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.
Yeah, it was probably mine.
[laughter] No, I had to sleep on a
twin bed, so it was probably bigger.
This is Matt Mathias.
You might recognize that last name.
His dad was Vic.
Matthias. As in Vic Matthias
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.
He was a well-liked guy and
an innovator in the city.
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.
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.
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.
From the Learning Center of Texas
Instruments, innovators in
the personal electronics.
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 ...
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.
So Vic went looking for another
spot.
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?"
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.
They said, "Well, we're going to fly
down and look, but we don't have
time to land before our board
meeting."
So Vic and another guy at the
chamber grabbed a bedsheet.
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.
Two guys running around with a
bedsheet. A true act of
desperation to close a deal,
to get a company to move to Austin.
And he said about 3 hours later,
he gets a call from Texas
Instruments, and Dallas said,
"We'll take it." [laughter]
If you wave a bedsheet, they will
come.
I'm Audrey McGlinchey.
This is Growth Machine: How Austin
Engineered Its Housing Market.
Episode five.
Welcome to Silicon Gulch.
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 Leigh Cook
arrived in Austin as an officer
in the Air Force.
His first assignment coming back
from the Vietnam War.
When I first went to work for the
Air Force, my base
salary was $399 a month
and I thought I was rich.
Cook was thinking of his future.
And initially, he saw limited
prospects in Austin.
Most of the people that lived and
worked in Austin and Austin
Metro in 1970
were government and education
and service.
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.
And I had the honor to
serve the citizens of Austin from
1988 to 1991.
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.
Vick 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.
For this episode, I'm going to be
joined by KUT's Jimmy Moss.
He's also a native Austin.
Hey, Jimmy.
Hi, Audrey.
So you grew up in Austin in the
1980s.
And tell me, what was it like?
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.
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?
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.
They started promoting it as
industry without smokestacks in
the 1950s.
Andrew Busch is a historian who
studies cities and he actually wrote
a whole book about Austin.
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.
And these knowledge workers start
coming, slowly, in the 1950s.
That's when Trade Core, an
Electronics company opens
here in Austin.
That's an offshoot of a research
project at the University of Texas,
which opened in East Austin.
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.
Electronics was a big umbrella
that a lot of things fit under
back in the fifties and sixties.
Electronics ... yeah, military
planes, it's all the same.
Then in 1967, Austin
lands a big one.
Transistors ...
IBM opens a branch in what is now
North Austin.
... the result of intensive search,
and at IBM research
has continued.
And Andrew says that's when things
start taking off.
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.
By the mid 1970s, Motorola and
then Advanced Micro Devices
or AMD, opened offices in the city.
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.
Austin's still relatively small
then. Toledo, Ohio, is
bigger than Austin at the time.
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.
Welcome to Silicon Gulch.
Around this time, America's economic
domination was being threatened,
threatened by Japan, in a fight
over computers.
Supercomputers.
The Japanese want to get there first
and fast so that they can
gain a good chunk of the market
before IBM wakes up.
Japan's trying to build a fifth
generation computer.
I have no idea what that is.
But like Jimmy said, it's a
supercomputer.
And the U.S. decides it's going to
try to beat Japan.
It's going to build its own
supercomputer first.
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.
Really rolls off the tongue.
Really does.
M.C.C.
for short.
And this guy was going to lead it.
Admiral Bobby R.
Inman, U.S.
Navy, retired.
So let's just talk for a little
while.
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.
Anyway, Inman is going to head up
this big electronics research
center, and
he needs a place to put it.
How are you going to do that?
Let's do a public site selection.
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?
Philadelphia.
Baltimore.
Tucson?
How 'bout Phoenix?
San Antonio?
Dallas? Maybe Austin.
And all these place basically have
to make a presentation.
Here's why you should pick us.
Pick us.
What were the criteria that
they had to meet?
Cost of living.
Quality of life.
Business climate.
Tax climate.
Eventually, they announced five
finalists.
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.
Okay, so four finalists.
Sorry, Phoenix.
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.
Flew into Austin.
We began
with breakfast
in the atrium of the LBJ Library
hosted by Mrs. Johnson.
That's Lady Bird Johnson.
And with the
governor, his chief of staff
by Powers, John Watson,
the local real estate guy,
heads of major banks,
academic systems.
