Austin Rental Market – September 2006 Update

Leasing Market Update

Below are the stats for the Austin Rental Market for September 2006 and for 2006 year-to-date.

We are now in the slower rental season in Austin. From September through around March is not the ideal time to rent a home in Austin. It’s not a disaster to have a vacancy during this time frame, but the last time I ran stats for it (about a year ago), a typical home in Austin rents for about $50/mo less and takes an average of 10 days longer to rent in the fall/winter than it does in the spring/summer. You can see the fall-off in averages by looking at the August to September comparison below, as school has started and families and students have already settled in by August. (Renters – you can get better deals this time of year, but you have fewer homes to choose from)

As a landlord in Austin, it’s always best to keep your leases ending in the summer cycle if possible, with move-in date after and before school starts. This isn’t always easy to do. We just rented a home with a 12 month lease because that’s what the tenants really needed. In that case, the renewal would be the time to reset the turnover cycle if they decide to renew after 12 months. Another one we just rented we were able to lease it through June 2008, thus giving the owner a longer occupancy and setting the lease ending date back to a summer cycle. A rent increase was written in at the 12 month point.

The other option when you have vacant rent properties during this time of year is to do a shorter 6 to 9 month lease, but that can result in more than one turnover in a 12 month period, which isn’t good either.

OK, to the stats below. There is virtually no change from September 2005, although it looks like homes are renting a bit faster than this time last year. I sound like a broken record, but the story is the same – we have so much new inventory being supplied by investors that it’s making it hard for rental rates to move up. When investment activity slows down, and supply diminishes relative to demand, rental rates will be able to increase. Homes in Austin still rent for less today, on average, than they they did in 1999.

 

Austin Leasing Stats September 2006
Previous Month and Year Comparison
All MLS Areas – Houses Only
August 2006
Sept 2006
Sept 2005
Yr % Change
# Leased
773
606
559
+8%
Avg List Price
$1363
$1270
$1271
0%
Median List Price
$1200
$1185
$1150
-3%
Avg Leased Price
$1352
$1255
$1256
0%
Med Leased Price
$1200
$1175
$1150
+2%
Avg Size SQFT
1887
1842
1827
+1%
Median SQFT
1753
1734
1743
-1%
Avg $ per SQFT
$0.72
$0.68
$0.69
-1%
Avg Days on Mkt
44
51
57
-11%
Median Days on Mkt
34
42
47
-11%

 

Below is the year-to-date stats for the Austin Rental Market. We are just slightly ahead of last years’ pace, which means we might be at the bottoming out point in this 5 year downward slide in rental rates, but we still have three slow months ahead and a lot of inventory on the market. As of this morning (Oct 7, 2006), there are 1470 single family homes listed for rent in the Austin MLS. We can expect 600 to 700 of those to lease by next month. That’s a lot of unrented homes to roll into next month’s inventory.

Austin Leasing Stats August 2006
Year to Date Previous Year Comparison
All MLS Areas – Houses Only
YTD Sept 2006
YTD Sept 2005
Yr % Change
# Leased
6211
4492
+38%
Avg List Price
$1268
$1261
+1%
Median List Price
$1150
$1150
0%
Avg Leased Price
$1256
$1247
+1%
Med Leased Price
$1150
$1150
0%
Avg Size SQFT
1844
1803
+2%
Median SQFT
1750
1695
+3%
Avg $ per SQFT
$0.68
$0.69
-1%
Avg Days on Mkt
54
60
-10%
Median Days on Mkt
42
48
-13%

 

Below are year-to-date Austin leasing stats broken down by MLS area. This month I also added a new column – Average year Built. It’s interesting to note that, with a couple of exceptions (Dripping Springs (Area HD) and near Lake Travis (Area RN)), the homes in newer areas have average rent rates and per square foot rent rates below the overall averages for Austin. These homes are cheaper though, so the question then becomes – was the purchase price significantly lower that it still makes sense to invest in these areas?

I’ll have to run an analysis on gross rent multiplier to find out about that, which I may do soon. But since none of these homes provide positive cash flow, appreciation potential is still what we focus on most when advising investment buyers. Would you rather have break-even cashflow in an area with little or no appreciation, or a -$500 cash flow on a home appreciating at +$1500 per month?

