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US boomtown Austin leaves many to fall by the wayside

Angela Weiss in Austin, Texas
March 13, 2023

The state capital of Texas has been expanding rapidly in recent decades thanks to its thriving tech industry. But many locals have little to celebrate, as they can no longer afford life in the booming city.

A colorful mural stands next to skyscrapers under construction
The mixture of old and new makes up the charm of Austin, but it's threatened by an unprecedented economic boomImage: Angela Weiß/DW

Austin has always been a colorful spot on the map of the largely archconservative US federal state of Texas. Governed by the Democratic Party, the city on the banks of the Colorado River wants to be seen as the unofficial world capital of live music, boasting no less than 250 venues where the music virtually never stops — even the airport greets travelers with live music.

"Keep Austin Weird" is the unofficial motto of the Texas state capital, and a combination of a business-friendly tax system, an innovative scientific environment and high quality of life make Austin attractive to tech companies and their employees.

Austin, which hosts the annual South by Southwest festival (SXSW) as a testimony to its growing tech industry, has seen a "huge influx" of fresh tech talent, especially from California, in recent years, said Julia Stielow.

"The competition for homes was huge, with sums of $50,000 [€46,910] to $100,000 being outbid to win," the Hamburg, Germany-born real estate agent told DW.

Especially during the COVID-19 pandemic, some Austin neighborhoods experienced extraordinary increases in value of up to 25% annually. "That's insanely high and also scary for the people who paid those prices," she said.

A photo of real estate agent Julia Stielow
Julia Stielow has been watching Austin emerge as a hot spot for technology over the past three decadesImage: Angela Weiß/DW

Ideal location for US tech giants

Austin's economic focus on the tech industry is by no means a recent phenomenon. As early as the mid-1980s, Austin became a leading development center for computer chips.

At the time, Michael Dell — a student enrolled at the University of Texas in Austin — had a revolutionary business idea. At the age of 19, he decided to drop out of college and start a company that focused on direct sales of computers. Initially, a one-man enterprise, his company, Dell Technologies, made him rich and famous.

For Austin's tech industry, this was something of an initial spark. Today, the city is home to major operations of Silicon Valley giants such as Apple, Amazon and Google.

More recently, electric vehicle manufacturer Tesla left Silicon Valley for Austin. About a year ago, the company opened a new factory there, and there are reports that Tesla CEO Elon Musk is planning to build a new city called Texas Utopia on the outskirts of Austin.

Tesla factory opens in Texas

Robert Hebner heads the Center for Electromechanics at the University of Texas. He views the collaboration at the time between the state, city, university and local businesses as the critical cornerstone of Austin's successful development.

"Everyone pulled in the same direction to make Austin successful," Hebner told DW. But he thinks there's another aspect that has been working in Austin's favor — the local university is one of the most prestigious in the country, boasting a reliable pool of young and extremely well-educated talent for the industry.

Austin's greenery and its open and tolerant character have also had a role to play. "It doesn't matter if you are a cowboy or a hippie, you are singing the same songs at concerts — and of course, the computer geeks from California or New York are always welcome," said Hebner.

A picture of the main building of the University of Texas in Austin
The University of Texas provides a seemingly never-ending stream of talent for the tech industry in AustinImage: Angela Weiß/DW

Real estate market surge

But the recent boom has come at a price: Austin's infrastructure is groaning under the constant influx, and the cost of living has exploded. Rents and home prices have risen sharply, not only around the offices of Google, Apple and Dell Technologies in the city center but also in the city's south, traditionally home to a large number of music and art professionals.

A small house there that sold for $94,000 in 2004 is now worth $875,000 (about €818,000), said real estate agent Stielow — and the price of a single-family home downtown has surged from about $180,000 in 2010 to a staggering $1.3 million now.

Normally, homeowners are pleased by the rise in the value of their property. But in Austin, residents are increasingly struggling because property tax is linked to housing prices in Texas. For a house worth $800,000, the owner has to pay about $16,000 in taxes every year. And even though city officials have lowered property tax for people 65 of age and older in some suburbs, young families and people with low incomes don't benefit from the subsidy.

Amid the housing market boom, Austin's rents have risen in lockstep, said Stielow. "In 1993, the rent for a two-bedroom house was $350 a month. Now it rents for $2,300." Hardest hit are the city's musicians and artists, she added.

Artists on the breadline

Rockabilly and country music artist Rosie Flores has been part of Austin's rich music scene for many years, and she longs for the golden days of old.

"It was wonderful and inspiring. Every show was booked, the rents were cheap and I could be who I really was as an artist here," Flores told DW.

But nowadays, the new and modern Austin is causing great hardship for many locals. "I even had to sell my guitars a few years ago to pay bills and buy food," said the 72-year-old — and she is far from the only musician struggling to survive in Austin.

An older woman with dark hair wears a black blouse decorated with pink roses, and a red wide-brimmed hat
Flores has to pinch and scrape to carve out a living in AustinImage: Mark Guerra

Since 2014, the Greater Austin Music Census has captured the mood, developments and trends of the local music scene. Some 2,260 musicians and producers participated in the latest survey, the results of which were released in early February.

While 89% of respondents plan to continue in their profession for the next three years, only 64% expect to remain in Austin. The survey also showed that 38% of all respondents were struggling to find affordable housing.

Nancy Coplin can attest to this trend. She is part of Housing Opportunities for Musicians and Entertainers, an organization that has been providing financial assistance, especially to older music professionals, since 2013.

"In Austin, we are currently supporting 23 female musicians and have already disbursed 200 monthly emergency grants at $500 each," Coplin told DW.

Flores is one of the program's beneficiaries. "I still love Austin, but it's only because of their help and the support of other great artist organizations that I'm still able to be here," she said.

Flores believes Austin is still living up to its image as the live music capital of the world, with the old artistic tradition still alive. But the Texas boomtown must do much more to help creative people — aside from tech workers — continue living there, she said.

This article was originally published in German.