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Sunny skies, rising rent: How Austin and Phoenix stack up amid rapid growth

Austin and Phoenix are both known for their Town Lakes, warm weather and fast growth. (Visit Austin/Facebook) (Visit Phoenix/Facebook)

When now-Phoenix dweller Danny Anzaldua lived in Austin in 1978, it was a fun place—"Keep Austin Weird" was in its full form, bona fide hippies and "Drag Worms" hung out up and down the Drag downtown and Town Lake was the place to be come summertime.


Now, he's relocated to possibly even sunnier skies in Phoenix, Arizona. Like Austin, the Arizona capital has seen the pros and cons of rapid growth play out across the city, from HQs relocating en masse to a booming housing market and an increase of Californian move-ins.

Here's what the two summery cities do—and don't—have in common:

Big Growth

Austin and Phoenix have both been among the nation's fastest growing cities in the past decade. (Visit Austin/Facebook) (Visit Phoenix/Facebook)

Austin boasts a "boomtown" reputation thanks to recent transplant and Tesla CEO Elon Musk, but with over 160,000 newcomers migrating to Phoenix from 2010-2020, Phoenix takes the cake as the fastest-growing big city in the U.S.

But while Phoenix grew fast, the Austin metro grew faster, with more move-ins than any other U.S. metro in that same time frame.

Phoenix is also much bigger: While Austin hasn't quite cracked 1 million residents, over 1.6 million people call The Valley of the Sun their home. They're also the most populous capital cities in the U.S.

Both cities have seen an influx of newcomers from all walks of life, according to Anzaldua, who meets a lot of new homebuyers in his field of high-end appliances.

"It seems like you don't meet too many people born and raised in Phoenix," Anzaldua said. "There's a few, but the majority are new transplants. I mean, people from all over the country are moving here."

Both Austin and Phoenix are known as great places to be new: Austin was named the best city for move-ins in the world in 2021.

"Don't California My—"

Both Austin and Phoenix seem to have mixed emotions when it comes to new transplants, many of whom come from big cities in the Midwest and Pacific Northwest.

And as the West Coast moves East, many move-ins in the two cities are Californians—something that has caused fierce debate in cities from Austin to Boise, Idaho.

Californians made up more than a quarter of new moves to Phoenix in 2020. That was reflected at Arizona State University, where graduate Ivory Thornton said most of her classmates were from the Golden State.

Meanwhile, California was the largest source of migration to Austin outside of other Texas counties from 2015-2019. The state seems to have made plenty of enemies—while "Don't California My Texas" has become a growing mantra in the Lone Star State, the same mantra can be found on T-shirts in Arizona as well.

For Thornton, that's largely due to the city's booming housing market. Like Austin, the city has seen rent and housing prices spike as wealthier Californians used to more expensive housing buy out "cheap" housing in other cities.

"I was in the process of buying a townhome, but with all of the people moving over from California, the prices have skyrocketed," Thornton said. "Homes that used to be $200k-$300k are now $600k-$700k, so nobody can afford to buy and now everyone has to rent."

Housing, rent goes up, up, up

Both Austin and Phoenix are former cheap housing havens that have seen tremendous real estate amid the pandemic.

Average homes in Phoenix grew by over $100,000 from January 2020-2021, according to Realtor.com, and now sit at $457,000. That's near-identical to the Austin metro, which saw its median home price jump over 30% to $450,000 in the same time frame.

Homes are getting picked up quick. Anzaldua said his friend recently sold his home for $45,000 more than the asking price in just a day as both cities see demand outpace supply.

But comes as a blessing for home sellers can be a nightmare for buyers and renters.

Thornton said her apartment complex is raising her renewal rate by $150 and is having to allow tenants to pay their rent in multiple payments to avoid eviction. Now a social worker who has worked at a homeless shelter, Thornton said she's seen shelters swell in size while rent assistance programs and other resources run dry.

"Low-income areas in Phoenix are just expanding because the prices are increasing but the pay isn't," Thornton said. "I think somethings going to have to give because there's going to be a point where people just can't afford it."

Homelessness and affordability have become hot topics in Austin as well, as rent increased more than any other U.S. tech hub in 2021.

But there's still hope for less-affluent dwellers of both cities: the two have around the same cost of living, which is still near the U.S. average, and both are experiencing major job growth thanks to rapidly-growing markets.

Businesses

While Phoenix is largely driven by tourism and sports, Austin is known for its tech. (Visit Phoenix/Facebook) (PCPA/OneLux)

So why move to Austin or Phoenix?

