Rental Rumblings

Austin declared one of the hottest rental markets in the nation right now

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Rentals are in high demand.

Austin is in high demand, and that's not going to change anytime soon. A new report from online real estate investment firm HomeUnion has named Austin one of the most desirable rental markets in the U.S. for 2017, making it a sound choice for local and remote real estate investors.

In fact, Austin is No. 9 on the report's ranking of highest demand markets, which means it boasts some of the strongest supply and demand fundamentals in the nation.

"An influx of millennial job-seekers drawn to the low cost of living compared to coastal markets, combined with growth in internet and technology sector jobs, make Austin one of the most desirable metros for renters," says Steve Hovland, director of research at HomeUnion, in a release.

And, a bonus for investors (but not good news for those striving to own a home), a limited number of Austin renters will graduate to homeownership. "Austin has a large population of educated millennials, so it’s unlikely that homeownership levels are going to go up significantly in this market, considering the all-time high levels of student loan debt," says Hovland.

Those investing in the Capital City are targeting properties desired by young families in the technology and internet space, notes the report. Approximately 36,000 new positions are expected to be added in Austin in 2017, says HomeUnion, with the professional and business services sector, led by high-tech and internet-based companies, fueling the growth.

While the report focuses on factors that influence the balance of risk versus reward for investors, we can also glean insights for local renters. Here's what Austin renters can expect this year:

Single-family rental vacancy in Austin is expected to drop to 3.9 percent.
Rents are expected to grow to $1,735 per month, up 2 percent from 2016.
Austin’s year-over-year employment growth is projected at 3.6 percent, much higher than the national growth of 1.7 percent.

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Homebuyers can afford to be picky as Austin housing inventory rises

Photo by Avinash Kumar on Unsplash

Housing economist Clare Losey said the most significant factor affecting home sales in Austin is high mortgage rates.

The latest real estate report from Unlock MLS and the Austin Board of Realtors (ABoR) has revealed housing inventory is still on a steady rise in the Austin-Round Rock-San Marcos MSA, creating more choices for potential homebuyers as they navigate a high interest rate market.

Residential home sales dipped by a mere 1.5 percent year-over-year from October 2023, amounting to 2,248 closed sales in the Austin-Round Rock-San Marcos MSA. Median prices have also dropped to $430,000, or 3.2 percent less than this time last year. More than 3,300 new home listings were added on the market — a 7.4 percent increase from 2023 — bringing the total number of active home listings to 11,599.

According to Unlock MLS and ABoR housing economist Clare Losey, Ph.D., October's mortgage rates stood at 6.4 percent and are showing no signs of a significant drop in the near future. Even heading into 2025, Losey says potential homebuyers who are biding their time in the hopes of seeing rates plummet "may be in for a long wait."

"In the meantime, sellers must recognize that bringing buyers to the table requires a more aggressive pricing approach," Losey said. "Even in a more balanced market, buyers with limited purchasing power are struggling to meet current price expectations."

As for the overall health of the Central Texas housing market, 2024 Unlock MLS and ABoR president Kent Redding labeled recent news reports that called Austin "ground zero" for a downturn as an "extreme over-exaggeration."

"Austin led the state and nation in record-breaking home price growth and sales activity during the pandemic," Redding said. "For three years, near-zero housing inventory, numerous offers above list price and a rapid-paced market raised home prices and left little negotiating power for buyers. During this record-setting growth, ABoR and Unlock MLS consistently emphasized the unsustainability of the rapid growth, and now, our market is working to balance those extremes."

Central Texas housing trends in October 2024

In Travis County, 979 homes were sold last month — a slight 2.5 percent increase from last year. Median prices remained flat year-over-year at $510,000. Active home listings continued growing to 5,702 homes, which is 9.4 percent more year-over-year.

In Williamson County, 807 homes were sold in October, with median prices steadily dropping to $420,000. There were 1,028 new home listings on the market, showing a 4.5 percent increase from October 2023, bringing the total number of active home listings to 3,369.

Residential home sales dropped by nearly eight percent in Hays County in October, totaling 315 sales. Median prices also fell 5.5 percent year-over-year to $359,000. Active listings rose 6.6 percent year-over-year to 1,740 homes with the addition of 534 new listings on the market.

Meanwhile, 114 homes were sold in Bastrop County last month, which is 4.4 percent more than this time last year. Median prices dropped by a single percentage point year-over-year to $355,000. There were 654 active listings on the market in October, and 152 new home listings, representing a 1.3 percent slip in new inventory when compared to last year.

Only 33 homes were sold in Caldwell County in October to reflect a near 14 percent decline year-over-year from October 2023. Median prices fell to $262,990, which was a 13.5 percent decrease from last year. There were 136 active homes on the market last month, and 40 new homes added on the market.

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