Growth Machine

Growth Machine > All Episodes

July 27, 2023

Welcome to Silicon Gulch

By: Audrey McGlinchy

(Episode 5) Not that long ago, Austin’s economy was sleepy, to put it mildly. People came here for UT, to work for the state or for the military.

A little more than 50 years ago, a bedsheet changed everything — including the housing market.

The full transcript of this episode of Growth Machine is available on the KUT & KUTX Studio website. The transcript is also available as subtitles or captions on some podcast apps.

Audrey McGlinchy This story starts with a bedsheet. It was probably white. I don’t know. Aren’t most? Maybe queen or king sized. It’s unclear.

Matt Mathias Yeah, it was probably mine. [laughter] No, I had to sleep on a twin bed, so it was probably bigger.

Audrey McGlinchy This is Matt Mathias. You might recognize that last name. His dad was Vic Mathias. As in Vic Mathias Shores, which used to be called Auditorium Shores. Matt’s dad was the head of the Austin Chamber of Commerce starting in the late 1950s.

Matt Mathias He was a well-liked guy and an innovator in the city.

Audrey McGlinchy Vic ended up running the chamber for nearly 30 years, and back in the early 1970s, he was trying to make Austin a destination, a place where people didn’t just come to go to college and then leave for a job in another city, but a place where they stayed and started families.

Matt Mathias My dad always said our most valuable asset is our kids, and we’re educating them on a great public school system here. They’re going to the University of Texas or one of the other colleges in town, and then they get out and they can sell shoes at JCPenney’s. They can go to work for the state or the university, or they can join the military and maybe end up at Bergstrom, because — So it was really a government town.

Audrey McGlinchy As the head of the chamber, Vic started recruiting companies to move here, companies that could employ people getting out of U.T. or nearby schools. And one of these first companies was Texas Instruments. Now, I’m not entirely sure what they made back in the seventies, but I’m definitely sure I owned one of those scientific calculators.

Texas Instruments Ad From the Learning Center of Texas Instruments, innovators in the personal electronics.

Audrey McGlinchy To get Texas Instruments to move to Austin, they needed a place to put their office. Vic was eyeing a piece of land in northeast Austin, but …

Matt Mathias Word leaked out and a reporter reported that Texas Instruments was looking at buying a tract on I-35 North. After that article, the seller, who was a farmer, doubled his price. And Texas Instruments said we’re not going to do that.

Audrey McGlinchy So Vic went looking for another spot.

Matt Mathias So my dad got on the phone, started making calls about other sites, and he said, “I’ve got another site for you. It’s on 183.” And they said, “You know, we don’t have time to really come down there. Look at it. How can we how can we see it?”

Audrey McGlinchy Vic sent the maps of this new place he had in mind, just north of the Arboretum. But the Texas Instruments executives weren’t going to buy a piece of land sight unseen.

Matt Mathias They said, “Well, we’re going to fly down and look, but we don’t have time to land before our board meeting.”

Audrey McGlinchy So Vic and another guy at the chamber grabbed a bedsheet.

Matt Mathias And they went out on one corner of the property and stood there and waved the sheet. And he said the jet got low and came over and flew by them. And then they got in the car and ran to the next corner and they waved the sheet, and the jet came back by in about 5 minutes and did a circle, and they did this to show them the four corners of the property by waving a bed sheet.

Audrey McGlinchy Two guys running around with a bedsheet. A true act of desperation to close a deal, to get a company to move to Austin.

Matt Mathias And he said about 3 hours later, he gets a call from Texas Instruments, and Dallas said, “We’ll take it.” [laughter]

Audrey McGlinchy If you wave a bedsheet, they will come.

Audrey McGlinchy I’m Audrey McGlinchy. This is Growth Machine: How Austin Engineered Its Housing Market. Episode five. Welcome to Silicon Gulch.

Audrey McGlinchy I think it’s hard for a lot of people who got to Austin in the last 20 years or so to really understand how much Austin has changed, how different this place was just a few decades earlier. Former Austin Mayor Lee Cook arrived in Austin as an officer in the Air Force. His first assignment coming back from the Vietnam War.

Lee Cook When I first went to work for the Air Force, my base salary was $399 a month and I thought I was rich.

Audrey McGlinchy Cook was thinking of his future. And initially, he saw limited prospects in Austin.

Lee Cook Most of the people that lived and worked in Austin and Austin Metro in 1970 were government and education and service.

Audrey McGlinchy But because of Vic Mathias’ bed sheet shenanigans, Texas Instruments had opened a branch in Austin, and Cook took a job there and made a life. A decade later, Cook would succeed Vic Mathias as head of the Chamber of Commerce. And by 1988, he was mayor of the city.

Lee Cook And I had the honor to serve the citizens of Austin from 1988 to 1991.

