KVUE — A new real estate forecast suggests those who rent in Austin should brace themselves for another increase in rent prices in 2015.
Andy Hill, senior vice president of Berkadia Commercial Mortgage, LLC, said job and production growth play a part in the rent increase. "It all comes down to supply and demand," said Hill. Berkadia's latest market review predicts rent will jump 4.5 percent by the end of the year, making the average rent at market price $1,185 a month.
Berkadia predicts rent will jump 4.5 percent by the end of the year, making the average rent at market price $1,185 a month.
"I think you've got to dive into that number a little bit. That number includes the demolition and re-development of sites from older class C or D apartments into [a] new product, which by its nature carries higher rents," said Hill.
He also said new, high-end complexes play a factor in a higher rental average.
But if the average rent is $1,185 dollars a month, some wonder how much money they need to make to live in Austin.
"I'm used to, you know, living off of a coffee shop job and be able to make it and live more sustainably," said resident Douglas Kennedy.
City of Austin staff consider "affordable" housing to be 30 percent of a person's monthly income. That means a person would need to make $3,950 a month or $47,400 a year if their rent is $1,185 a month. But the city considers the living wage to be $11 an hour, which only equals $22,880 a year.
"It seems like the population of working class citizens in Austin now are getting pushed further outside of the city center," said Kennedy. Which makes it hard for him because he works downtown.
While some can't afford to live downtown or in Central Austin, rent in other parts of the city and even the suburbs is also increasing because of the demand.
"All the new stuff that's been built over the last few years has largely been leased up," said Hill. "The good news for renters in the city of Austin is developers continue to put new product on the ground. We're continuing to see new product in markets outside of the CBD (Central Business District) and outside of Central Austin."
According to the Berkadia report, developers are set to build 10,670 units in 2015. Hill said the more affordable units will be in the cities just outside of Austin. He added that he expects the rental market to plateau at some point, but no one knows when.
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