As residents of the Austin area continue to reel from record-breaking sale prices for single-family homes, some are pursuing a more attractive alternative: single-family home rentals. But a new study indicates that even those are getting more expensive.
In the Austin area, rents for single-family homes rose 3.5 percent from April 2018 to April 2019, according to the study, produced by CoreLogic. That was the highest increase among Texas metro areas included in the study.
“While the housing market is cooling, home prices remain high in some of the nation’s top metros. This may be contributing to the growing rental demand, as many potential buyers are being priced out of the market,” Molly Boesel, principal economist at CoreLogic, says in a release.
CoreLogic analyzed changes in single-family rents across the U.S. as a whole and in 20 metro areas, including Austin. In Dallas-Plano-Irving, single-family rental rates grew 2.5 percent from April 2018 to April 2019, according to CoreLogic, while the growth rate was 1.2 percent in the Houston area. San Antonio was not included in the study.
Although percentage increases for April 2019 were available, the dollar amounts for single-family rents were not. Dollar amounts for March 2019, however, were available. In the Austin area, the median rent for a three-bedroom, single-family home was $1,548 in March, according to CoreLogic, compared with $1,622 in Dallas-Plano-Irving and $1,408 in the Houston area.
Frank Nothaft, chief economist at CoreLogic, says that as workers continue to be attracted by Austin’s robust, job-creating economy, this “has added to demand for housing and increased upward pressure on rents and prices.”
Among the 20 metro areas examined by CoreLogic, Phoenix posted the highest year-over-year increase in rents for single-family homes — 6.9 percent.
CoreLogic, a provider of property data, services, and technology, says low inventories of single-family home rentals are driving up rental rates around the country. “Metro areas with limited new construction, low rental vacancies, and strong local economies that attract new employees tend to have stronger rent growth,” the company says.
The Austin Board of Realtors recently reported that the median price of a single-family home within Austin’s city limits shattered a record in May, crossing the $400,000 threshold for the first time to hit $407,400. That represented a 5.8 percent price hike compared with May 2018.
Across the five-county Austin metro area, the median price of a single-family home reached $335,095 in May, up 4.2 percent from the same time in 2018, the board says.
Amid that atmosphere, some residents of the Austin area are turning to single-family home rentals, because those require less of an upfront financial commitment than home purchases do. One reason? When you rent a home, there’s no down payment (a 20 percent down payment equates to around $67,000 for the median-priced home in the Austin area). Another reason? Buying a home normally results in thousands of dollars in mortgage-related fees.