The cost of housing in Austin, Texas has recently fallen. Is this good or bad in the long run for the city? Some details on the falling prices:

Home prices and apartment rents in Austin, Texas, have fallen more than anywhere else in the country, after a period of overbuilding and a slowdown in job and population growth. 

That marks a sharp reversal from previous years when Austin’s real-estate market was sizzling. The city attracted waves of remote workers on six-figure tech salaries. Others arrived after companies such as Tesla and Oracle moved offices there, taking advantage of lower taxes and less business regulation. Austin’s economy grew at nearly double the national rate, and it became the country’s 10th-largest city. 

Now, it is contending with a glut of luxury apartment buildings. Landlords are offering weeks of free rent and other concessions to fill empty units. More single-family homes are selling at a loss. Empty office space is also piling up downtown, and hundreds of Google employees who were meant to occupy an entire 35-story office tower built almost two years ago still have no move-in date. 

On one hand, falling prices are good news for residents. Housing is more affordable. People have more options. Getting in to better housing can mean better day-to-day experiences plus the opportunity to develop wealth.

On the other hand, falling prices mean less demand for development. This could mean slower population growth. Status is tied to population and interest actors have in snatching up properties. Tax revenues will be lower than they could be if property values do not shoot up.

Many American communities experience this tension. Property owners want values to go up. They do not necessarily want to pay higher taxes with these rising values but they will be happy when they sell the properties. More people want housing at reasonable prices. But, relatively few people want to live in places known for low housing values or people may not want to live in places where property values do not go up.