Audrey McGlinchy Cook’s ability to leave the Air Force and find a job here, to start a career, that’s just one example of what Vic was trying to build. He wasn’t really thinking about fancy brunch spots, upscale hotels, million dollar houses. Those came later. Vic was just trying to keep people here and give people a reason to come. He helped push for one of Austin’s first big festivals, Aqua Fest. He helped clean up Town Lake. Now, Lady Bird Lake, maybe more importantly, he helped drive a dramatic change in Austin’s business landscape. And to be clear, it was no accident.

Audrey McGlinchy For this episode, I’m going to be joined by KUT’s Jimmy Moss. He’s also a native Austin. Hey, Jimmy.

Jimmy Moss Hi, Audrey.

Audrey McGlinchy So you grew up in Austin in the 1980s. And tell me, what was it like?

Jimmy Moss It was a simpler time. That’s a dumb thing to say, but it really was. It was a simpler place. Like, you either came here because you were going to go to school. You came here because your parents were stationed at Bergstrom Air Force Base. That is why I call Austin home. Or you were going to work for the state government in some capacity, either passing legislation at the Capitol or doing some of the, working in the bureaucracy in some way or another. But that was it. Like, those were the main three reasons to come to town. You might have also been lured by, if you were a musician in your early years, this was your stopover on your way to Nashville or something like that. But there wasn’t a lot going on, and that had been the case for several years prior, even for a few generations before me.

Audrey McGlinchy Starting around the fifties and sixties, some people in Austin get together and they’re trying to figure out how do we make this a place where people who want to can stay? How do we create jobs for people and careers?

Jimmy Moss And it was early visionaries, guys like Vic Mathias, they began to wonder, “What should Austin be? What should be the staple of Austin’s economy?” And they kind of centered around technology fairly early in this process.

Andrew Busch They started promoting it as industry without smokestacks in the 1950s.

Audrey McGlinchy Andrew Busch is a historian who studies cities and he actually wrote a whole book about Austin.

Andrew Busch Bring in an industry but make it clean. Use the quality of life and the natural beauty of Austin to sort of sell it to these knowledge workers.

Audrey McGlinchy And these knowledge workers start coming, slowly, in the 1950s. That’s when Trade Core, an Electronics company opens here in Austin.

Jimmy Moss That’s an offshoot of a research project at the University of Texas, which opened in East Austin.

Audrey McGlinchy As far as I can tell, they worked on, quote, electronics. Not really sure what that meant, but they had big contracts with the U.S. military.

Jimmy Moss Electronics was a big umbrella that a lot of things fit under back in the fifties and sixties.

Audrey McGlinchy Electronics … yeah, military planes, it’s all the same. Then in 1967, Austin lands a big one.

IBM Ad Transistors …

Audrey McGlinchy IBM opens a branch in what is now North Austin.

IBM Ad … the result of intensive search, and at IBM research has continued.

Audrey McGlinchy And Andrew says that’s when things start taking off.

Audrey McGlinchy Sort of an academic truism when it comes to high tech is that companies pick other companies, right? That there’s this sort of locational advantage to being around other companies and other knowledge workers.

Jimmy Moss By the mid 1970s, Motorola and then Advanced Micro Devices or AMD, opened offices in the city.

Audrey McGlinchy These companies employed thousands of people, and these people were moving here for those jobs. Between 1960 and 1980, Austin’s population more than doubled to almost 350,000 people.

Jimmy Moss Austin’s still relatively small then. Toledo, Ohio, is bigger than Austin at the time.

Audrey McGlinchy And a lot of these companies are putting their offices along 183, the highway that runs from southeast Austin to the city’s northwest. At some point, this stretch of roadway gets a new name, at least in old newspaper articles. You know what they called it? Silicon Gulch.

Jimmy Moss Welcome to Silicon Gulch.

Audrey McGlinchy Around this time, America’s economic domination was being threatened, threatened by Japan, in a fight over computers.

Jimmy Moss Supercomputers.

News Reporter 1 The Japanese want to get there first and fast so that they can gain a good chunk of the market before IBM wakes up.

Audrey McGlinchy Japan’s trying to build a fifth generation computer. I have no idea what that is. But like Jimmy said, it’s a supercomputer.

Jimmy Moss And the U.S. decides it’s going to try to beat Japan. It’s going to build its own supercomputer first.

Audrey McGlinchy So all these tech companies come together to form a coalition. They call it a consortium, and it’s going to be called the Microelectronics Computer and Technology Corporation.

Jimmy Moss Really rolls off the tongue.

Audrey McGlinchy Really does. M.C.C. for short.

Jimmy Moss And this guy was going to lead it.

Bobby R. Inman Admiral Bobby R. Inman, U.S. Navy, retired. So let’s just talk for a little while.

