Austin is one of the hottest apartment markets in the country due to its dynamic economic and population growth story. The Austin-Round Rock MSA housing market continued its normalizing trend for the third consecutive month, boosted by a more sustainable rate of price growth and more available supply, according to The Austin Board of REALTORS® August 2022 Central Texas Housing Market Report.
Austin, Texas has been a prime place to buy real estate for the past few years and not just for people who love music and barbecue. It was ranked the hottest real estate market by Zillow as buyers flocked to the area from higher-priced housing markets in California and the Northeast in search of affordability.
The Austin apartment market is currently experiencing significant growth as increasing demand is driving more intensive development and developers are addressing tenants’ desire for a better experience. The Austin metro’s strong vacancy compression, abundant economic wins, and robust single-family market, where median pricing was up by more than 19% over the past year, explain the market’s impressive apartment fundamentals.
Austin’s mix of employment sectors has the strongest correlation with demand for top-tier apartments, as well as a correlation with rent growth. Austin also benefits from a high rate of labor force participation, which our research indicates is highly indicative of long-term performance.
Austin’s technology cluster consists of both software design and advanced manufacturing, distinguishing the market from some of its coastal technology peers. Many California and New York-based tech firms are increasingly gravitating to Austin thanks to a relatively affordable housing market, compared with Gateway markets, and a high-skilled workforce. The apartment market benefits from a consistent pipeline of young adults attending the University of Texas, many of whom remain within the metro post-graduation.
The apartment supply pipeline in Austin is full, although the bulk of new construction and the greatest supply side risk is concentrated within the urban core. While the pipeline may appear daunting to some observers, the depth of demand in this market driven by corporate in-migration and expansion largely mitigates supply risk.
Austin’s markets continue to drive the highest demand and garner the most attention from apartment investors and developers. Year-to-date, approximately 11,567 new units have been added and over 7,557 units have been absorbed.
Throughout the last decade, Austin metro’s population expanded by more than 28 percent, creating substantial housing demand, and fueling a trend that has accelerated in the past couple of years.
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What is the average rental rate in Austin?
According to the Austin Apartment Property Market Report 2022, the average rental rate in Austin has increased by 4% in 2022 and is expected to increase by 3% in 2023 and 2.5% in 2024.
Is there a shortage of rental apartments in Austin?
Yes, the city is currently experiencing a shortage of rental apartments, with demand outpacing supply. However, the city is making efforts to address the shortage with new construction projects underway.
What are the future prospects of the Austin Apartment Property Market?
The future prospects of the Austin Apartment Property Market are positive, with a growing population, strong economy, and increasing rental rates expected to drive demand for rental apartments in the coming years. The city’s favorable investment climate and dynamic rental market make it a lucrative market for real estate investment.