Austin Rental Market Update – Aug 2010

The Austin rental market remains strong, and rent values continue to rise overall. Let’s start with a look at the historic rental value graph. Going back to 1999, the YTD 2010 average and median rental rates still remain below the peaks of 2000/2001.

Austin Rental Market graph 1999-2010 Aug

The big dip in rental rates in Austin following the peak in 2000/2001 was a result of the tech bubble (does anyone even remember that) followed by 9/11. Around the tail end of 2005 our real estate sales market started picking up after remaining flat for 4 years, and rental values started to rise as well. We’re almost back to where we were at the start of the decade.

Next, the chart below shows August year-over-year rental market stats for Austin.

Austin Real Estate Rental Market Update August 2010
Houses only (condos, duplexes, etc. not included) compiled from Austin MLS data

July 2010 Aug 2010 Aug 2009 Yr % Change
# Rented 1114 1085 977 11.05%
Avg List $1,538 $1,582 $1,519 4.15%
Med List $1,325 $1,350 $1,295 4.25%
Avg Rent $1,525 $1,569 $1,508 4.05%
Med Rent $1,300 $1,350 $1,295 4.25%
Rent/List % 99.15% 99.18% 99.28% -0.10%
Avg SQFT 1998 1989 1978 0.56%
Med SQFT 1858 1833 1805 1.55%
Avg $ SQFT $0.76 $0.79 $0.76 3.47%
Avg DOM 33 25 32 -21.88%
Median DOM 23 17 24 -29.17%
# Expired 32 47 38 23.68%
# Withdrawn 133 102 144 -29.17%
Not Rented 165 149 182 -18.13%
Not Rented % 12.90% 12.07% 15.70% -23.11%


The far left column is the preceding month and is included as reference, but it’s the middle and right columns that we compare. August 2010 compared to Aug 2009 shows about a 4% increase in rental rates for both the average and median prices. The average rent for a single family home in Austin for Aug 2010 was $1,569/mo, and the median was $1350. Average size was just under 2000 sqft. The rent rates will typically drop though, as we head into the slower fall/winter season. July and August are the peak leasing months in Austin.

The Days on Market we exceptionally low for Aug with the average home leasing in 25 days and a median time of 17 days. In a market with normal demand, DOM average is usually 30 to 45 days. The “Not Rented” stats just tell us how many homes were placed on the market and then removed in Aug without leasing. This could be because the home sold instead, or the owner went into foreclosure, or the owner decided to remain in the home and not move, or possibly gave up on the agent and pulled the listing and re-listed with a different company. Whatever the reason, 12% is a reasonably low number of failed lease listings, again indicating a strong market for landlords.

Finally, the year to day chart for Jan-Aug 2010 compared to the same period in 2009.

Austin Rental Market Update – YTD Aug 2010
Homes only (no condos, duplexes, etc) – Data from Austin MLS

Jan-Aug 10 Jan-Aug 09 Yr % Change
# Rented 6407 6434 -0.42%
Avg List $1,506 $1,471 2.38%
Med List $1,295 $1,295 0.00%
Avg Rented $1,492 $1,457 2.40%
Med Rented $1,295 $1,273 1.73%
Leased/List % 99.07% 99.05% 0.02%
Avg SQFT 1935 1971 -1.83%
Med SQFT 1775 1816 -2.26%
Avg $ SQFT $0.77 $0.74 4.31%
Avg DOM 30 41 -26.83%
Median DOM 18 29 -37.93%
# Expired 276 390 -29.23%
# Withdrawn 744 1135 -34.45%
Not Sold 1020 1525 -33.11%
Not Sold % 13.73% 19.16% -28.32%


The year to date rental rates for homes in Austin are up 2.4% and 1.72%, less than the Austin rates as a percentage. Note that the average for the year is less than the August average. Homes typically lease for higher rates during the summer season, which is one of the reasons we always try to time our leases to end between April and July when possible.

In summary, the Austin rental market continues it’s march back to equilibrium. As a percentage of sales values, we’re still way below market rates, but with the “new normal” and what have you, it’s hard to know if or when rental rates will return the the once-normal 1% of sales value instead of the 0.5%-0.8% of sales value we see today.

Questions and comments are welcome.

Posted by Steve
6 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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M1EK - 6 years ago

I’ll anectdotally disagree – both us and our next-door-neighbors (next door to our home, not our rental property) had a heck of a time leasing this fall. We ended up going down a couple hundred bucks and got the place leased (thanks for your reference); the property next door to us is empty for the first time in a decade.

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Steve Crossland - 6 years ago

Hi Mike,

Yes, I completely agree with your observation. It is in fact a house by house market. We often have difficulty leasing specific properties. Though that is often due to tight qualifying standards. I have one Central for which we’ve declined two sets of applications and just dropped the rent to $1650 from $1800. I have another in South Austin with the same issue, unqualified applicants, but we haven’t dropped rent on it yet as we’re getting plenty of showing activity.

But yes, it’s frustrating when, even in a good market, some units just don’t get leased as fast as others.
Steve

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M1EK - 6 years ago

I don’t think it’s a good market overall; neither one of us has had significant problems before; and this isn’t his only property that he’s having trouble with this year. I also see more signs up (anectdotes again) near campus than is typical for this time of year.

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Shawn - 6 years ago

Do you have neighborhood specific numbers? I’d be curious to how rents have changed in west campus as compared to the rest of the city. My impression is that increased supply there (combined with relatively static demand) has resulted in reduced prices. I would also expect it to have reduced demand for apartments (like M1EK’s) that students might have looked at in prior years, whereas they can now live closer to campus.

Are landlord incentives included in the price? I.e., if a landlord is saying “two months free,” which is effectively a ~15% discount on rent, is that reflected in your statistics?

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