Austin Rental Market Update – July 2008

The Austin TX rental market continues to do well overall. Rents are steadily rising for the third year in a row after falling for 4 straight years (2002 through 2005). Average rents for homes in Austin for July 2008 were $1,493 per month. Year to date the average rent is $1,425. the graph below shows nearly the past 10 years of Austin’s rental market and our ups and downs.
Austin Rental Market graph 1999-Jul2008

The rental market is helped now by the fact that fewer renters can qualify to purchase homes, which increases demand. The easy loans that renters were able to obtain from 2002 through 2007 are gone. You need a down payment and decent credit to buy a home now, as it should be.

The chart above shows the past decade of the ups and downs in Austin’s rental market. Despite three years of gains, the average and median rents are still lower than they were in 2000. Yes, that’s right, rents are lower still today than they were 8 years ago. Austin renters have had a great ride, while landlords have been nailed with higher property taxes, insurance costs and repair costs.

I just rented a home I own for $1,225 after an extensive remodel. I rented the same home, in average condition, for $1,325 in 2001. Rents are still very specific to location, price range and condition. We just rented a luxury home for $2,295 that rented for $2,495 a year ago. We simply did not have the number of showings needed to fetch the higher rent this time, and we disallowed large dogs.

Below are July rental stats chart and the year to date stats chart. I’ve added some color formatting to the charts this time. Green fields indicate numbers that are moving in a direction positive for landlords.


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Austin Rental Market Update - July 2008

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Homes only (condos, duplexes, etc. not included) compiled from Austin MLS data

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Jun 2008 Jul 2008 Jul 2007 Yr % Change

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# Rented 733 884 813 8.73%

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Avg List $1470 $1504 $1385 8.59%

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Med List $1300 $1295 $1250 3.60%

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Avg Rented $1457 $1493 $1378 8.35%

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Med Rented $1300 $1295 $1225 5.71%

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Rented/List % 99.12% 99.27% 99.49% -0.22%

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Avg SQFT 1912 1949 1845 5.64%

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Med SQFT 1756 1827 1756 4.04%

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Avg $ SQFT $0.76 $0.77 $0.75 2.67%

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Avg DOM 25 23 27 -14.81%

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Median DOM 16 17 20 -15.00%

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# Expired 50 39 38 2.63%

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# Withdrawn 68 74 90 -17.78%

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Not Rented 118 113 128 -11.72%

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Not Rented % 14% 11% 14% -21.43%


Below are YTD rental stats for July.


As usual, questions, comments and observations are welcome.

Posted by Steve
8 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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Dave - 8 years ago

Steve,

Thank you for the blog! I really appreciate the information and thoughtful analysis. I have a couple questions/comments regarding the data. I am focusing on the Jan-Jul of 07 vs Jan-Jul of 08 since it is a larger sample size (7mo vs 1mo). First, I find it surprising that the number of “Not Rented” has increased slightly even though the avg DOM and Median DOM have decreased significantly. This suggests to me that some landlords are trying to increase rents too quickly? Secondly, I notice that the overall supply of rental homes (# rented + # not rented for 07 vs 08) has decreased significantly (about 2.5%) while, I would imagine, area population growth has increased. This seems very encouraging from a landlord’s point of view. Do you have information on multi-family housing starts and permits? I would imagine that these would be on the rise given the current rental market conditions.

-Dave

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Mike - 8 years ago

what price range is showing the lowest DOM for rentals? i’ve been looking at rentals and they still seem expensive relative to the rental revenue.

Reply
Steve - 8 years ago

Hi Dave,

> This suggests to me that some landlords are trying to increase rents too quickly?

Yes, that’s right.

> Secondly, I notice that the overall supply of rental homes (# rented + # not rented for 07 vs 08) has decreased significantly (about 2.5%) while, I would imagine, area population growth has increased.

Apartments are entering the “Hyper Supply” cycle in Austin, meaning there are way more new ones coming online than will be absorbed. That means people who normally would rather rent a house might be attracted by appartment incentives.

Mike, DOM doesn’t correlate to price range. There is no range that does better than others, in general. That said, once you get higher than $2,000 per month, the pool of renters shrinks, so those can take longer, in general, but not always. Likewise, many lower priced rentals take a long time to rent. The price simply has to match the condition and location or it won’t rent.

steve

Reply
Cherry - 7 years ago

Dave,
We currently rent in Lake Point. Have right @ 2000 sq feet., 2 story, 3 bd,1 bonus room (orig.a bdr but HO removed closet so it’s not usable as a real bdr.),2 small LR, 2 Eating, etc. beautiful yard and fenced. Fence us old. Home is in good condition, tile all down, hdwds up and in master. Only carpet rooms are aux bdrms. Garage is very small. Storage is tight in kitchen. Though in “good condition”the house is dated, laminate counters, clear ash or milkwash on finishes, white appliances.. My question is this: time is coming up for renewal on lease contract. Owner wants $1900. Though this is what we orginally agreed to, it can’t see in this market, it being worth it again. There may be more ammenities for less money in the area. We don’t need the space, it’s ammenities we like. I have been in and around the remodeling business for years and can refinish many things for them and update lighting, etc but is that a viable solution for many owners or do they just not want to hassel with it? Any insight you can offer is appreciated.

cherry

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