Austin Sees First Signs Of Apartment Market Stabilizing
Austin, which has seen steep year-over-year increases in rent, could see rents leveling out in the coming months.
Austin does not rank among the markets with the biggest multifamily rent percentage increases, according to Abodo. Those are New Orleans and, surprisingly, Corpus Christi. Nor is Austin on the end of the market that saw rent drop. That is Glendale, Arizona, and St. Paul, Minnesota. Nationally, rent is holding steady.
The median price of a one-bedroom apartment is $1,154 in Austin, while a two-bedroom unit goes for $1,429. That is a bump of 2.6% from July to August, just in time for the return of students at the University of Texas at Austin, one of the hottest multifamily market segments.
“It’s not the most incredible rent growth. It’s around 2%,” Abodo's Sam Radbil said. “That median rent of $1,154 ranks Austin as 26th in the country. That’s pretty good compared to rising rents in the country.”
But Radbil, an Austin native and Austin condo owner, does not have to run the numbers to see the Austin multifamily market changing. He lives through the trends not necessarily reflected in Abodo numbers.
He sees the scale in the rental market beginning to tip from a landlord's market to a renter's market. When Radbil first bought his condo on Congress in 2010, it commanded $1K a month in rent. Since then, Austin became the nation’s crane capital, and rent steadily rose to $1,500 a month. Now Radbil, who currently lives in Chicago, is finding it hard to get that $1,500, given the new projects that have come online, such as Davis SoCo, Windsor South and Post South entered the market.
“Supply and demand is evening out,” Radbil said. “Five years ago, a landlord could have asked $1,600 and the renter would take it. They had no choice. All the leverage was with the landlord,” Radbil said. “There’s not so much of that anymore.”
The size of Austin also plays a role, Radbil said. Mopac not withstanding, Austin is not like Houston or Chicago, where it takes an hour to cross the city. A millennial can be just as happy with a newer property off Slaughter or up Burnet with more amenities than settle for a pricier unit near Downtown.
Softer rent growth is a sign the market is stable, Radbil said, not a sign the market is getting cheaper. Plenty of companies, especially Roscoe, are flipping apartments for rehabilitation. Most of those apartments, however, are only slightly cheaper than their new-construction neighbors. Older housing stock still will pull down higher rents.
“But you’re not bidding up prices on homes and apartments,” Radbil said. “I live in Chicago. You could go to a rental show, and by the time you got back to your apartment to get your checkbook, someone else has snapped it up. It’s competitive in Austin, but not as competitive as it could be.”
Austin renters should expect the rental market to stabilize and remain steady. Nowhere in Austin is going to be cheap to rent any time soon.
“At the end of the day, you can’t control the fact everyone loves Austin so much,” Radbil said. “You get the benefit of living in Austin, but you also get the downsides.”
For those interested in more on the Austin multifamily market, you can hear from the experts on Sept. 12. For more information, go here.