Austin, Texas, renters might have caught a break when the pandemic hit, but it seems those days are over. Rents are now up in the area -- notching the highest monthly increase in at least five years.
According to Housing Tides, the current average rent in Austin clocks in at $1,524 -- up about $30 in just the last month and $52 from the pandemic trough. The numbers likely come as welcome news for local landlords, who saw rents drop to their lowest point in years last October.
Fortunately, after steady rent increases since the start of 2021, it seems there's finally been a turnaround in the Austin market. Here's what investors need to know and how to capitalize on the trend.
What's driving rents upward?
In looking at the data, there's a lot that could be contributing to the increase in rents. For one, the city has a severe dearth of housing at the moment. Austin has less than a one-month supply of homes for sale -- lower than both the national average and the city's year-ago numbers.
When you throw in the area's population growth (it's gained almost 32,000 households in just the last year), rentals are one of the few options many of these new residents have left.
The city's younger demographic likely plays a role as well. Nearly one in five Austin residents is in the 20-to-29 age range -- a prime renter category. Another 20% are 30 to 39. Considering the average age of a homebuyer is 47 years old, according to the National Association of Realtors, many of these residents may be years off from owning a home -- particularly in today's high-cost market.
How you can leverage the trend
Whatever the reasons behind Austin's rising rents, they present a prime opportunity for real estate investors -- particularly those who choose their properties (and locations) well.
According to the data, Class A apartments, those on the higher-end of the spectrum, have recovered the most, with rents rising 10% in just the last six months. Class C properties are also doing well; only a mere 24% are offering concessions, and rent specials are much smaller on these than other properties (just -4.5%, on average).
As far as locales go, properties in the Cedar Park/Leander/Four Points community seem to be booming. The area has seen a near-30% annualized growth rate. With median home prices recently surpassing $500,000 in the area, this one's no surprise. It's been one of the hottest neighborhoods in the region for a while.
Other top rental markets in the area include:
- Downtown/SoCo/Barton Springs
- University of Texas/Mueller
- Round Rock/Georgetown
- Pflugerville/Tech Ridge/Wells Branch
The bottom line
With housing supply at a premium, booming population growth, and new Apple (NASDAQ: AAPL) and Tesla (NASDAQ: TSLA) headquarters slated to hit the scene next year, Austin continues to be a smart market to invest in. This latest news only solidifies that.
Check out our Austin market report to learn more about local real estate conditions and to get your pulse on the market.