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Austin Rental Market Update - Mid Year 2006

July 5, 2006

Rent values for single family homes in the Austin area slid a bit lower in June compared to June of last year. The market is however showing an impressive ability to absorb the additional supply created by investors. The first six months of 2006 compared to the first 6 months of 2005 have seen a 50% increase in the number of homes rented through the Austin MLS. 741 homes were leased through the Austin MLS in June, and almost 4000 for the first 6 months of 2006, which I know must be a record, but I haven’t gone back to verify that yet. The “days on market” is down slightly from the same period last year. Many property managers I know say they are now able to get most homes rented in 30 days or less when they are priced right and in great condition. Very few of the investment homes we sell take longer than 30 days to lease. We continue to advise investors to stay as close to Austin as they can afford, buy homes that are at or near the median price for the neighborhood, and buy investment property that will rent for average or above average rents for the area.

The rental market will turn around when interest rates and home prices get high enough to continue disuading those investors who require better cash flow. We are in an odd grey area right now with Austin’s single family home investment market. It is still a great time to buy due to the upside for appreciation, but fewer investors can afford the increasing cash flow gap that results from rising sales values, higher interest rates and stagnant rent prices. This is starting to weed out the more hesitant investors who are unwilling to accept the negative cash flow associated with down payments of less than 30%. As those more timid investors get weeded out, the investors who have already bought will enjoy rising rents in coming years as the supply of new rental homes to the Austin market slows down. Patience is the name of the game for now.

I’ve put together a year-to-date chart this month along with the monthly data, as we are midway through the year now. I still think we have a chance for 2006 to be the first upturn year since 2000/2001, but it’s just as likely that 2006 will be our bottom-out year for rental rates.


Austin MLS Leasing Stats June 2006 with YTD stats
All MLS Areas - Houses Only
 
June Leasing Stats for Austin 2005/2006
Jan-Jun YTD Leasing Stats 2//5/2006
 
June 2005
June 2006
% Change
YTD 2005
YTD 2006
% Change
# Leased
541
741
+37%
2623
3926
+50%
Avg List Price
$1306
$1278
-2%
$1252
$1238
-1.1%
Median List Price
$1195
$1195
+ 0%
$1150
$1150
0%
Avg Leased
$1298
$1269
-2.2%
$1239
$1227
-1%
Med Leased Price
$1150
$1150
+0%
$1145
$1125
-1.7%
Avg Size SQFT
1837
1841
+0.02%
1795
1823
+1.6%
Median SQFT
1695
1750
- 3.2%
1673
1749
+4.5%
Avg $ per SQFT
$0.71
$0.69
- 2.8%
$0.69
$0.67
-3%
Avg Days on Mkt
52
48
- 7.7%
61
58
-5%
Median DOM
42
38
- 9.5%
49
46
-6%

Below is a breakdown by city, and a 2006 YTD analysis.

Austin Leasing Stats June 2005/2006 Comparison
City Breakdown - Houses Only
 
# Leased June
Avg Leased $
Avg Size SQFT
Avg $ Per SQFT
Avg Days on Mkt
City/Area
2005
2006
%Chg
2005
2006
%Chg
2005
2006
%Chg
2005
2006
%Chg
2005
2006
%Chg
Austin
279
370
+33
1436
1377
-4.0
1830
1749
-4
0.78
0.78
0%
44
40
-9
Round Rock
77
126
+64
1201
1190
-0.9
1966
2075
-6
0.61
0.57
-7%
56
51
-9
Cedar Park/Leander
59
92
+56
1129
1154
+2.2
1880
1974
+5
0.60
0.58
-3%
49
42
-14
Hutto/Manor/Elgin
27
40
+48
1084
1035
-4.5
1790
1777
-0.7
0.61
0.58
-5%
107
69
-36%
Kyle/Buda
34
33
-2.9
1070
1075
+0.5
1716
1828
+6.5
0.62
0.59
-5%
64
43
-33%
Dripping Springs
4
14
+250
1242
1795
+45
1672
2248
+34
0.74
0.80
+8%
21
50
+138%
Lakeway
3
8
+167
1516
1717
+13
2463
2284
-7
0.66
0.75
+13%
52
91
+76%
Pflugerville
38
46
+21
1168
1138
-3.0
1847
1804
-2
0.63
0.63
0%
48
74
-54%
Westlake/Eanes
14
8
-43
2277
2499
+10
2506
2375
-5
0.91
 1.05
+15%
57
32
-44%
Georgetown
17
18
+6
1184
1250
+6
1704
1961
+15
.64
0.64
0%
47
54
+15%

Below is a Year to Date breakdown of the Austin Leasing Market for Jan thru June 2006 compared to 2005.