Jimmy Moss Inman wasn’t really a computer guy, he was a defense guy. He was the deputy director of the National Security Agency in the late 1970s and then the CIA in the early eighties.

Audrey McGlinchy Anyway, Inman is going to head up this big electronics research center, and he needs a place to put it.

Bobby R. Inman How are you going to do that? Let’s do a public site selection.

Audrey McGlinchy Yeah. So they were going to go to all these cities and have these cities, you know, basically pitch themselves to him. So Chicago, tell us why we should move here. Pittsburgh, what you got going on?

Jimmy Moss Philadelphia. Baltimore. Tucson? How ’bout Phoenix?

Audrey McGlinchy San Antonio? Dallas? Maybe Austin.

Jimmy Moss And all these place basically have to make a presentation. Here’s why you should pick us. Pick us.

Bobby R. Inman What were the criteria that they had to meet? Cost of living. Quality of life. Business climate. Tax climate.

Audrey McGlinchy Eventually, they announced five finalists.

Bobby R. Inman San Diego, Phoenix, Austin, Atlanta and the Research Triangle. One of the CEOs had been stationed in Phoenix, hated it, and they persuaded his colleagues to drop Phoenix. So it turned out to be just the four.

Jimmy Moss Okay, so four finalists. Sorry, Phoenix.

Audrey McGlinchy So Inman and the other guys go again and they visit these cities and they’re being wined and dined. And these cities are saying why MCC should move there.

Bobby R. Inman Flew into Austin. We began with breakfast in the atrium of the LBJ Library hosted by Mrs. Johnson.

Jimmy Moss That’s Lady Bird Johnson.

Bobby R. Inman And with the governor, his chief of staff by Powers, John Watson, the local real estate guy, heads of major banks, academic systems.

Audrey McGlinchy What did they serve for breakfast?

Bobby R. Inman Quail.

Audrey McGlinchy So while eating their quail, they got a presentation about Austin.

Bobby R. Inman They did a lot of, little bit of song and dance about quality of life and all the things to do. Barton Springs played a big role.

Jimmy Moss There was some other stuff, too.

Bobby R. Inman Ross Perot quietly said, “If you select Austin I’ll loan you a Lear 35 for two years.”

Audrey McGlinchy To be clear, that’s Dallas billionaire Ross Perot, who offered to let them use his plane.

Jimmy Moss When the selection committee eventually voted …

Bobby R. Inman It was ultimately unanimous for Austin.

News Reporter 2 The announcement that MCC will locate here is not only a victory for the city of Austin, but for the state as well, as Texas beat out three other states to be host to the new company.

Bobby R. Inman  Oh, the university was the ultimate key.

Audrey McGlinchy So MCC is coming to Austin.

News Reporter 3 One of the new joint ventures is Microelectronics and Computer Technology Corporation. MCC for short. Based in Austin, Texas.

Laura Huffman And so that’s the turn of the wheel.

News Reporter 3 Laura Huffman was head of the Austin Chamber of Commerce until last year.

Laura Huffman Landing that in Austin was the first big turn of a wheel that allowed us to become a flourishing, advanced manufacturing technology idea economy.

Audrey McGlinchy As Andrew Bush said earlier, companies beget companies.

News Reporter 3 They all want to be part of the party. When MCC moved to Austin, it brought all the companies that were part of the consortium. 3M, Microsoft, Boeing, G.E. But those companies brought in their own workers to do their own projects based on the research they did at MCC.

Audrey McGlinchy It was also around this time that a freshman at UT started a small business making computers in his dorm room. That guy was Michael Dell. But we’ll put a pin in that for now.

News Reporter 3 Meanwhile, the tech companies keep on coming.

Audrey McGlinchy In 1988, Semtech, another high tech research center, opened in southeast Austin.

News Reporter 4 Austin’s economy has just received a giant boost. Sematech, an electronics research consortium, has picked our city as the site for their corporation.

Audrey McGlinchy So just to be clear, what are all these companies that are moving to Austin making?

Jimmy Moss Chips, baby!

Audrey McGlinchy We’re a chip town!

News Reporter 3 Yeah, we hit the lotto with this chip maker. It’s the thing that basically makes computers go.

Chip Ad The secret of turning sand to silicon crystal, then to those incredible electronic miniatures called chips is available to anyone today.

Chip Ad All you need are the best engineering brains.

Jimmy Moss That’s right. With just a few months of training at Austin Community College or technical school programs, you, too, can be part of the exciting and ever growing electronics industry.

Audrey McGlinchy It seemed like “fab” plants were opening everywhere. And if you’re not up with the lingo that’s short for fabrication plants. Just some of the industry jargon that Austinites were regularly seeing in want ads.

Jimmy Moss Like microchips.

Audrey McGlinchy Well, microprocessors.

