Austin and Atlanta have pulled off something rare: rent declines. Their rapid construction and intentional growth offer a model for the rest of the country. 

By Patrick Carroll of AIER. Excerpts:

"In a September article, Realtor.com highlighted three metros that are seeing the biggest declines. 

“Rents in Las Vegas (-13.6 percent), Atlanta (-13.6 percent), and Austin, TX (-13.4 percent), are seeing the largest price cuts from their peaks, highlighting prime opportunities in these markets,” writes Joy Dumandan."

"Economist Jiayi Xu offered an explanation for these trends. 

“Las Vegas, Austin, and Atlanta saw the largest rent declines from their peaks due to rapid rent growth during the pandemic, when many people moved to warm Sun Belt areas, creating a high starting point for corrections,” she said. “Migration trends have slowed, and significant new multifamily supply has increased options for renters, exerting downward pressure on prices,” she continued. “Combined, these factors have pushed rents down more sharply than in other markets.”

Xu’s comment about “significant new multifamily supply” is key."

"Markets with the biggest rent deflation over the last 3 years: 

Austin: -21% 

Fort Myers: -19% 

CoSprings: -15% 

Phoenix: -14% 

Raleigh: -13% 

San Antonio: -12% 

Atlanta: -11% 

Denver: -11%" 

"An August report from RentCafe looked at new apartment construction in 2025 across the US and identified the places that are building the most units. The South overall had a strong showing, accounting for 52.5 percent of the 506,353 units that are expected to be opened nationwide by the end of the year. Within the South, Texas is experiencing some of the biggest housing growth, fueled especially by growth in Austin.

The report presented a ranking of the US cities that are building the most housing this year, as well as a separate ranking for US metros. Austin took the top spot in the country on the city level, with an estimated 15,195 units expected to be completed this year. Austin came third in the country on the metro level with 26,715 units expected to be built, behind Dallas (28,958) and New York City (30,023)."

"Atlanta came sixth in the country on RentCafe’s list of cities, with 6,359 new units expected to be completed this year. The Atlanta metro area took fifth place on the metros list, with 17,512 units expected."

"How can we add more supply? One of the best ways is deregulation. As economist Bryan Caplan explains in his recent illustrated book Build, Baby, Build, the main reason housing is so expensive is because of manufactured scarcity — restrictions on the supply of housing created by government regulations. 

“Housing prices stay high in desirable areas,” Caplan writes, “because most governments strictly regulate new construction.”

Caplan anticipates a common reaction: “Sounds more like Right Wing Ideology 101 to me.” This is understandable, but Caplan stresses that housing deregulation is a bipartisan issue that even non-right-wingers should be able to champion. He points to progressive thinkers like Paul Krugman, Obama-advisor Jason Furman, and Matt Yglesias as people whose left-wing credentials are not in doubt, yet who acknowledge that strict regulation really is a big part of America’s housing problem."

How new apartments create opportunities for all

By Tyler Boesch, Erik Hembre & Ben Horowitz of The Federal Reserve Bank of Minneapolis. Excerpts:

"Who benefits from new market-rate apartments? While these new units are typically occupied by households on the higher end of the income spectrum, the chain of residential moves brought about by their construction benefits many more households. Today’s lower-priced rental housing was often the new, expensive rental housing of yesteryear. And it doesn’t take decades for new apartments to put downward pressure on rents elsewhere in a metropolitan area. New units help keep current prices down for everyone by opening up new opportunities for low- and moderate-income renters over a few short years through a chain of residential moves.

Imagine that a renter named Jim moves into a brand-new market-rate apartment. A renter named Maria moves into Jim’s old unit, which is more affordable than Jim’s new place. Another renter is going to move into Maria’s old unit. The chain will likely continue to include several more units, each progressively older and more affordable. It will end when someone moves out on their own from a previously shared living space.

This process of new construction encouraging mobility across the income spectrum is one piece of a phenomenon known as filtering. Theories connecting filtering to housing affordability are generally accepted among economists. For example, economic theory predicts that housing units should be relatively more affordable when the housing supply increases, as it does when new apartments open.

Owners and managers of older properties are well aware that new supply entering a market creates new opportunities for their renters to move up."

"owners and managers often cited the increased housing supply in the region as a reason why rents at their properties generally had not increased very much in the past few years. 

Evidence from economist Evan Mast, who is currently with the University of Notre Dame, has helped clearly track and document how filtering works at a granular level."

"within five years, the aggregated chain of residential moves ultimately results in about 70 new openings for renters in lower-income neighborhoods for every 100 new market-rate apartments."

"The rate at which properties filter through a housing market isn’t set in stone. Lower growth in a city’s housing supply leads to less filtering for all housing units. Unless there’s a huge drop in demand for housing, cities that don’t add to their housing supply will see more competition for fewer homes, and prices and rents will increase more quickly than they otherwise would."

"Analysis by Liyi Liu and others at the Federal Home Loan Mortgage Corporation shows that filtering happens more slowly in places with more restrictions on construction. In places like San Francisco, filtering can even happen in reverse. When there are few homes relative to demand, older homes are more likely to be bought by higher-income households over time. This doesn’t just apply to Victorian-era mansions, but also to the less amenity-rich housing stock that used to be more accessible to first-time home buyers."

"Mast’s paper echoes research showing that high-income movers tend to create more opportunities through filtering than they take away through gentrification. His work also shows that the people who move into new housing in lower-income areas are most likely to come from other low-income neighborhoods. In a separate paper, Mast also finds that rent growth is actually slower in low-income neighborhoods after new market-rate apartments are built."

"The easier it is to build new housing, the more opportunities low- and moderate-income households will have to experience housing affordability."

The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco

By Rebecca Diamond, Timothy McQuade, Franklin Qian.

"NBER Working Paper No. 24181
Issued in January 2018
NBER Program(s):Labor Studies, Public Economics

We exploit quasi-experimental variation in assignment of rent control to study its impacts on tenants, landlords, and the overall rental market. Leveraging new data tracking individuals’ migration, we find rent control increased renters’ probabilities of staying at their addresses by nearly 20%. Landlords treated by rent control reduced rental housing supply by 15%, causing a 5.1% city-wide rent increase. Using a dynamic, neighborhood choice model, we find rent control offered large benefits to covered tenants. Welfare losses from decreased housing supply could be mitigated if insurance against rent increases were provided as government social insurance, instead of a regulated landlord mandate."