A major incentive has been booming labor markets: the cities were side-by-side as two of the top 3 job growth markets in the U.S. in July 2021.

As the sailboat-inspired new Google tower finishes up construction in downtown Austin, it's become increasingly clear that the city is now more of a tech town than a hippie haven.

Known as one of the biggest emerging tech markets in the U.S., Austin has seen record job growth as companies like Tesla and Oracle relocated their headquarters to the city in the past few years.

The two join Dell as some of the area's biggest employers, while other industries, from its massive beer and brewery market to crypto, continue to put Austin in national headlines.

Phoenix hosts a more under-the-radar tech scene, but software jobs still increased by over 20% in the last five years. Instead of tech startups and blockchain companies, Phoenix has a bigger focus on manufacturing, real estate and tourism.

Tourism and business services now make up nearly 77% of the metro's total employment. Meanwhile, the area's warm weather has made Phoenix a sports hub: it's one of the few cities with all four Major league sports teams (NFL, NBA, MLB and NHL) and could be facing off Austin FC with an MLS team of its own sometime soon.

It's also the only city in the country with a spring-training MLB league and hosts professional golf and NASCAR racing arenas as well.

What's the difference?

Austin and Phoenix are both known for outdoorsy attractions. (Visit Austin/Facebook) (Visit Phoenix/Facebook)

Each city is attracting newcomers for similar reasons, although there are some key differences.

If Austin is hot, Phoenix is even hotter, with average high temperatures in the 100s all summer long. Austin's more humid heat brings more than 20 more inches of rainfall per year and fuels plenty of water-based activities at Lady Bird Lake or any local swimming hole.

Perhaps surprisingly, however, Phoenix has at Town Lake of its own and hosts many more hiking trails than Austin, featuring picturesque Sonoran Desert views. Both cities have earned a reputation as an outdoorsy person's paradise.

And while both cities are among the youngest in the U.S., Austin has a much busier nightlife. Some of the "Live Music Capital" heyday that Anzaldua remembers still remains, and newcomers can find plenty to do in the city's diverse art and music scene.

Popular

With deposition and trial looming, Elon Musk has offered $44B for Twitter, again
Shutterstock

Elon Musk has proposed once again to buy Twitter for $54.20 a share.

The news that Musk is offering to carry on with the $44 billion buyout was first reported by Bloomberg. Now, a filing with the Securities and Exchange Commission shows Musk made the proposal in a letter to the tech giant on Monday.

The New York Stock Exchange temporarily halted trading in Twitter stock twice Tuesday, first because of a big price move and the second time for a news event, presumably the announcement of Musk's renewed offer.

While the per share offer price on this latest proposal remains the same as the original offer, it’s unclear if Musk has made other term changes or if Twitter would reject it. According to other reports, a deal could be reached this week.

The stock closed at $52.00/share Tuesday, indicating market uncertainty around the $54.20 offer.

After Musk informed Twitter of plans to terminate the original agreement in July, Twitter sued. A trial has been expected in Delaware Chancery Court on Oct. 17.

With the proposition of a buyout on the table again, it revives the question of whether Musk might move Twitter from San Francisco to Central Texas.

He’s done so with some of his other companies. Tesla’s headquarters in southeast Travis County had its grand opening earlier this year and tunneling business The Boring Company moved to Pflugerville. At least two other Musk companies, SpaceX and Neuralink, have a Central Texas presence without being headquartered here.

Technology journalist Nilay Patel this afternoon voiced concerns that owning Twitter and Tesla together could be problematic for Musk, as his Tesla manufacturing facilities in Germany and China are both in countries that have disputes with Twitter over content moderation and censorship.

Telsa shares fell after the Twitter news became public, before rallying to close up, at $249.44.

Austin rents nearly double in a year and are now in the top 5 nationwide
Dwellsy

While searching for a place to live, Austin renters will face monthly rates of nearly $3,000, a recent guide from rental marketplace Dwellsy shows.

The median rent in August this year was $2,930, a more than 86% increase since August 2021. That’s $820 more than the nationwide median asking rent in August and puts Austin just below the Bay Area, Boston and New York for large cities with the most expensive asking rent.

“Within this group, Austin, TX stands out for the highest increases in asking rent, which has nearly doubled since this time last year,” the study notes.

Outside of those large cities, however, others are seeing even higher rent spikes. Metro areas that ranked above Austin in one-year increases include those like Kansas City, MO with a 112% change in rent since last August and Tucson, AZ with a 124% change.

The data reflects large apartment communities, single-family homes and 2-6 unit buildings.