Rental rates, occupancy to rise in local Austin rental market
Although the article below specifically references apartments, the single family and duplex rental markets generally run parallel to whatever is happening in the multi-family rental market in Austin. Rental prices in turn have an effect on home prices. In general, this is more good news for Austin real estate investors and sellers alike.
Source: Austin Business Journal 8/23/2005
Rental rates, occupancy to rise in local apartment market
Apartment owners will be able to post modest increases in rents this year and slowly eliminate concessions, according to a new market report. The report was issued by Encino, Calif.-based Marcus & Millichap Real Estate Investment Brokerage Co.
“Austin’s apartment market will continue to record improvement this year, as several key market fundamentals have turned positive,” says Bradley Bailey, sales manager of the firm’s Austin office.
“Job growth and in-migration are lifting renter demand, leading to rising rents and solid returns,” Bailey says. “The expanding economy and high quality of life will continue to attract new residents. These trends have positive implications for the local rental housing market going forward.”
The market study found:
· Austin’s economy continues to pick up steam this year, with job growth on pace to reach 3.5 percent in 2005 as 23,500 positions are added.
· Builders are on pace to deliver 1,700 (apartment) units this year, up slightly from 2004 but the second consecutive year in which completions will be less than 2,000 units. Developers are sensing that an uptick in demand is on the horizon due to the improving job market and consistent in-migration over the past few years. Currently there are more than 3,000 units either under construction or in the planning stages.
· Apartment vacancy in Austin is on course to decline to 9.4 percent by year end as job growth and in-migration drive demand. Class A properties in the entire metro area have posted a vacancy reduction from 12 percent to 9 percent so far this year as rent concessions and impressive amenities have successfully lured renters from single-family home rentals. Properties in the Central submarket near the University of Texas currently have the lowest vacancy at 8 percent, and vacancy may move lower during the remainder of 2005 as a greater number of college graduates are able to find local jobs.
· Asking rents are on track to rise 0.9 percent to $764 per month this year, while effective rents are expected to increase 1 percent to $620 per month.
· Encouraged by improving market fundamentals, sellers will continue to price properties aggressively, leading to further price appreciation.
During the past 12 months, the number of transactions in the $5 million and above price range has increased as institutions and private investors have become active in the Austin marketplace. Total annual dollar volume during the most recent 12-month period reached its highest level since the boom years of 2000 and 2001.