After a slight pandemic slump that was a rare boon to tenants, Austin's rental market has rebounded. Fueled by job growth, relocations and an increasingly pricey housing market, the average monthly rent in the Greater Austin area rose to $1,335 in April, exceeding pre-pandemic rates, according to the latest market report from ApartmentData.com.
Bruce McClenny, president of ApartmentData.com, attributes this change to increasing demand, which gives landlords the confidence to raise rents. Since January, the Austin market has absorbed a monthly average of 1,403 units, meaning that renters have leased that many more units than were vacated. This absorption rate is significantly higher than that of the first four months of 2020. "Absorption is demand," he said.
Other metro rental markets are seeing similar gains, McClenny said, but Austin has some specific advantages. Job creation by companies such as Tesla, Oracle and Samsung and the return of some leisure and hospitality sector positions fuel demand. So too does a steady rate of relocations. Data released by the U.S. Census Bureau on Tuesday shows that the five-county Austin-Round Rock metro grew faster than any other metro area in the country between 2019 and 2020.
Up until early this year, the local rental and housing markets were on divergent post-pandemic paths. Renters were more likely to have suffered job loss as a result of the pandemic or to work in impacted industries, such as hospitality. A glut of new construction in recent years also meant that supply outpaced demand.
The housing market, on the other hand, saw increased demand due to continued job creation, especially in the tech and professional sectors; a millennial-heavy population, with many members starting families and looking for more spacious residences; and record-low inventory.
The scorching housing market may now play a role in the rental market rebound as record-high sales prices and record-low inventory prolong, or even halt, some prospective homebuyers' searches. "Austin's home market is probably hotter than ever," McClenny said. "That has to play into the rental market right now."
The rental market rebound appears to be spread out across suburban and urban core areas. The fastest growing submarkets, according to the ApartmentData.com report, over the past three months are:
- Cedar Park-Leander-Four Points
- Downtown-South Congress-Barton Springs
- The University of Texas at Austin-Mueller area
During the pandemic, residents flocked to the suburbs in search of more space. Despite this urban flight, Austin's urban core submarkets are rebounding more quickly than those in other Texas metros. "Austin has such a unique, desirable urban core," McClenny said, adding that the city's mobility challenges may also be at play as renters return to the office—and their commutes.
The ongoing reopening process is one reason to believe the Austin rental market will continue to grow this summer, which is a typically strong leasing season. One concern, however, is the relatively high number of apartments under construction—nearly 16,000, according to the report—which could temper growth if there isn't enough demand to absorb them.
"You've got a few competing elements here," McClenny said. "I could see a scenario with reopening where it just pushes demand and rents higher."
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Officials are asking certain residents in Bastrop State Park to evacuate as crews work to put out a “very active fire” that is currently 0% contained.
The Texas A&M Forest Service has responded to help local fire departments with the Rolling Pines Fire at 100 Park Road 1A, which is consuming 300 acres. Residents of Pine Hill Drive, Pine Tree Loop, Linda Lane and Lisa Lane are being asked to evacuate.
Today’s Bastrop Rolling Pines Fire is burning along Power Plant Road towards Lake Bastrop South Shore. pic.twitter.com/YCvJkIAg1u
— BastropCntyTexas OEM (@BastropCntyOEM) January 18, 2022
Aviation resources have been called to assist.
According to the Bastrop County Office of Emergency Management, the wildfire sparked during a prescribed burn that took place today, despite wildfire warnings. Park Road 1C from Harmon Road to Park Road 1A had been closed for the prescribed burn.
The blaze is in the same location as the Bastrop Complex Fire of 2011, which burned for 55 days, killing two people, destroying 34,000 acres and around 1,700 homes and buildings. The fire, which started in 2011, became the most destructive wildfire in Texas at the time.
A hotbed for fires, the Hidden Pines Fire started at the same location in 2015, destroying 4,600 acres and 64 structures.
Some road closures have been put in place at State Highway 21 South Shore Lake Bastrop and East State Highway 21.
This is a developing story and will be updated as information becomes available.
After months of record-setting periods for Austin real estate, the Austin Board of Realtors announced Tuesday that the metro's housing market accounted for over $23 billion of economic activity in 2021, making it the biggest year yet for both home sales and median home prices in the metro.
The Austin-Round Rock MSA saw 41,316 homes sold in 2021, 2.5% more than a record-setting 2020. Median home prices skyrocketed as well, rising 30.8% from 2020 to $450,000. The housing market also saw unprecedented impact on Austin's economy, with sales dollar volume jumping to over $23.38 billion, and more homes hit the market in 2021 than any previous year, increasing by 5.9% to 46,449 total homes listed.
(Austin Board of Realtors)
As many recent Austin homebuyers have experienced firsthand, Austin Board of Realtors 2022 President Cord Shiflet said 2021 was the most "exciting, complicated, fast-paced and record-setting housing market" in Austin's history.
Shiflet dubbed the market as "complicated" for a reason—Austin became a case study on supply and demand in 2021, with demand far outpacing the number of active listings, which dropped by 48.2% to 2,348 homes in 2021.
The metro ended the year with 0.6 months of inventory, a far cry from a "healthy" six-month supply, and houses were snatched at breakneck speeds, spending 25 fewer days on the market when compared to 2020. The average home was on the market for 20 days.
But low inventory is more due to high demand than a stagnant homebuilding market, Mark Sprague, Independence Title's state director of information capital, said in the report.
“In 2021, the record number of homes sold were demand-driven transactions and that demand was influenced greatly by companies continuing to target the region for job creation and expansion," Sprague said. "Even though more homes are being built, listed and sold than ever before, our region is still nowhere close to having a comfortable amount of supply to meet the demand, which is why home prices continue to rise steadily.”
Over 23,000 jobs have been promised by companies across the metro as of December 2021, breaking the 2020 record, according to Opportunity Austin, the economic development arm of the Greater Austin Chamber of Commerce. With an influx of major factories and offices, including Tesla's Giga Texas, Samsung's Taylor plant and a planned 33-floor Facebook office, Sprague said the region's booming market paired with a struggling inventory and supply chain issues could be a double-edged sword in 2022.
"In short, 2022 will see a robust market for home sales and property values, but the region must do more to address inventory, ” Sprague said.
Shiflet recommended that potential homebuyers make a decision ahead of predicted increases in interest rates and home prices and said that he hopes local politicians will continue to prioritize affordable housing in the election year.
Still, Shiflet said a record-breaking housing market reflects Austin's growing reputation as a hub for talent, tech jobs and a good quality of life.
"With all the new jobs across the region from exciting companies like Tesla and Samsung, Austin was put on the world’s stage and captured the hearts and attention of so many," Shiflet said. "We are lucky to call Austin our home when it has so much to offer from a great quality of life to a wonderful destination for innovation and opportunity.”
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