order to take advantage of the lack of Texas income tax – but he also wanted to live somewhere else for half the year, so he was looking for an apartment that he could easily rent out and make money from could . And he wanted guaranteed appreciation. “I mean, everything is an investment, right?” he told me. A friend of his who had just moved to Austin introduced him to Holm, whose dirty-blond hair was pulled back in a sleek ponytail. He founded the Tesla Owners Club of Austin in 2013 and proudly referred to himself as the city’s “Tesla broker”. When Jon sneaked in to look at a short-term rental, Matt told me that Jon would happily spend $500,000-$700,000, “but he’ll spend $1.3-1.5 when he’s done.”
“There’s nine million square feet of office space being built,” Holm said as we drove through downtown, cranes and glass skyscrapers glittering above stalked buildings of yellow limestone and red granite. (The Austin Chamber of Commerce gave a lower but still shocking number, 6.2 million square feet.) “And that’s it will be built, like, it’s not busy. So these jobs are coming. People tell me how Oh, you know we’ve reached the climax. … As far as metrics go, the Texodus doesn’t slow down. We are on the verge of a tidal wave.”
“People haven’t even considered the Elon Effect,” he continued, “I can’t tell you how many people are saying: Oh, Elon is building a factory. No, Elon doesn’t build a factory – this is the headquarters for everything Elon does. He hasn’t officially announced it, and I don’t know anything behind the scenes, but I see very clearly the people who are moving here, and they’re not factory workers.” (In fact, Musk made it official in October.)
Holm and Jon spoke the same language. They analyzed each package to maximize profits and offered tips on how to minimize taxes. Walking through a cavernous, tiled-and-carpeted two-story building in Travis Heights, Holm suggested that with its many bedrooms, it would make an excellent Airbnb. Although Austin and the state dictated that owners could only rent their homestead and only for a maximum of six months a year, “that could be every weekend,” Holm said.
“The investor that I know is killing him right now is a systems guy,” he continued. “And I’ve been telling him for four years that he needs to get into the Airbnb business and he thought I was kidding him about the numbers. And finally he believed me and now he has 13 Airbnbs.”