Jimmy Moss Clean rooms, those dust-less places where chips are made.

Chip Ad The atmosphere in there is more sterile than an operating chamber.

Jimmy Moss And of course, the wafer.

Audrey McGlinchy What is that exactly?

Jimmy Moss I still don’t know, but I know it’s important.

Chip Ad A single wafer finally yields 100 chips.

Audrey McGlinchy And all these years later, chips are still a big part of Austin’s tech industry.

Jimmy Moss Right. Nearly 40% of the equipment used to make semiconductors in the world is manufactured in Austin at Applied Materials and its suppliers. Samsung has expanded their “fab” plant footprint in the Austin area in the suburb of Taylor.

Audrey McGlinchy And while AMD and Intel no longer make chips here, semiconductors are still a big deal.

Jimmy Moss Yeah, more than 60,000 Texans work in advanced chip manufacturing.

Audrey McGlinchy Most of those in the Austin area.

Jimmy Moss There’s a multiplier effect that you can estimate somewhere between three and five times that number of workers. Their business is directly supported by chip designers and manufacturers. And there’s one other little company during the nineties that is making stuff here, too.

Dell Ad You’re not, by any chance computer shopping, are you?

Dell Ad Mhm, if I can get some help.

Dell Ad Well, right now, you can get a complete Dell system with an Intel Pentium 3 processor, plus all of this, for just 799.

Audrey McGlinchy Oh, yeah. Dell.

Dell Ad Dude, you’re getting a Dell.

Dell Ad Dude, you’re getting a Dell.

Dell Ad Dude, we’re getting another Dell.

Dell Ad Sweet.

Dell Ad When you want your perfect PC, it’s easy as Dell. Dell PCs …

Audrey McGlinchy Dell starts making one of the first affordable personal computers, and selling them over the phone and eventually on the Internet. This is when the Internet is starting to become a thing, and the tech economy is changing around it.

Laura Huffman A lot of people in the country recognize that this was a really big opportunity to move from whatever your economy was based on to more of a technology idea economy. And Texas and Austin were all over that.

Audrey McGlinchy So this is where we went from making things, like making chips, to “ideas-ing” things.

Jimmy Moss “Ideas-ing.”

Audrey McGlinchy Right on. In the late nineties, Austin became part of the economy. Like we mentioned in the last episode, this was more about making websites, you know,

Jimmy Moss This is also around the time this guy comes to power.

Bobby R. Inman Where’s the bumper sticker. [background laughter] I usually have a bumper sticker around where I can do that. No, my name’s Kirk Watson. I’m the newly elected mayor of Austin, Texas.

Audrey McGlinchy Again, Mayor Kirk Watson. He was elected for the first time in 1997, and that’s when he started preaching a move back to downtown. But this time, a digital downtown.

Mayor Kirk Watson I ran saying we were going to get away from the old traditional folks downtown of banking and lawyers and real estate. We were trying to entice the new technology firms.

Audrey McGlinchy This was part of his smart growth strategy that we talked about in the last episode.

Jimmy Moss One of these companies was Computer Sciences Corporation, another really catchy name. They went by CSC.

Mayor Kirk Watson Computer Sciences Corp. announced that it was going to build a headquarters out over the aquifer, and we didn’t want them to build on the aquifer. Instead, what we wanted was we wanted them to build in downtown.

Audrey McGlinchy In previous episodes, we talked about the aquifer, about a big environmental fight to protect Barton springs from pollution by making it a lot harder to build in southwest Austin.

Jimmy Moss But CSC, this California tech company, wanted a campus. They wanted a bunch of land so they could build a tech campus like we think of today, a gym, park, restaurants, all that their employees could walk, too.

Audrey McGlinchy So Watson said, “Well, why don’t you come downtown?”

Mayor Kirk Watson And just across the street, you’ll have a beautiful lake, you’ll have a hike-and-bike trail. And just on the other side of that lake, you’re going to have a beautiful park. So your people will have that campus.

Jimmy Moss The company ended up building two offices downtown. Those tan buildings that flank city hall on Cesar Chavez.

Audrey McGlinchy That’s all actually city owned land.

Jimmy Moss And Watson’s plan to get CSC to move downtown paid off in more ways than one.

Mayor Kirk Watson What we did was, we said, “We’ll give you a 99 year lease. The city is going to continue to own the land. And by prepaying that lease, it provided the city money that was then pushed into the new city hall.

Audrey McGlinchy So this tech company from California basically built City Hall. Now, if that isn’t a metaphor for how politics works, I don’t know what is.

Jimmy Moss Several other software companies planned to follow CSC downtown, but chips were still Austin’s true love.

Audrey McGlinchy Intel ,the chip manufacturer at the time, decided it would set up shop downtown.

