Vacation Rentals in Austin – Good or Bad?

short term rentals austin

Last week I attended the VRBO “stakeholder’s meeting” held by the city of Austin. The meeting was the first in response to growing complaints from neighborhood groups and individuals about the burgeoning VRBO (Vacation Rental by Owner) business in Austin. There were over 100 attendees representing both sides of the debate, as well as some just there to listen, like me. The discussion was lively.

The Anti-VRBO Point of View
Imagine living next to or across the street from a VRBO house in Austin. This home is essentially a guest house for vacationers, year-round. You’re nowhere near a lake or vacation spot. You live in Allandale, or Barton Hills or Travis Heights. Each year, you witness a parade of 50 or more different groups, in and out of the home – every weekend – coming to enjoy UT football, ACL Fest, South by Southwest, and any number of other Austin attractions. Even if the visitors don’t cause problems, have loud parties, or otherwise bother you, you’d still probably rather have a family or other permanent residents living in the home. You’d rather have actual neighbors in your neighborhood instead of a constant stream of strangers on vacation or visiting locals.

The Pro-VRBO Point of View
Imagine you own a home, well located in central Austin. Perhaps you inherited it from a parent, or you purchased it many years ago and kept it as a rental when you moved to the suburbs. For whatever reason, you’d like to hang on to it. Because of the high property taxes, it doesn’t work well financially as a long term rental anymore, with taxes and insurance alone eating up more than half the gross annual rents.

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Austin Rental Market – 2010 Update

Average and median rents for homes in Austin continued to rise in 2010, but still remain lower then the peak in 2001. Hard to believe, but rents in Austin are still lower than 10 years ago.


As indicated by the graph above, rental rates in Austin topped out in 2001 with the Tech bubble and a surge in growth in Austin and companies hired and expanded. Immediately thereafter, when the Tech bubble popped and 9/11 followed, Austin lost jobs, homes were hard to sell, and rental demand decreased as the inventory of available homes increased.

Below is a chart of the year over year stats comparing the 2010 Austin rental market to 2009.

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