Austin Rental Home Market Still Favors Renters

Despite all the great news about our booming sales market in Austin, many of the sales are to investors and the result is an over-supplied rental market. Renters have never had it so good! In Austin TX you can rent a 4000+ square foot brand new home on a golf course for $2200 per month! Oh, and that comes with all the amenities including pool, and recreation facilities. The typical family homes however, 3 bdrm 2 baths with a double garage, about 1800 square feet, lease for between $1,100 and $1,200 on average. You pay between $150,000 and $180,000 to purchase one of these typical rental homes in an area with good schools.

Let’s look at January’s leasing numbers for single family homes in Austin.

Austin Rental Market January 2005 and 2006
Single Family Homes
Year 2005
Year 2006
# Homes Leased
Average List Price
Average Leased Price
Median Leased Price
Average Days on Market
Median Days on Market
Average Size (square feet)
Average Price per Square Foot (monthly)

The average rental price dropped from $1,189 January last year to $1,166 this year.
The average rental home in Austin took 62 Days to lease.
The Median Days on Market was 53 Days.
The average size home increased from 1759 sqft last Jan to 1778 Jan 2006.
The average price per square foot dropped from $0.68 to $0.66.
The number of homes leased increased from 373 Jan 2005 to 550 in Jan 2006.

What does all this mean? If you’re an investor it means you better plan on having the sharpest home on the block and pricing it well. The market punishes greedy cheapskates with prolonged vacancy. You have to spend money making your home look nice, or the renters will pick the better one down the street. And you have to price it below the comparable homes in your area, or it will take months to lease. Remember, it only takes an extra 2 weeks of vacancy to wipe out an extra $50/mo. rent on a $1,250 rental. Vacancy loss is money that is gone forever, never to be recovered. It’s better to keep your home in good condition and rented below market for the next couple of years until our economy starts winning the footrace with the investors.

Below is my Austin historical lease graph. As you can see, rental rates have been in decline for many years now, but the rate of decline is slowing. Will we bottom out and see Austin rental rates turn upward again in 2006? It’s too soon to say, but if January were the sole indicator, the answer would be no.

I repeat this often, but it’s worth repeating – you’re not buying in Austin for cash flow unless you have 30% downpayment, you’re buying because you think our prices will appreciate very nicely in coming years. That means you have to be able to ride out the soft rental market that you in fact contribute to when you purchase a rental property in Austin.

Austin Rental Market 1999 thru 2005

Call Steve or Sylvia Crossland at (512) 301-5811 to learn moe about investment opportunities in Austin TX.

4 thoughts on “Austin Rental Home Market Still Favors Renters”

  1. Steve,

    I have to agree with you. However, we are seeing our “A” grade properties and those properties closer in to town doing better on lease rate and lease time.


  2. Michael and Carrie,

    I filtered out the stats for just “Austin”, thus keeping places like Hutto and Kyle from skewing the results, but it comes out the same. Knowing you bot, I know you put your properties into excellent condition so it makes sense to me that you can beat the averages.


Leave a Comment