Austin Apartment Rental Market Still Going Strong
Apartments somewhat mirror the Austin residential real estate rental market (houses and duplexes), though not always directly. A weak apartment market, such as that which occured in Austin from 2002 through 2005, hurts the rental market for homes and duplexes. Renters who would normally not rent an apartment can’t resist the free rent and other incentives that the apartments will provide when they demand falls. I had a tenant who rented a duplex from me in 2002, saying he couldn’t wait to get out of his apartment. A year later, at renewal time, he turned around and moved back into an apartment, even as I offered to lower his rent. He said he was getting 3 months free rent on a 15 month lease, plus a free washer and dryer and paying only a $50 deposit. I couldn’t compete with that.
Here is an article below from today’s Austin Business Journal about the Austin Apartment market, which is doing very well now, which means our homes and duplexes should continue to do well also.
Austin Business Journal – 1:56 PM CDT Wednesday, May 23, 2007
Gains in occupancy and rental rates continue to paint a positive picture in the Austin apartment market.
The local market saw occupancy creep up less than a percentage point in April to 93.38 percent — the highest occupancy level of any of the major Texas markets, according to a new report from Texas real estate services firm O’Connor & Associates. Average rent per unit rose $2.05 in April to $794.23. The month also saw the absorption of 77 units for a total of 1,907 in the last 12 months.
The O’Connor report shows 5,353 units now under construction in the market with another 4,573 proposed. The most active submarkets in terms of new product are downtown and Southeast Austin.
Another apartment report from Marcus & Millichap Real Estate Investment Services suggests the landscape will only improve. Austin is expected to add 24,200 jobs this year, an employment increase of 3.3 percent. That’s not as robust as the 4.8 percent job growth posted last year, but still a strong showing. Marcus & Millichap forecasts that vacancy will drop to 6.8 percent by year-end and owners are likely to raise effective rents 5.4 percent to $747 a month.
Still, the apartment market is contending with a growing local condo craze. Dozens of condo projects small and large are popping up across the area, and with apartment rents rising, an expanding segment of residents that have rented heretofore are exploring for-sale options. That said, the population is rising rapidly and the number of apartment units delivered this year will be more than double the number of completed condos, according to the Marcus & Millichap report.