 

Austin Leasing Stats September 2006 Year-to-Date
by MLS Areas- Houses Only
MLS Area
# Leased
Avg $
Leased
Avg
SQFT

Avg $
Per
SQFT

Avg
Days
Avg Yr Built
Area 1A
20
$2175
2294
$0.95
49
1976
Area 1B
138
$1858
1604
$1.16
43
1945
Area 1N
151
$1383
1858
$0.74
44
1984
Area 2
119
$1143
1218
$0.94
38
1958
Area 2N
101
$1066
1454
$0.73
59
1974
Area 3
134
$1118
1401
$0.80
54
1963
Area 3E
50
$1073
1469
$0.73
68
1994
Area 4
128
$1582
1344
$1.18
54
1954
Area 5
117
$1007
1207
$0.83
59
1967
Area 5E
50
$1026
1691
$0.61
70
2003
Area 6
85
$1321
1203
$1.10
40
1954
Area 7
22
$1419
1415
$1.00
38
1957
Area 8E
31
$2664
2339
$1.14
29
1979
Area 8W
71
$2228
2511
$0.89
41
1991
Area 9
17
$1107
1382
$0.80
37
1974
Area 10
456
$1136
1518
$0.75
41
1986
Area 11
98
$984
1417
$0.69
59
1988
Area BA
61
$950
1568
$0.61
43
1987
Area BL
0
0
0
0
0
0
Area BU
3
$1231
1710
$0.72
30
1987
Area BW
11
$990
1619
$0.61
57
1990
Area CC
5
$895
1294
$0.69
29
1987
Area CL
758
$1175
2000
$0.59
53
2000
Area EL
16
$1018
1860
$0.55
79
2000
Area FC
0
0
0
0
0
0
Area GP
0
0
0
0
0
0
Area GT
133
$1160
1835
$0.63
54
1995
Area HD
67
$1650
2189
$0.75
58
1998
Area HH
321
$1081
1822
$0.59
55
2003
Area HS
7
$1137
1848
$0.62
103
2004
Area HU
202
$1035
1879
$0.55
68
2004
Area HW
23
$1296
1814
$0.71
96
1993
Area JA
2
$1325
1603
$0.83
46
2005
Area LC
0
0
0
0
0
0
Area LH
2
$987
1321
$0.78
14
1963
Area LL
0
0
0
0
0
0
Area LN
66
$1240
1655
$0.75
60
1986
Area LS
158
$1743
2118
$0.82
53
1993
Area MA
99
$1051
1837
$0.57
81
2004
Area MC
0
0
0
0
0
0
Area N
136
$1180
1721
$0.69
48
1989
Area NE
158
$1131
1779
$0.64
56
1997
Area NW
196
$1300
1955
$0.67
49
1987
Area PF
478
$1143
1930
$0.59
64
2000
Area RN
84
$2313
2862
$0.81
51
2001
Area RR
951
$1178
2015
$0.58
58
1998
Area SC
41
$1225
2119
$0.59
57
2000
Area SE
50
$1060
1881
$0.56
76
2001
Area SV
6
$940
1560
$0.60
53
1976
Area SW
328
$1493
2152
$0.69
46
1997
Area TC
10
$752
1335
$0.56
69
1965
Area W
48
$1743
2129
$0.82
51
1989
Area WE
1
$695
1110
$0.63
38
1920
Area WW
1
$1250
2016
$0.62
19
1993
All Areas
6211
$1256
1844
$0.68
54
1992

 

Comments and Questions are welcome.
Steve

Posted by Steve
10 years ago
Steve

Steve is a Real Estate Blogger, Husband and Dad, UT Austin Grad, Runner, Real Estate Broker and owner of Crossland Team and Crossland Real Estate in Austin TX.

Click Here to Leave a Comment Below

Jim - 10 years ago

Hmm, I made a chart for September and average prices for sales are up 12% while the rental market looks flat. I think a lot of people are buying to live nowadays, which is driving up prices, while fewer people are renting. It’s getting tougher and tougher to even break even with investment single-family residences.

Reply
Mark - 10 years ago

Looks go for buyers right now. No need to lease if you can just go out and buy a home. Phoenix was like this for quite a while until the home prices are too expensive and then a rental market boom came right after. Basically it tells me that Austin home affordablility is still pretty good. Great for first time buyers and bad for investors looking to lease rather than flip.

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