The Texas rental market often sets the pace for the entire country, but 2020 has been different, according to new data from apartment marketplace Abodo. Nationally, median rents have moved upward this year, whereas Texas rents have shown a definite downtrend.
The national one-bedroom median rent moved from $1,086 in January to $1,111, a gain of 2.3 percent. Two-bedroom units began 2020 at $1,346 and have risen to $1,359, a slight gain of 0.97 percent.
In contrast, the median one-bedroom rent in Texas was $1,054 in January. It fell to $1,005 in October, a significant 4.7 percent decrease. Two-bedroom units that began 2020 at a median $1,306 dropped 2.3 percent to $1,276 in October.
The declines in Texas can be attributed, at least in part, to oil prices, notes Abodo. West Texas Intermediate crude prices have fallen to $40 per barrel, from a high of nearly $60 per barrel. This, of course, is a big jump from oil’s record 2020 lows, but it's still well below the point of profitability for most oil companies, Abodo says.
Abodo recently explained the depth of the West Texas oil bust in terms of lodging prices: “During the recent oil boom, motel prices — even for budget brands like Motel 6 — were commonly listed $350 per night or more. Now, rooms are available for about $50.”
In Midland, apartment rentals have followed suit, with one-bedroom prices dropping 17.2 percent since January and two-bedroom prices drastically falling 21.1 percent.
The cost of oil and other challenges in apartment leasing amid the pandemic have impacted Texas rent prices, and Abodo expects statewide rents to stay at their current levels or decrease slightly as we head into 2021.
The Austin market is falling right in line with Texas' downward trend. Local one-bedroom units began the year at a median price of $1,298 and fell to $1,268 in October. Two-bedroom units in the Capital City began the year at $1,589 and dropped to $1,563 in October.
Abodo attributes the "slight weakness" in Austin rents to the general economic slowdown, as well as a lack of renewed interest in living downtown.
Will the drop in prices continue? Some real estate professionals see a hotter Austin rental market emerging in early 2021 and say that now is the time to lock in a long-term rent deal before the market makes a resurgence.