Big tech means big rents for Austin as residents face high prices after a brief dip from the pandemic.
Austin saw the largest year-over-year percentage increase in average rent this September among the nation's top 10 tech hubs, according to the latest report from Realtor.com. Average rent, which sat at $1,367 and dipped to $1,300 at its pandemic low (-4.9%), skyrocketed to $1,647 by September 2021, a 25.3% year-over-year increase.
The Austin metro also saw the sixth-highest average percentage rent increase among the nation's 50 largest metros in that same time period, falling to Florida cities Tampa and Miami as well as Riverside, Calif., Phoenix, Ariz. and Riverside, Calif.
The median rent in Austin has increased by $155 since April 2021, when rent nationwide began to rebound at the onset of the COVID vaccine rollout. Since then, 31 of the nation's 50 biggest metros have seen double-digit percentage gains in median rent from Sept. 2020-21.
While Austin tops the tech hub list in median rent percentages, it's still a tad below the national average of $1,654, a new record high. The nation's median rent increased by 13.6% year-over-year.
And median rent in Austin is still below all 10 tech hubs measured—including Boston ($1,895), Chicago ($2,500), Denver ($2,850), Los Angeles ($2,095), San Jose ($2,517), Seattle ($2,895), Washington, D.C. ($3,015) New York City ($2,075) and San Francisco ($1,695).
But as unsatisfied West Coasters and outpaced city dwellers in the pandemic's age of remote work flock to the capital city, that trend has been predicted to change. Big tech companies continue to invest in the area—notably, new HQs for Tesla and Oracle.
Austin is already more expensive than 29 of the 50 biggest metros, including Texas' DFW ($1,475), the Houston metro ($1,319) and San Antonio-New Braunfels ($1,206).
The city's headline-making hot housing market has cooled a bit this fall, but a pandemic boom saw the market's median home price shoot to an all-time high of $482,364 in June 2021. And by the end of 2021, at least one report has predicted that Austin will be more expensive to live in than any non-Californian city in the nation.
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So you want to buy a house?
To anyone trying to get on the "housing ladder," it's been a discouraging couple of years as prices skyrocketed in a market crowded with buyers bidding against each other for just about any available home.
Things may be calming down, with the Austin Board of REALTORS reporting fewer sales and more available homes this summer.
Mortgage rates have more than doubled in the last year, from around 3% to well over 6% on a 30-year fixed rate loan, getting even more of a bump this week after the Federal Reserve raised bank rates on Wednesday.
So how affordable are homes right now? That, of course, depends on what you want and how much you're able or willing to pay, but here are some rough estimates of what a typical buyer would pay to buy a $650,000 home, which would be considered "mid-price" in today's market.
Mortgage banker Chris Holland (NMLS 211033) of Austin's Sente Mortgage ran some numbers for Austonia to illustrate a typical purchase.
Holland says that while the 30-year fixed rate mortgage is often mentioned in the media, the most popular loan that he's seeing now is a 7/1 adjustable rate mortgage, which has a fixed rate for 7 years and then adjusts every year based on market rates, with a limit on how much it can increase each year. The interest is amortized over a 30-year period. Adjustable Rate Mortgages (ARMs) offer lower rates than fixed rate loans.
Here are the numbers, which are examples. In practice, exact numbers vary with a buyer's credit rating and overall financial situation, and with the rate, which can move up or down at any time.
- $650,000 home purchase price
- 7/1 ARM at 5.875%
- 5% down payment, equals $32,500
- 95% financed, equals $617,500
- $4,990 payment, including principle and interest (P&I), insurance, and property tax
- Typically, a borrower's debt to income ratio needs to be at or below 45%. So for this mortgage, a borrower, or borrowers, would need income of roughly $11,100/month, or $133,200/year. That number could be higher, depending on the buyer's outstanding credit balances on things like credit cards and car loans.
Holland says he's had a lot of clients approved for loans who were house hunting but have put that on hold, hoping prices come down.
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Packages and Ways to Stay
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Amenities and Activities
Camp Fimfo Waco
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