Official: $8 Billion Lightrail The Montopolis Investment Play Before 2027

Buy Around Montopolis Before 2027: $8B Light Rail, Ultra-Wealthy Ground Lease Strategy & Why High Earners Are Fleeing California

Welcome to this week's market update! Today we're covering Austin's $8 billion Light Rail federal approval and the exact neighborhood to buy before 2027 construction starts, how the ultra-wealthy use ground leases to capture billion-dollar buildings for free, why Texas is poaching high-earners from California at record rates, and the market signals showing Q1/Q2 buyer surge incoming.

TLDR; Key Takeaways

✅ Austin Light Rail Federal Approval - $7.1-8.2 billion project green lit; construction starts 2027, delivery 2033; opens door for federal grants covering ~49% of costs
✅ Montopolis Investment Opportunity - Buy duplexes NOW at $200-220K, projected $450K value in 6 years when light rail delivers; equity becomes your construction loan down payment
✅ East Riverside Gateway Transformation - Area sandwiched between South Congress mega-development, Carson Creek redevelopment, and Dog's Head/Endeavor project
✅ Ground Lease Wealth Strategy - Ultra-wealthy keep land, lease for 99 years, get property back WITH structures; "Rich people sell, wealthy people keep"
✅ Texas Population Growth - 31.7M people (vs California's 39.3M); Texas growing 1.25%/year while California population flat/declining; pro-business environment driving migration
✅ Market Stats Stabilizing - Inventory at 4.2 months (flat YoY), prices flat to -1% for third consecutive month, but mortgage applications up significantly signaling Q1/Q2 buyer surge

✅ 5-7% Annual Appreciation Target - Sustainable growth preferred over 30% spikes; positive migration + investment outpacing development = upward pricing pressure

Austin Light Rail Clears Federal Hurdle - $7.1-8.2
Billion Investment Approved

This is HUGE. The Austin Light Rail expansion just got federal approval, which means this project is officially green lit. Construction starts in 2027, delivery in 2033. That’s seven years out, but here's why you need to pay attention now.
The project cost ranges from $7.1 billion in capital costs to $8.2 billion when you include financing costs (interest on loans). The feds could cover up to 49% of the cost if Austin successfully competes for the grants.
Right now, none of the light rail services south of the river—everything's north. This expansion changes everything:
South Route: From the rowing center area, south along the other side of Congress, down Riverside to Lakeshore, Pleasant Valley, stopping at Grove Street, Montopolis, Yellowjacket, all the way to the airport 

South Congress Route: Running down South Congress to Oltorf

The Investment Play

Here's where it gets interesting. Remember the Domain in 2010, seven years before light rail delivery? I could buy duplexes in that area (off Ptarmigan, Breaker Lane, Quail Hollow) for less than $100K. Crazy, right?

Today's opportunity: Montopolis. You can buy a duplex there right now for $200-$220K, that's dirt value. Come in, fix it up, rent it out. When the light rail delivers, you tear it down and build (as of today's zoning) at least three units, depending on lot size.

Let's do the math: If your dirt cost is $200K today and it's worth $450K in six years when you're ready to redevelop, that extra $250K in equity becomes your down payment for your construction note. You don't have to put additional money down.

Why East Riverside is About to Explode

East Riverside is getting sandwiched between two of the largest developments
happening in Austin over the next decade:

1.South Congress area: The Statesman site plus the adjacent property (owned by an old Austin family since the early 1900s (they used to grow spinach there, fun fact)
2.The Dog's Head investment with Endeavor

Plus, Carson Creek just got bought and is going through complete redevelopment. I saw the site plan this weekend—it looks dope.

This is what the city has always wanted East Riverside to be: the gateway to Austin. And in seven years, it's going to look drastically different.

Ground Leases: How the Ultra-Wealthy Build
Generational Wealth

Quick sidebar on that South Congress property family. They own the land under the Catherine and all the dirt between South Congress and South 1st along the river, just
south of Riverside and Barton Creek. They don't sell, they ground lease.

The owner said something that stuck with me: "Rich people sell, wealthy people
keep."

Here's how it works: A 99-year ground lease lets the lessee act as if they own the
property. Banks view it as ownership, so they can build on it. But at the end of 99
years, the family gets the dirt back with the structures on it.

Imagine 55-story structures coming back to them in 100 years. That property will be
worth billions, maybe a trillion when you factor in inflation. They're getting billionsdollar buildings for basically free in a century. That's generational wealth.

Texas About to Overtake California as Most Populous State?

As of July 1, 2025, Texas has an estimated 31.7 million people. California has 39.3
million.

Texas is growing faster than California - but "overtaking" California is more speculative than certain. California's population has been relatively flat or slightly declining, while Texas continues strong growth. However, Texas would need to maintain its current growth rate while California's population continues to stagnate or decline for this to happen.