What did they serve for breakfast?
Quail.
So while eating their quail,
they got a presentation about
Austin.
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.
There was some other stuff,
too.
Ross Perot quietly
said, "If you select
Austin I'll loan you
a Lear 35 for two
years."
To be clear, that's Dallas
billionaire Ross Perot, who offered
to let them use his pane.
When the selection committee
eventually voted ...
It was ultimately unanimous
for Austin.
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.
Oh, the university
was the ultimate key.
So MCC is coming to Austin.
One of the new joint ventures is
Microelectronics and Computer
Technology Corporation.
MCC for short.
Based in Austin, Texas.
And so that's the turn of the wheel.
Laura Huffman was head of the Austin
Chamber of Commerce until last year.
Landing that in Austin
was the first big turn of a wheel
that allowed us to become a
flourishing, advanced
manufacturing technology
idea economy.
As Andrew Bush said earlier,
companies beget
companies.
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.
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.
Meanwhile, the tech companies keep
on coming.
In 1988, Semtech, another
high tech research center, opened
in southeast Austin.
Austin's economy has just received
a giant boost.
Sematech, an electronics research
consortium, has picked our city
as the site for their corporation.
So just to be clear, what are
all these companies that are moving
to Austin making?
Chips, baby!
We're a chip town!
Yeah, we hit the lotto with this
chip maker.
It's the thing that basically makes
computers go.
The secret of turning sand to
silicon crystal, then to those
incredible electronic miniatures
called chips is available to
anyone today.
All you need are the best
engineering brains.
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.
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.
Like microchips.
Well, microprocessors.
Clean rooms, those desk-less places
where chips are made.
The atmosphere in there
is more sterile than an operating
chamber.
And of course, the wafer.
What is that exactly?
I still don't know, but
I know it's important.
A single wafer highly yields
100 chips.
And all these years later, chips are
still a big part of Austin's
tech industry.
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.
And while AMD and Intel no
longer make chips here,
semiconductors are still a big
deal.
Yeah, more than 60,000 Texans
work in advanced chip manufacturing.
Most of those in the Austin area.
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.
You're not, by any chance computer
shopping, are you?
Mhm, if I can get some help.
Well, right now, you can get a
complete Dell system with an Intel
Pentium 3 processor, plus
all of this, for just 799.
Oh, yeah.
Dell.
Dude, you're getting a Dell.
Dude, we're getting another
Dell.
Sweet.
When you want your perfect PC, it's
easy as Dell. Dell PCs ...
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.
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.
So this is where we went from making
things, like making chips, to
"ideas-ing" things.
"Ideas-ing."
Right on.
In the late nineties, Austin became
part of the dot.com economy.
Like we mentioned in the last
episode, this was more about making
websites, you know, pets.com.
This is also around the time this
guy comes to power.
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.
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.
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.
This was part of his smart growth
strategy that we talked about in the
last episode.
One of these companies was Computer
Sciences Corporation,
another really catchy name.
They went by CSC.
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.
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.
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.
So Watson said, "Well, why don't you
come downtown?"
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.
The company ended up building two
offices downtown.
Those tan buildings that flank city
hall on Cesar Chavez.
That's all actually city owned land.
And Watson's plan to get CSC to move
downtown paid off in more ways
than one.
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.
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.
Several other software companies
planned to follow CSC downtown,
but chips were still Austin's true
love.
Intel ,the chip manufacturer
at the time, decided it would set up
shop downtown.
Another high tech tenant could be
moving into our digital downtown.
The city approved an incentive
package to move Intel,
the big chipmaker, downtown.
But this was the early 2000s
and the economy wasn't
looking so hot.
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.
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?
Big cliffhanger.
I mean, come on, y'all.
More after the break.
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."
... to our digital downtown, the
city ...
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.
But as rocky as this economy was,
and it got pretty bad,
money had already started flowing
into Austin.
In the form of venture capital.
Basically, rich people investing
in small businesses, startups.
David Gibson is part of I.C.
Squared.
It's like this economic think
tank at UT.
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.
Yeah. Remember Dell?
Bobby Inman, the guy who brought MCC
to Austin, was an early investor.
And it fundamentally
changed the Inman family's
financial status.
Dell was cracking right along and
doing great on the stock market and
making a lot of billionaires.
