Rents continue to rise in Austin as more buyers opt to be renters and the supply of homes shrinks relative to demand. See the graph below for a snap shot of the wild ride Austin rental rates have taken since 1999.
It took over a decade for Austin’s rental rates to return to their 2001 peaks. Good for renters but it’s been a rough 10 years for landlords. And not all homes are back to pre-2001 rates, these are just the averages.
For November 2011 compared to a year ago, let’s take a look at the chart below.
|Austin Real Estate Rental Market Update Nov 2011|
|Houses only (condos, duplexes, etc. not included) compiled from Austin MLS data|
|Oct 2011||Nov 2011||Nov 2010||Yr % Change|
|Avg $ SQFT||$0.77||$0.79||$0.73||8.33%|
|Not Rented %||14.27%||18.64%||17.68%||5.40%|
Average Rent prices are up 6%. Median rent values in Austin are up 4%. Homes are leasing 25% faster than Nov a year ago, average 29 days instead of 39. Median Days on Market has fallen from 30 days a year ago in Nov to 20 days this November. The number of expired lease listings has increased a bit, which seems at odds with the other stats, but it’s a pretty small number either way.
Finally, let’s look at the Year to Date stats for the Austin rental market for November 2011.
|Austin Real Estate Rental Market YTD Update Jan-Nov 2011|
|Homes only (no condos, duplexes, etc) – Data from Austin MLS|
|Jan-Nov 11||Jan-Nov 10||Yr % Change|
|Avg $ SQFT||$0.80||$0.76||4.38%|
|Not Sold %||12%||15%||-21.94%|
Year to date, average rent prices in Austin are up 4.6% from the same 11 month time period a year ago. More homes have leased, 9,421 homes leased in Austin Jan-Nov 2011, up from 8.711 during the same time period in 2010. Still, the demand has increased more than the supply.
I expect 2012 to be another strong year for rental rates in Austin. We’re seeing a lot of “buyer quality” renters leasing our homes. I’m seeing FICO scores over 800 from applicants with excellent income. When I ask why they’re renting instead of buying, the responses are a reflection of the general lack of confidence in the U.S. economy as a whole, and specifically the real estate market. Most will become buyers, perhaps within a year or two, but they do not feel a sense of urgency even with interest rate still close to 4%.