Austin Rental Market Update – August 2007

The Austin rental market saw rising rental rates again for August 2007, up 2.4% over last year to $1384 per month. Not a rise worth celebrating, but a gain nonetheless. The number of homes rented fell 5% though, from 806 last August to 765 this August. This may be due to fewer renters moving to new rentals in Austin (churn), but I thought some of the first time buyers who are now unable to obtain home loans would have helped create higher demand. It may be that the market already absorbed those buyers over the past 6 years and there are simply none remaining.

Below you’ll find a month by month chart, a year to date, and a history of rental rates in Austin going back to 1999. Next month I’ll provide a quarterly breakdown by area through September 2007. As usual, post any comments or questions and I’ll be happy to answer.

Austin Rental Market Stats August 2007
Previous Month and Year Comparison
All MLS Areas - Houses Only

 
July 2007

Aug 2007

Aug 2006

Yr % Change
# Leased
791
765
806
-5%
Avg List Price
$1385
$1394
$1364
2.2%
Median List Price
$1250
$1225
$1200
2.1%
Avg Leased Price
$1378
$1384
$1352
2.4%
Med Leased Price
$1225
$1225
$1200
2.1%
Avg Size SQFT
1848
1871
1882
-0.6%
Median SQFT
1761
1766
1751
0.9%
Avg $ per SQFT
$0.75
$0.74
$0.72
2.7%
Avg Days on Mkt
37
37
44
-16%
Median Days on Mkt
29
31
34
8.9%

Below is the Year to date breakdown.

Austin Rental Market Jan-August 2006/2007 YTD Comparison
All MLS Areas - Houses Only

 
Jan-Aug 2006
Jan-Aug 2007
Yr % Change
# Leased
5680
5532
-2.6%
Avg List Price
$1270
$1338
5.4%
Median List Price
$1150
$1200
4.3%
Avg Leased Price
$1259
$1330
5.6%
Med Leased Price
$1150
$1200
4.3%
Avg Size SQFT
1843
1875
1.7%
Median SQFT
1750
1781
1.8%
Avg $ per SQFT
$0.68
$0.71
4.4%
Avg Days on Mkt
51
46
-10%
Median Days on Mkt
42
34
-19%

Below is the Austin Rental market history graph, through August 2007.
Austin Rental Market Graph

Posted by Steve
9 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.

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Scott - 9 years ago

The real estate fallout in Austin, which will be very minor and short, BTW, will enable a bunch more rental units to go on the
market as investors have trouble selling. I think Steve is right in that renters are simply staying in their rental homes,
seeing that there isn’t much out there, or at least wasn’t when the market was hot not long ago. Give things a bit of time to settle down, and you should see a reasonable amount of new home rentals the next 6-12 months, which will be absorbed immediately by wanna-be buyers bumped out of the loan market, but still jonesing for a home. I understand that some
of the condo projects breaking ground soon may go rental as well, and sellers of condos having a hard time selling may rent out their units soon. In a nutshell, Austin will be white hot for years to come, and this little RE correction should
put a fair share of homes and condos on the rental shelf soon to alliviate the apparent lack of the same…..

Reply
spyglass - 9 years ago

Scott,

Could you explain why you think Austin will be relatively immune from the Housing meltdown?

Reply
Scott - 9 years ago

Why is Austin immune? Good question…First, it doesn’t have very much to melt down, as the area was stagnant for
several years after the tech bust in 2001. Things really didn’t pick up till recently as well. Add to that the very strong economy, and Texas in general booming from energy, tech, and manufacturing, amongst other things, and you have your answer. To sum, Texas is the last affordable viable real estate market left in the US. The state economy is thriving,
and Austin shares in this as well. Add to this the long term growth pattern in Austin going back 20 years or so, and
the fact that Austin has a unique quality of life that is on the national radar, and you would be hard pressed to believe
there will be any residual effects from the national RE meltdown at all. I’m not saying there will be no effect from the macro situation in the greater US at all, just that it will be short and slight, and things will pick up rapidly after that.
Houston, San Antonio, and the Dallas Metroplex will experience the same short, slight glitch, and commence long
term growth vectors quick. Expect, in Austin, a sight slowdown for 6 months at most, after which things will pick
up rapidly…….

Reply
Steve - 9 years ago

> why you think Austin will be relatively immune from the Housing meltdown?

Scott answers is pretty well. Prices in Austin have not climbed to an artificial level from which to fall. At worse, sales will slow and more homes will not sale (expire or be withdrawn). Austin has low unemployment, high job growth, great lifestyle, etc.

There is in fact no “national real estate market”. Markets are local, and each local market has submarkets. Nevertheless, if consumer confidence in housing erodes because people watch too much cable news and believe every negative real estate story they read, and they decide not to buy or to move up in their local market because of that, then even a market with a strong foundation like Austin can be affected.

Steve

Reply
Scott - 9 years ago

One other major stat I forgot to mention is Austin’s rapid income growth. That stat means a bunch, because that
indicates that good-paying jobs are entering the mix, and that companies are profiting, expanding, and sharing the
wealth with employees. It’s really a no-brainer that Austin will fly right over this “correction” like a speed-bump.

Reply
Observer - 9 years ago

Scott, what planet do you live on? Look, what is going on with the greenbuck. It is loosing its value faster than you can blink. Or does Austin have it’s own currency and we are immune from rapid rising prices on groceries, gas, other everyday purchases? It is all about DTI (debt-to-income) ratio and affordability. Last time I checked it was out of scale. Salaries are not rising, not mentioning that the salaries in Austin are way lower than national.
If you add “affordable loans” schemes of the last few years and rising foreclosures to the mix – you’ll get the better picture.

Good luck

Reply
scott - 9 years ago

Observer, I agree that Austin’s income growth starts from a relatively lower base, per the heavy mix of service industry
jobs. However, the mix is changing now with tech, and other financial headquarters like Chase establishing branches
here. Indeed, sometimes it seems like everyone here is either bartending or serving tables, if not playing a guitar on stage, but that is just the remaining vestige of the old Austin, but a still thriving vestige that has its greatest worth in attracting Creative Class people who can relocate their jobs and companies anywhere. And the fact that income is growing
at all is worthy of merit, as anyone from the rust belt midwest or northeast can attest to.
I don’t think anyone will mistake Austin for a major financial center, like New York, Chicago, Houston, and Dallas. Austin
will never pay those kind of salaries because of it. Just like florida workers are paid in “sunshine”, Austinites pay the
same in “vibe”. You can’t have your cake and eat it too(city with cool vibe in out-of-the-way place AND equivalent
salaries of white-collar major cities. Also, Austinites in general emphasize quality-of-life and free time issues ABOVE
salary anyway. Look at all the folks eating and chatting for hours at shady grove, south congress, and east 6th,
and you can see that this will never be a high-salary mecca, as folks will not live in the office doing deals for 16 hours a day here like they do in Houston, New York, and San Francisco. There’s a trade off with everything. That being said,
there is a great future for Austin, in its own way, in its own time, and I imagine most people living there mostly like
it just fine, even with the growing pains……….

Reply
Observer - 9 years ago

We are now hearing the same arguments that we heard in Florida two years ago 😉

– Florida is “immune”.
– Look at the demographics.
– Look at the jobs.
– It’s impossible to overbuild.
– Retirees will move to Florida.

Reply
Rental News » Blog Archive » We are in Austin. What do we think? - 9 years ago

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