Has Tesla Impacted Your Housing Market?
Austin is already home to one of Tesla's gigafactories, which brought with it 10,000 workers, and now the company’s headquarters are moving into town. Tesla’s CEO, Elon Musk, announced that the electric car manufacturer will relocate its headquarters from Palo Alto, CA, to Austin. There is no concrete date set for the move, but Austin Mayor Steve Adler welcomed Tesla's decision and said the company fits right in with Austin's innovative, entrepreneurial, and environmentally focused culture.
“Some of the reasons why Tesla left California, Elon Musk said, was because housing costs are so high. Well, housing costs are rising in Austin. Our hope is that players like Tesla are going to help us bring in the housing as part of their movement into the city. And I think that if we use the power we have right now to attract the kind of companies that are coming in, that also gives us the potential and hope to be able to better deal with the challenges that we have,” Adler said in an interview with Fox Business.
But what will this move mean for potential Austin homebuyers?
Housing prices in the Austin metro area have already increased recently, as large tech firms including Apple Inc., Google, and Oracle Corp. began building new campuses around the city between 2018-2020. Accordingly, the median home price for Austin houses has risen nearly 40% over the last three years, with the median price for a house around $552,418 in November 2021, according to Redfin. With Tesla’s HQ allegedly heading into town sooner rather than later, now is a great time to unpack what the impact could be for everyday Austinites.
Tesla’s Potential Effect on Austin Overall
The impact that Tesla will have on Austin reaches real estate and beyond. The gigafactory is located near SH 130 and Harold Green Road, and it would make sense for Tesla HQ to be located somewhere nearby — which could expand the area without boosting the cost of office space or houses downtown. In fact, local economist Dr. Dwight Steward, Ph.D., expects this location and the resulting influx of workers will have effects reaching up to San Antonio.
"You literally would be able to live, say, on the east side of San Antonio and get to work there in about the same amount of time some people have commuting to other parts of Austin, so yeah, I think that could really be incredible," said Steward in an interview with CBS Austin.
Beyond housing this new workforce, experts have expressed their concerns regarding additional traffic. Steward says having the headquarters near the spot off SH 130 would initially help with traffic patterns in Austin since there wouldn’t necessarily be added congestion to the downtown area. However, three out of four Austin residents drive to work, so the city will need to prioritize expanding its current public transportation systems to alleviate commuting time.
Austin locals have also let their voices be heard regarding Tesla’s move, as the city continues to grow in population thanks in part to large companies moving to the metro area.
“I’m really happy for all the jobs this will create, but my family is already unable to buy a house right now, and it will only get worse with Tesla,” Trish Webb, a resident of South Austin, said in an interview with New York Post.
Locals are worried, both about rising housing prices and that the city’s culture of “Keeping Austin Weird” is in jeopardy.
“All these Californians coming here are also changing the culture, and I’m worried it will become too much,” said Reed Chorry, another Austin resident, in the same interview.
Tesla’s Impact on Austin’s Real Estate
County and city officials now have to take a close look at how the permitting and approval processes can be improved and expanded. Officials agreed that making expanding permits will help bring more affordable housing to the Austin area to accommodate new workers.
This update is an effort to help create more affordable housing and curb the steep home prices in Austin. Home prices around Tesla’s gigafactory have already increased nearly 45%; Redfin shows the median home sale price is up 44.7% over last year in 78725, where the gigafactory is located. Redfin’s chief economists expect this price to continue to rise.
The issue Austin and Tesla will face are housing workers who hold both blue-collar and white-collar jobs. The city will have 10,000 factory workers and thousands of executive-level to C-suite employees to house. We’ll have to see if the change in expanding permits helps to curb the steep home prices that could otherwise crop up as Musk looks to put down more roots in Austin.
Have you seen any impact in your market from Tesla’s recent moves and announcements? If so, let us know in the comments below!