News Reporter 5 Another high tech tenant could be moving into our digital downtown. The city approved an incentive package to move Intel, the big chipmaker, downtown.

Jimmy Moss But this was the early 2000s and the economy wasn’t looking so hot.

News Reporter 6 The fragile technology stocks, even harder hit the Nasdaq index in free fall, down nearly 10%. It lost a quarter of its value in just one week.

Audrey McGlinchy The Intel news was short lived. In 2001, the company canceled plans to move downtown and stopped construction on their office. The building, which was supposed to reach ten stories tall, was abandoned at just a six story frame, and the steel skeleton in the middle of downtown Austin seemed like a warning. Would the tech economy Austin had so earnestly coveted survive the economic bust?

Jimmy Moss Big cliffhanger.

Audrey McGlinchy I mean, come on, y’all.

Audrey McGlinchy More after the break.

Audrey McGlinchy So ideas technology had come to Austin, and it was coming downtown. This was the age of smart growth. You might remember that from a previous episode. And what we were calling “digital downtown.”

News Reporter 7  … to our digital downtown, the city …

Jimmy Moss But as every boom, comes a bust. So a recession hit in the early 2000s and companies were backing out, literally abandoning their buildings midway through construction.

Audrey McGlinchy But as rocky as this economy was, and it got pretty bad, money had already started flowing into Austin.

Jimmy Moss In the form of venture capital. Basically, rich people investing in small businesses, startups.

Audrey McGlinchy David Gibson is part of I.C. Squared. It’s like this economic think tank at UT.

David Gibson The Austin Technology Incubator in 1989, and the Texas Capital Network in 1989, and the capital network was tapping into wealthy Texans who are used to real estate and oil and gas financing and say, “you all take a look at these technologies.”  And some of them were fairly successful.

Jimmy Moss Yeah. Remember Dell? Bobby Inman, the guy who brought MCC to Austin, was an early investor.

Bobby R. Inman And it fundamentally changed the Inman family’s financial status.

David Gibson Dell was cracking right along and doing great on the stock market and making a lot of Dellionaires.

David Gibson So the money’s here, but where are the ideas?

Bobby R. Inman You might have heard of a tiny music festival started in the eighties.

News Reporter 8 You can see all sorts of stuff at the South by Southwest multimedia Festival …

David Gibson By the mid-nineties, South By Southwest was no longer just a music festival. It was now kind of like the MCC for ideas.

Speaker 1 The whole gamut of high technology will be there.

News Reporter 10 So this is pretty cutting edge stuff.

Speaker 1 It’s the wobbly edge of the cutting edge. [background laughter]

Audrey McGlinchy I’m talking about South by Interactive, the tech part of this annual festival, where all these tech people fled the city to meet each other and share ideas.

Jimmy Moss And sometimes they even made big announcements.

Audrey McGlinchy For some reason, we can’t find any video evidence of this on the Internet. But Twitter blows up at South by Southwest in 2007. But I guess it’s called X now?

Jimmy Moss We’ll see if it catches on.

Audrey McGlinchy An existing tech base. A skilled workforce, things to do outside all year round, money, and south by as a kind of megaphone, It all combined to make Austin more than just an option. It was like a must have.

Matt Mathias Austin is is now a city that every major employer that’s going to have a relocation comes to see. Period.

Jimmy Moss This is Matt Mathias again.

Matt Mathias Everybody has to have Austin on the list.

Jimmy Moss Remember, companies beget companies.

Audrey McGlinchy Google started leasing office space in a building downtown in 2007. Facebook opened an office in 2010, Dropbox in 2013. Apple’s basically expanding its presence what feels like every couple of years. Indeed.

Jimmy Moss Atlassian.

Audrey McGlinchy Amazon.

Jimmy Moss Oracle.

Audrey McGlinchy Adobe.

Jimmy Moss NXP.

Audrey McGlinchy Microsoft.

Jimmy Moss Silicon Labs.

Audrey McGlinchy Salesforce.

Jimmy Moss Cisco.

Audrey McGlinchy PayPal.

Jimmy Moss And in some cases, like U.T. and the state did with the MCC, governments are offering incentives, taxpayer money to get these companies to move here or in some cases stay here.

Laura Huffman Think of economic development as sort of a toolbox and incentives is one of those tools.

Audrey McGlinchy This is Laura Huffman again.

Laura Huffman It is not needed every single time, certainly, but when it’s needed, it is typically because you are in a national competition and you got to play to win.

Audrey McGlinchy I think here is where we need to explain the name of this podcast: Growth machine. The term comes from a paper written by the sociologist in the 1970s.

Jimmy Moss He says the growth machine is a collection of people who push for a city or place to keep growing and growing, to keep attracting businesses and people and businesses that attract people.

