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.
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|
|Avg $ SQFT||$0.76||$0.79||$0.76||3.47%|
|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|
|Avg $ SQFT||$0.77||$0.74||4.31%|
|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.