Why the growth? Texas is pro-business. California isn't taking care of their highincome earners, so they're defecting and coming to Texas, Florida, Vegas, Arizona. A lot of them are landing here.

Shout out to all Californians looking to make the move—hit me up, happy to help.

Rainey Street Enters Its Next Era

For context, Rainey Street has had four distinct eras:

• 1.0: Pre-2010—single-family homes from the early 1900s on 50x150, 60x200 lots
• 2.0: The bar scene—Lustre Pearl (RIP), Bungalow (which is back), became the new 6th Street
• 3.0: The hybrid phase—bars + towers
• 4.0: What we're entering now—all towers, bars phasing out due to noise complaints from residents

Once it got rezoned to CBD (Central Business District), you could build as high as you want. Waterline is our first building over 1,000 feet, and it's in the Rainey District.

Unfortunately, towers and bars don't mix well. Noise complaints are pushing the bars out, and what you'll see eventually is just tall buildings.

Market Stats: Still a Buyer's Market (Mostly)

The 2025 year-end stats came out, comparing December to December:

• Inventory: 4.2 months (same as last year)
• Sales: Down significantly
• Prices: Basically flat

This is the third consecutive month of flat to -1% pricing. But here's what I'm seeing:
As interest rates normalize, more buyers are entering the market. My friend Tyler Hughes mentioned their mortgage applications are up significantly from last year. 

That's typically the start of an aggressive Q1 and Q2. It's a herd mentality—when people start seeing positive sentiment, they think: "Okay, maybe it's time to buy. Maybe I can purchase something today and it won't be worth less tomorrow."

• Inventory: 4.2 months (same)
• Sales: Down
• Prices: Flat/-1%
• Mortgage applications: Up significantly]**

Why I'm Optimistic

Look at what we just covered:

• Companies moving here
• Money being invested in Austin
• Positive migration + positive investment

If migration and investment outpace development, supply and demand get out of whack. That creates upward pressure on pricing.

But a 5-7% annual appreciation? That's sustainable. That's great.

When you see 30% appreciation, you know it's good for a year or two, but you also
know it's not sustainable. And on the other side of "not sustainable" is also not
sustainable to the downside. We don't want that.

Is It Still a Buyer's Market?

Short answer: It depends where you are looking.

Final Thoughts

Thank you all for tuning in to the “12:00 at 12 Rivers”. We've covered a lot today:

• Austin Light Rail federal approval and the Montopolis investment opportunity
• Ground lease strategy: How the ultra-wealthy build generational wealth
• Texas population growth and California migration trends
• Rainey Street's evolution from bars to 1,000-foot towers
• Austin market stats showing stabilization and upcoming Q1/Q2 buyer surge
• Why 5-7% annual appreciation is the sustainable wealth-building target

With light rail construction starting in 2027, East Riverside positioned as Austin's
gateway, and positive migration driving demand, the window to buy strategically
is now—not when everyone else figures it out in 2033.

Bottom Line

Purchase equity over rate. Always.

If you have questions about any of this or anything real estate, hit me up. Subscribe
to the newsletter, smash like and subscribe on YouTube.

Y'all be good.

—Paul Smith
12 Rivers Realty

Austin Light Rail Project Cost ($7.1-8.2 Billion) ATP documentation shows $7.1B in capital costs; FTA Capital Investments Grants Dashboard lists $8.23B total including $1.1B financing costs; Community Impact; Austin Monthly
Light Rail Construction Timeline ATP official timeline: Construction begins 2027, service delivery 2033; Federal Register Notice dated January 7, 2026
Light Rail Route Details ATP Phase 1 Final Environmental Impact Statement: 9.8 miles, 15 stations, South Congress to Oltorf, East Riverside to near airport
Federal Grant Coverage FTA Capital Investments Grants Program documentation; ATP expecting ~49% federal funding if successfully awarded
Texas Population Data (July 1, 2025) U.S. Census Bureau Vintage 2025 Population Estimates released January 27, 2026; Texas: 31,709,821; California: 39.3+ million; KXAN Austin; Houston Public Media
Texas Population Growth Rate U.S. Census Bureau: Texas grew by 391,243 people (1.25%) between July 2024-July 2025; third consecutive year leading nation in total population increase
California Population Trends U.S. Census Bureau 2025 estimates: California population declined by 9,000+ between July 2024-July 2025
Waterline Tower Height Waterline Residences official data: 1,022 feet tall (completed 2024), Austin's tallest building and first to exceed 1,000 feet
Austin Market Statistics (December 2025) Austin Board of Realtors monthly housing market report; inventory at 4.2 months supply