Audrey McGlinchy The machine is usually made up of politicians, real estate and business professionals, even journalists. These people, this sociologist, argues, all benefit from this growth.

Andrew Busch So growth is good for car dealerships because people are moving here and they need to buy cars. Growth is good for developers. It’s good for landowners because real estate values increase.

Jimmy Moss This is Andrew Busch again.

Andrew Busch It’s good for cities because it increases tax revenue. So it’s sort of this all. this everybody kind of on board and everybodym and the false premise of it is, is that it’s good for everybody.

Andrew Busch But there comes a time when the growth machine starts powering itself, when people don’t need to rip a sheet off their bed, wave it around a piece of vacant land, some rich guy flies his plane overhead.

Jimmy Moss No need to sell this place. No need to watch your kids leave. The place sells itself.

Laura Huffman None of my brothers and sisters, we didn’t think we would be able to stay in Austin, because unless you wanted to work in government or teach or do something like that, you know, it wasn’t a big enough economy for a lot of different kind of career choices.

Jimmy Moss Laura Huffman grew up here.

Laura Huffman But now, there are more economic opportunities for people, but there’s also truly, truly significant affordability issues. So I think that one of the biggest challenges we have ahead of us is, you know, what are those things that we can do now to secure Austin’s future with a really strong eye towards affordability?

Audrey McGlinchy When we started this episode in the late ’60s, you could buy a house in Austin for less than $20,000. That’s incredible. That’s about 125,000 in today’s money. Now, the median sales price of a home in Austin is over half a million.

Jimmy Moss This price progression was not linear. We held steady for a very long time. The average price for a home was under 100,000 well into the nineties.

Audrey McGlinchy But even then, it was still affordable.

Socar Chatmon-Thomas Oh, my clients were, you know, people who worked for the city. People worked for the state.

Audrey McGlinchy Socar Chatmon-Thomas bought a home in South Austin with her husband in the mid-nineties, for less than $100,000.

Jimmy Moss She started working as a realtor in Austin in 1995. Back then, her clients were …

Socar Chatmon-Thomas People who worked for Motorola, Dell. Applied Materials, AMD. Schoolteachers.

Audrey McGlinchy Schoolteachers. That’s right. Teachers could afford houses in Austin.

Socar Chatmon-Thomas Oh, my God. Condos were almost being given away, like $50,000 for two bedroom condos. Most houses were less than $100,000. To say that out loud, it just doesn’t seem real. But I lived it. I sold it.

Jimmy Moss There was, of course, the Great Recession in 2008, but Austin fared pretty well.

Audrey McGlinchy And when would you say the pace or sort of the increase in price starting from when you started working in the mid-nineties to now? When did it just really take off?

Socar Chatmon-Thomas It took off in around 2013, 14.

Jimmy Moss Between 2013 and now, the median sales price of a home in Austin more than doubled.

Audrey McGlinchy That’s a big deal.

Jimmy Moss That didn’t happen the decade before or the decade before that.

Audrey McGlinchy And the reason is really pretty simple. Suddenly, lots more people wanted to move here and we didn’t really have enough houses for all of them. Simple supply and demand.

Jimmy Moss And a lot of people moving in were able to pay a fortune, or at least what seemed like a fortune to us, to get their spot in this town.

Socar Chatmon-Thomas You mean I can get this house in Avery Ranch for, like, 325? Okay, I’ll get two.

Audrey McGlinchy And the pandemic threw gasoline on all of this.

News Reporter 11 The median price of a home just hit a brand new record.

News Reporter 12 Now $425,000.

News Reporter 13 Now $624,000, that’s the median price.

Socar Chatmon-Thomas And yes, maybe we can blame Californians here, at least just a little bit.

Socar Chatmon-Thomas I had people, I’m representing the seller, and they’re bidding over $150,000 more than the house is listed for. And they work for a tech company. So it was working for a tech company as well as coming from California married together that they gave them the money, because when they looked at the real estate market in Austin, they were like, “Oh my God, this is good. You mean, all you have to pay is 850. All we have to pay is a million. That’s awesome.” And Im like, “Oh,” [laughter] “That’s awesome for California money. But Texas money is not the same.”

Audrey McGlinchy Suddenly, many people working in tech could work remotely, and they all moved to Austin. Okay, so not all of them, but roughly 28,000 remote workers moved to Austin during the pandemic. That’s according to a New York Times analysis of census data.

Jimmy Moss Cities like L.A., New York and Chicago all lost remote workers during this time. Austin had the largest influx of digital nomads of any big U.S. city.

Audrey McGlinchy Austin’s growth machine had done such a good job marketing this city, waving a bedsheet, serving quail, throwing money around.

Jimmy Moss Goodbye, Silicon Gulch.

Audrey McGlinchy Welcome to Silicon Hills.