So the money's here, but where
are the ideas?
You might have heard of a tiny
music festival started in the
eighties.
You can see all sorts of stuff at
the South by Southwest multimedia
Festival ...
By the mid-nineties, South By
Southwest was no longer just
a music festival.
It was now kind of like the MCC
for ideas.
The whole gamut of high technology
will be there.
So this is pretty cutting edge
stuff.
It's the wobbly edge of the cutting
edge. [background laughter]
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.
And sometimes they even made
big announcements.
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 Ex now.
We'll see if it catches on.
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.
Austin is is now a city
that every major employer that's
going to have a relocation comes
to see. Period.
This is Matt Mathias again.
Everybody has to have Austin on the
list.
Remember, companies beget
companies.
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.
Atlassian.
Amazon.
Oracle.
Adobe.
NXP.
Microsoft.
Silicon Labs.
Salesforce.
Cisco.
PayPal.
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.
Think of economic development as
sort of a toolbox and incentives
is one of those tools.
This is Laura Hoffman again.
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.
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.
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.
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.
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.
This is Andrew Busch again.
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.
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.
No need to sell this place.
No need to watch your kids leave.
The place sells itself.
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.
Laura Huffman grew up here.
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?
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.
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.
But even then, it was still
affordable.
Oh, my clients were,
you know, people who worked for the
city. People worked for the state.
Socar Chatmon-Thomas bought a home
in South Austin with her husband in
the mid-nineties, for less than
$100,000.
She started working as a realtor in
Austin in 1995.
Back then, her clients were ...
People who worked for Motorola,
Dell.
Applied Materials, AMD.
Schoolteachers.
That's right. Teachers could afford
houses in Austin.
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.
There was, of course, the Great
Recession in 2008, but Austin
fared pretty well.
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?
It took off
in around 2013,
14.
Between 2013 and now, the
median sales price of a home in
Austin more than doubled.
That's a big deal.
That didn't happen the decade before
or the decade before that.
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.
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.
You mean I can get this house
in Avery Ranch for,
like, 325?
Okay, I'll get two.
And the pandemic threw gasoline on
all of this.
The median price of a home just hit
a brand new record.
Now $425,000.
Now $624,000, that's
the median price.
And yes, maybe we can blame
Californians here, at least
just a little bit.
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."
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.
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.
Austin's growth machine had done
such a good job marketing this city,
waving a bedsheet, serving
quail, throwing money around.
Goodbye, Silicon Gulch.
Welcome to Silicon Hills.
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.
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.
Once again, Matt Mathias, son
of Vic Mathias.
This call was from a friend whose
wife, Karen, works for a big
company that was considering moving
to Texas.
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.
You see, Matt works in commercial
real estate now.
And I said, "Well, tell me the
requirements." And so he got Karen
to send me a screenshot
on my phone.
It needed to be close to a major
airport over a thousand
acres.
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."
So he called a friend that worked
with a concrete mining company
that had some land just outside of
Austin.
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."
No bed sheets required.
No bed sheets on this one, no.
Cut to October 7th, 2021.
I'm excited to announce that we are
moving our headquarters to Austin,
Texas.
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.
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.
But it's the sum of all of this
growth. All of these companies,
all the hype ...
combined with a system that for a
long time has made it really
hard to build new housing in Austin.
That adds up to a housing
crisis.
Thanks so much, Jimmy.
It's been a pleasure, Audrey.
About a week ago, I went to meet one
of the tens of thousands of
remote workers that moved to Austin
during the pandemic.
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.
Luis moved here in late 2020.
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.
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.
That is $215,000
a year.
That's about two and a half times
the median salary in Austin.
And you're, like, relatively fresh
out of college.
Yes.
Luis is doing well for himself, but
he also sometimes sends money home
to his parents in Houston.
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.
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.
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?"
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.
As we're talking, a train rattles by
his apartment.
Oh, that's the train.
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.
Talk to me about why you decided to
live here.
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."
Luis and his girlfriend moved into
this apartment after their rent in
Travis Heights nearly doubled during
the pandemic.
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.
If you can afford it.
Luis says most of his friends
can't.
When they get together, they talk
about their housing situations.
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.
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.
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
Kut.org/GrowthMachine.
I'm Audrey McGlinchey.
Thanks for listening.