There’s no doubt we are emerging from one of the most unique and trying years our modern civilization has ever confronted. Hopefully, we will never again have to endure a pandemic of this scale. In the face of this unexpected challenge, Austin, Texas, continues to flourish (on a relative basis), and its real estate industry is poised to become one of the strongest markets in the nation, if not the world. A key discipline within the industry is the apartment rental market, which is currently facing obstacles but continues to successfully navigate market conditions.
Economic growth and expansion
Even amid COVID-19, Austin has received extremely exciting corporate relocation news. Earlier this year, Tesla announced the first of a multi-phase manufacturing/assembly facility that will open in summer 2021. On December 11th, Oracle announced the relocation of its corporate headquarters to Austin. The magnitude of this announcement is reverberating across corporate boardrooms throughout the country. Several publications have stated this is simply the beginning for Austin and Texas as a whole, as firms look to establish themselves in right-to-work states with pro-business initiatives and policies.
One other factor that plays into the high demand for apartments is the increase in pricing in the housing market. Just imagine what the housing market will do when corporations like Tesla, Oracle, and Google start adding jobs from entry-level to executive level. The increased cost to purchase a home naturally increases the demand for multifamily. Especially as new individuals and families are moving to town and still getting a feel for the area. The data below shows some trends as of December 2020…
- Home sales across the Austin-Round Rock MSA (Metropolitan Statistical Area) are up 16.2% year over year to 3,626 sales.
- The median price is up 15.8% to $370,000.
- New listings are up 10% to 3,747.
- Sales dollar volume increased by a whopping 41.1% to $1,784,023,513—An all-time record. Pending sales jumped by 40.8% to 3,114.
- Active listings are down by 50% to 3,501 properties for sale.
- Homes across the MSA spent an average of 36 days on the market, 25 days fewer than December 2019.
- Months of supply is 0.6 months—a sign of a strong seller’s real estate market.
Why is this significant to us?
The metro Austin apartment inventory is now approaching 200,000 units—a growth rate of 75 percent over the last eight years. While many cities would wilt under the pressure of this ongoing development surge, the Austin market has flourished. The ongoing supply has marginally outpaced demand, but even in the face of COVID-19, the overall Austin market remains approximately 92 percent occupied. Austin’s population growth and need for more residential product is further underscored by a new report from industry research firm Redfin, which found that Austin is currently attracting twice as many out-of-town homebuyers relative to this time last year. Unsurprisingly, the Bay Area is the top region from which people and jobs continue to flow into the state capital.
Apartment rental surveys reflect a positive response to both garden and urban product, so developers are leading the way to address future renter demand in this burgeoning market. While these numbers may appear daunting, there is evidence to support a potential demand total of approximately 18,000 units in 2021. These numbers reflect not only pent-up demand from 2020 but also the activity of renters who are moving away from the aforementioned “doubling up” and back into their own abodes.
As you can see, no matter which way you slice it, Austin is hot. Be on the lookout for an Austin deal specifically picked for you, and we can all be part of this new growth.