Audrey McGlinchy We’re almost up to the present day now. But there was one more thing that happened that’s kind of a big deal. It was back in 2020.

Matt Mathias Yeah, it was a fun story. I mean, literally, I was snow skiing in Colorado and I got a call about 9:00. I was literally putting on my ski pants.

Jimmy Moss Once again, Matt Mathias, son of Vic Mathias.

Audrey McGlinchy This call was from a friend whose wife, Karen, works for a big company that was considering moving to Texas.

Matt Mathias And they’ve looked at four sites that the Governor’s economic development office presented to them. They don’t like any of them. They didn’t really enjoy Dallas, but they love Austin. But they’re going to get on the plane and go to Charlotte later today, unless you know of something.

Jimmy Moss You see, Matt works in commercial real estate now.

Matt Mathias And I said, “Well, tell me the requirements.” And so he got Karen to send me a screenshot on my phone.

Audrey McGlinchy It needed to be close to a major airport over a thousand acres.

Matt Mathias And I’m looking there and I’m calling back. And I said, “Tell him not get on that plane. I know exactly where their site is. Just hang on.”

Jimmy Moss So he called a friend that worked with a concrete mining company that had some land just outside of Austin.

Matt Mathias And so he sent me some images. I sent ’em to Karen and they went and drove around the property. I went skiing, and about 3:00 that afternoon I got a call from Karen said, “Elon says that’s it. Let’s get it under contract.”

Audrey McGlinchy No bed sheets required.

Matt Mathias No bed sheets on this one, no.

Jimmy Moss Cut to October 7th, 2021.

Speaker 1 I’m excited to announce that we are moving our headquarters to Austin, Texas.

Matt Mathias When Tesla came, there was this frenzy from all over the nation. Buyers came in trying to buy up land speculatively, and all the rates for all the product types increased, including housing. Housing was dramatically affected after the Tesla announcement.

Audrey McGlinchy Around the middle of 2022, Austin’s housing market peaked. In May of that year, the median price of a home hit $667,000. Obviously, this isn’t because of Tesla. Prices were already rising fast before Elon Musk got here.

Jimmy Moss But it’s the sum of all of this growth. All of these companies, all the hype …

Audrey McGlinchy combined with a system that for a long time has made it really hard to build new housing in Austin.

Jimmy Moss That adds up to a housing crisis.

Audrey McGlinchy Thanks so much, Jimmy.

Jimmy Moss It’s been a pleasure, Audrey.

Audrey McGlinchy About a week ago, I went to meet one of the tens of thousands of remote workers that moved to Austin during the pandemic.

Luis David Osta Lugo I am Luis David Osta Lugo. I immigrated to the US when I was ten years old, from Venezuela, and I went to the University of Texas at Dallas to study computer science. And then I moved in here with my partner who studied at UT after graduating.

Audrey McGlinchy Luis moved here in late 2020.

Luis David Osta Lugo And the only city that ever felt like home, I guess in a sappy way, after moving from Venezuela, was Austin. It was the place where I felt like I had the most community. The people were good, the culture was good. I felt like people cared about the place. And so this is the natural place where we wanted to stay.

Audrey McGlinchy Luis is a software engineer and no, he didn’t move here from California. He came from Dallas, but his company is based in New York, so he makes New York money. You mentioned to me over the phone, you make a pretty good income. Remind me what that income is.

Luis David Osta Lugo That is $215,000 a year.

Audrey McGlinchy That’s about two and a half times the median salary in Austin. And you’re, like, relatively fresh out of college.

Luis David Osta Lugo Yes.

Audrey McGlinchy Luis is doing well for himself, but he also sometimes sends money home to his parents in Houston.

Luis David Osta Lugo We were poor in Venezuela and we immigrated here. Immigration is expensive. They have no retirement. Like that means literally have no retirement funds. And also my parents both have very serious health issues, which means that I’m also their medical, just like, you know, they don’t have anything to fall back on.

Audrey McGlinchy Luis is in this interesting position. He came from little money and now, at 23 years old, he earns a good salary. I was curious how he felt about this.

Audrey McGlinchy Do you feel like any sort of guilt of like, “I’m one of the people moving in and increasing the demand for housing in Austin and potentially the prices in Austin?”

Luis David Osta Lugo I mean, in general, as someone, like, I do feel, in general, just a low level amount of guilt over having, quote unquote succeeded and achieved a very- because it’s sort of random to a certain extent, how your life turns out. Like there is nothing in, like, the reason, for instance, techworkers are able to make such a high salary is because, for various historical reasons, we have more leverage, power over our employers than most workers do. That’s nothing inherent so like. That’s just random. Like there’s nothing that makes me somehow more valuable than my, even just other friends who are like civil engineers. Like other engineers don’t have that kind of leverage or that kind of power.