Austin Leasing Market Year to Date Jan-Jun 2005/2006 Comparison
 
# Leased
Avg Leased $
Avg SQFT
Avg $ per sqft
Avg Days on Mkt
City Breakdown
2005
2006
%Chg
2005
2006
%Chg
2005
2006
%Chg
2005
2006
%Chg
2005
2006
%Chg
Austin
1398
1916
+37
1314
1329
+1.1
1733
1737
+0.2
$0.76
$0.77
+1.3
59
52
-11%
Round Rock
319
605
+89
1182
1165
-1.4
1955
2011
+2.8
$0.60
$0.58
-3.3
65
63
-3%
Cedar Park
Leander
338
487
+44
1121
1161
+3.6
1878
1989
+5.9
 $.60
$0.58
-3.3
54
57
+6%
Hutto/Manor/Elgin
107
225
+110
1071
1028
-4.0
1759
1853
+5.3
$0.61
$0.55
-9.8
86
76
-11%
Kyle/Buda
128
224
+75
1059
1054
-0.5
1744
1798
+3.1
$0.61
$0.59
-3.3
63
63
0%
Dripping Springs
16
38
+138
1425
1635
+15
2000
2159
+8
$0.71
$0.76
+7.0
22
52
+136%
Lakeway
25
35
+40
1784
1710
-4.3
2351
2169
-7.7
$0.76
$0.79
+3.9
104
59
-43%
Pflugerville
185
299
+62
1196
1126
-5.9
1898
1880
-0.9
$0.63
$0.60
+4.8
60
72
+20%
Westlake/Eanes
53
46
-15
2144
2367
+10
2341
2343
0%
$0.92
$1.01
+9.7
69
37
-86%
Georgetown
58
79
+36
1144
1163
+1.7
1788
1841
+3.0
$0.64
$0.63
-1.6
60
59
-1.7%
 
 
# Leased
Avg Leased
Avg SQFT
Avg $ per SQFT
Avg Days on Market
Area Breakdown
2005
2006
%Chg
2005
2006
%Chg
2005
2006
%Chg
2005
2006
%Chg
2005
2006
%Chg
E. Central Austin
MLS Areas 3 & 5
92
151
+64
1026
1050
+2.3
1406
1290
-8.2
$0.73
$0.81
+11
66
62
-6%
S. Central Austin
MLS Areas 6 & 7
58
76
+31
1322
1326
+0.3
1330
1193
-10
$1.00
$1.11
+11
38
37
2.6%
South Austin
MLS Area 10
221
292
+24
1068
1113
+4.2
1500
1494
-0.4
$0.71
$0.75
+5.6
55
45
-18%
Southwest Austin
MLS Area SW
154
205
+33
1474
1491
+1.2
2148
2150
0%
$0.69
$0.69
0%
50
51
0%
West Austin
MLS Area W
25
28
+12
1608
1823
+12
2121
2179
+2.7
$0.76
$0.84
+11
56
52
-7%
Central Austin MLS Areas 1B,4
148
148
0%
1594
1607
+0.8
1504
1386
-7.8
$1.06
$1.16
+9.4
52
41
-21%
NW Hills Austin MLS Area 1A
92
71
-22
1657
1703
+2.7
1578
1472
-6.7
$1.05
$1.16
+10
53
40
-24%
NW Austin
MLS Area RN
25
51
+104
2357
2213
-6.1
2896
2786
-3.8
$0.81
$0.79
-2.4
71
60
+15%
NW Austin
MLS Area LN
23
40
+74
1435
1291
-10
1951
1743
-11
$0.74
$0.74
0%
77
65
-16%
NW Austin
MLS Area 1N
77
96
+25
1238
1305
+5.4
1720
1762
+2.4
$0.72
$0.74
+2.7
54
47
+13%
NW Austin
MLS Area NW
100
120
+20
1206
1294
+7.3
1881
1947
+3.5
$0.64
$0.66
+3.1
54
54
0%
N. Central Austin
MLS Area 2
59
76
+29
1028
1099
+6.9
1199
1202
-0.3
$0.86
$0.91
+5.8
65
44
-32%
North Austin
MLS Area 2N&N
129
153
+18
1102
1125
+2.1
1602
1636
+2.1
$0.69
$0.69
0%
67
59
-12%
N. East Austin
MLS Area NE
40
99
+148
1012
1135
+12
1530
1804
-18
$0.66
$0.63
-4.5
64
61
-4.7%
East Austin
MLS 3E&5E
23
64
+178
988
1054
+6.7
1490
1623
+8.9
$0.66
$0.65
-1.5
90
69
-23%
S. East Austin
MLS 9,11,SE
69
111
+61
1012
1012
0%
1480
1570
+6.1
$0.68
$0.64
-5.9
61
63
+3.2%

Below is the Austin rental summary from 1999 through 2005.

Austin Rental Summary 1999-2005

Posted by Steve Crossland in Austin Real Estate, Rental Market | »

Comments

3 Responses to “Austin Rental Market Update - Mid Year 2006”

  1. Damon Clinkscales on July 6th, 2006 10:16 am

    Hello Steve

    Your blog is interesting. I’ve just discovered it.

    Thank you for the data! Do you create these html tables by hand or use some software to help?

  2. Steve Crossland on July 6th, 2006 10:25 am

    Hi Damon,
    Unfortunately, I currently calculate and enter the data manually. It’s hard to automate it, for a number of reasons, but I am working with a coder to see if it can be done using raw MLS data. It takes a bit of time but it allows me to use that part of my brain and, in a weird kind of way, it’s relaxing and enjoyable for me. I usually do it late at night after the kids are asleep. It beats watching TV and we get very positive feedback from our buyers.

  3. Damon Clinkscales on July 7th, 2006 1:00 pm

    Steve, I do that kind of thing too sometimes with data. Almost like zen meditation or something. Sometimes I write code to process it too. I am a software engineer by day and a wannabe real estate hobbyist at night.

    Let me know if you’d like to talk about the real estate and technology intersection sometime. I’m interested in both.

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