Audrey McGlinchy As we’re talking, a train rattles by his apartment.

Audrey McGlinchy Oh, that’s the train.

Audrey McGlinchy Luis rents a two bedroom apartment with his girlfriend downtown. They pay a little over 3000 a month. This is in the C home district where the city’s old power plant was. Kirk Watson, both as mayor in the nineties and then as a lawyer 20 years later, actually worked on this development. You see, it’s all connected.

Audrey McGlinchy Talk to me about why you decided to live here.

Luis David Osta Lugo We got the train-side discount, which I appreciated. I have known about C home for a while now. Back when, back in my university days when I was broke, I, and this is the kind of thing that I think a lot of folks who come, who are like, or have that sort of ambitions to achieve the American dream. They’re always like, “Oh, one day I’ll live in the nice tower,” or whatever. And I think they C home district was one of the areas, it’s like, “Oh man, that’s one places where, like, the fancy people live.”

Audrey McGlinchy Luis and his girlfriend moved into this apartment after their rent in Travis Heights nearly doubled during the pandemic.

Luis David Osta Lugo And I was just like, “One day I’m going to save enough money, we’re going to do whatever it takes to go to live in C home,” because it’s the kind of place that reminds me a bit, not fully, but a bit of what it was like to live, when I lived in Venezuela, where it’s like, oh, there’s a local bakery to get fresh bread. The grocery store is about four minutes, you know. Me and my buddies, we can go play soccer in a nearby field, you know. It reminds me of what it was like to live in a very sort of, like, integrated community.

Audrey McGlinchy If you can afford it. Luis says most of his friends can’t. When they get together, they talk about their housing situations.

Luis David Osta Lugo Like I would say, 90% of folks my age are having an incredible amount of stress related to housing, Right? Like, for instance, I still, even making crazy amounts of money, I have stress dreams about a repeat of 2020 to 2022, because if housing doubles again, that’s checkmate for me. I’m not buying a home in Austin. That’s not happening ever. Unless Austin makes some pretty massive changes about the way it’s operating on many levels. Right? The only people are going to be able to afford housing are people who bought in the early 2000s or who come from generational wealth. And that’s going to it.

Audrey McGlinchy We’ll talk about some of those changes, maybe massive, maybe not, on the next episode of Growth Machine: How Austin engineered its housing market.

Audrey McGlinchy Growth machine is a production of KUT and KUTX studios in Austin. It’s produced by me, Jimmy Moss, Mose Buchele, Marisa Charpentier, Nathan Bernier, and Matt Largey. Production help from Heather Stewart. Technical help from Jake Perlman and Renee Chavez. Stephanie Federico is our digital editor. Special thanks to the Austin History Center and KVUE for archival sound in this episode. There’s more at I’m Audrey McGlinchey. Thanks for listening.

This transcript was transcribed by AI, and lightly edited by a human. Accuracy may vary. This text may be revised in the future.


August 18, 2023

Grow or Die

(Episode 7) Now that the machine has done its job, what now? We explore some of the existential questions that Austin’s housing market has wrought.


August 10, 2023

Pigs in a Parlor

(BONUS — Deleted scene!) We go back 100 years to tell the origin story of modern zoning.


August 4, 2023

There Go The Neighborhoods

(Episode 6) Austin last re-wrote its land development code in 1984. Sounds boring, right? Well, that rewrite made it harder to build denser forms of housing. We explore the history of zoning in Austin and the opposition to changing the rules today, which could make the biggest difference in fixing Austin’s affordability crisis.


July 27, 2023

Welcome to Silicon Gulch

(Episode 5) Not that long ago, Austin’s economy was sleepy, to put it mildly. People came here for UT, to work for the state or for the military. A little more than 50 years ago, a bedsheet changed everything — including the housing market.


July 20, 2023

Fertility Drugs for Cars

(BONUS) We talked in episode 2 about cars and roads — and how they affect where we live. We didn’t talk about one other way that cars affect housing: making places to put all the cars.


July 13, 2023

Smart Growth or Dumb Growth?

(Episode 4) When a new mayor came to power, he found what he thought would be a compromise — a way to bring new businesses and build housing for all the people coming to Austin without threatening the city’s ecological gems. It turned out to be more complicated than that.


July 6, 2023

Listen to This Podcast or We’ll Poison Barton Springs

(Episode 3) In the 1990s, Austin voters passed landmark protections for parts of southwest Austin that sit on top of the aquifer that feeds Barton Springs. That set off a chain of events that had a profound effect on how the city would grow in the coming decades.


June 29, 2023

Roads to Everywhere

(Episode 2) I-35 is more than a road. It’s been sculpting Austin’s housing scene for more than 60 years, encouraging endless sprawl and making gridlock a lifestyle. Take a drive with us through the highway’s history.