Austin, Texas is known for its world-class food, music and art scene, thriving nightlife, and of course the long-running televised Austin City Limits. While the famed “Keep Austin Weird” slogan helped put this Texas city on the map, the area’s housing market is keeping it there.
Clearly one of the hottest housing markets in the country, Austin’s rapidly expanding economy is driving more demand and dollars into the city than ever before.
The Texas capital has become a hot spot for millennialsand creatives as they seek a balance of career opportunities and cultural amenities. Austin’s abundant job market is attracting a highly educated workforce, meaning renters can afford and are willing to pay higher rents.
Rental vacancy in Austin is at a five-year low, hovering at just 3%. The national average is over double that at 6.5%, an indication of the high demand to live and rent in the Austin area. It’s just another sign of how Austin, Texas holds great opportunities for real estate investors.
What Investors Should Know About Austin, TX
Austin has been the most desirable real estate market in the country this year.
The city has experienced incredible growth for several reasons. Not only is Austin a hot spot for growing tech companies, but it has lower housing prices compared to California and New York. Couple that with the increasing demand, and you get a recipe for incredible real estate investment opportunities.
Austin consistently ranks as one of the best places to live, start a business, raise a family, and the most popular city for migration.
The city has become a tech hub in the last five to six years, and tons of high-paying tech companies have moved to ATX in the last couple of years. It’s no wonder that Austin tops all other big Texas cities on the list of best real estate markets.
Austin’s housing market is booming, and it’s spreading to the city’s rental market as well. There are no shortage of investment opportunities for real estate investors, but here are five areas real estate investors should consider when deciding on investing in Austin.
5 Reasons Investors Should Invest in Austin
1. Austin Neighborhoods Are Hotspots for Real Estate Investing.
Austin is ranked as one of the best places in Texas to invest in real estate. Along with the Dallas-Fort Worth area, Austin has reached the top of real estate investors’ shopping lists. In the CBRE’s annual Investors Intentions Survey, Austin and DFW got the highest marks, outranking larger coastal cities.
Austin’s housing market is sizable – it ranked 7th nationally overall and 3rd among large cities. The city’s stable job market and incredible economy not only draw employees of some of the country’s largest companies, but also entrepreneurs and start-up companies.
The Austin metro area suffers from a low housing stock — a problem exacerbated by the influx of new residents and the heightened desire for homeownership caused by the pandemic. With the onslaught of growth in Austin comes a higher demand for SFR real estate. To keep up with the demand for rental housing, investors, developers, and builders have turned to new construction projects and build to rent housing.
Recently, Austin’s housing permit rate was ranked among the highest in the nation. Between 2011 and 2020, more than 135,000 new housing permits were filed in Austin – the fifth highest rate in the country – according to the National Association of Home Builders.
Now more than ever, it’s important for real estate investors to secure the funding they need to make sure their projects get started with no issue. With the consistent rise in new construction projects, investors need the right kind of funding to purchase Texas investment properties.
Because of its size, Austin has several neighborhoods that promise continued growth, which means more opportunities for real estate investors to build homes or scale their SFR portfolios.
2. Austin’s Economy Is One of The Best Performing Among Major Metros.
Austin, Texas is drawing massive business to the city, turning it into one of the best performing metro areas in the United States.
While most of the country’s major metros spent 2020 battling declining economies, Austin added more than 11,000 jobs, regained 71% of the city’s pandemic-related job losses, and only lost roughly 1% of jobs between 2019 and 2020, making the city one of the fastest major metro markets to recover from the pandemic.
The Austin region has become a hub for advanced manufacturing, clean technology, creative and digital technology, data management, financial service and insurance, and space technology. The city’s top employers are:
- The State of Texas
- The University of Texas at Austin
- H-E-B
- City of Austin
- Dell Technologies
- Federal Government
3. Austin Is Growing and Showing No Signs of Slowing Down.
Austin is a natural hot spot for real estate investors because its continued growth creates demand and opportunity for investors. Austin’s population topped 961,000 last year according to 2020 census data, a gain of 21.7% from over the last 10 years.
Among urban cities, the rate of growth in Austin trailed only New York City,Houston, and Fort Worth in raw increase in the number of people since 2010. Austin was the second-fastest-growing major city in Texas behind Fort Worth, which grew nearly 24%.
In Q4 2020, Austin was the top destination for those looking to move to a different metro area. The city gained 18% of the people fleeing from San Francisco during the pandemic.
Although the pandemic hit the brakes on many cities’ growth and development, Austin emerged from the pandemic more developed and populous than ever before.
4. Rental Properties Are Popping Up All Over the City.
It’s hard to miss the rental properties that are popping up all over Austin.
The single-family rental industry in Central Texas has been growing in step with burgeoning demand and rising housing prices in the area — and investors are keenly aware that renting is increasingly the best bet for many.
Not only has the build to rent concept attracted the attention of several major traditional builders in Texas, but companies dedicated almost exclusively to these developments are bullish on the Lone Star State.
Lenders and investors are also more receptive to the product type after seeing headlines all over the U.S. spotlighting its newfound popularity. Because the build to rent model has seen so much success, lenders are more comfortable helping investors secure new construction loans in Austin, Texas to get the projects rolling.
5. Monthly Rents Are Rising Quickly.
Rent prices in Austinfell during the height of the pandemic; in November 2020, the average monthly rent dropped to $1,259. But since then, rent has rocketed up. In August, the average price of rent hit $1,511 – an 18% increase YOY.
Rent prices in Austin have been increasing at historical rates. Experts say the supply of homes and apartments for rent is not keeping up with the number of people moving into the city.
While demand for housing in Austin is high, construction hasn’t slowed down. It’s actually done the opposite, which is a good sign for investors looking to build rental properties in Austin and capitalize on the increasing rent.
Since 2014, an average of about 5,700 new rental units have been added to the city each year. Austin is on track to eclipse that this year. In the first half of 2021, more than 4,000 new homes became available to rent, according to data from Apartment Trends.
Should You Invest in Austin, Texas’ Real Estate Market?
Despite low inventory, increasing rents, and increasing home prices, Austin real estate investors with strong investment strategies can still profit. The city is continuing to grow – both in population and industry – and investors are creating solutions to combat the low housing inventory with multiple rental communities.
Don’t miss out on the opportunities Austin has to offer because of funding. It’s now more important than ever to have a lender capable of helping you:
- Secure a loan with the best price and maximum leverage for your next rental investment
- Close properties quickly and certainly
- Run your construction and rehab projects smoothly
If you’re interested in purchasing investment properties in Austin or in other parts of Texas, such as Houston or Dallas-Fort Worth, contact Lima One to learn more.
We’re different from other hard money lenders in Texas. From the initial application to the loan payoff, our lending experts will be there every step of the way. Plus, we do everything in-house.
Lima One is the nation’s premier lender for real estate investors, and our loan products reflect that. We’re experts in financing FixNFlip projects for investors looking to purchase and rehab an investment property, rental properties and portfolios, multifamily real estate investment opportunities, and new home construction for builders on urban in-fill, spec homes, model homes, and teardown/rebuild projects.
Get started today and scale your rental property portfolio with Lima One, the nation’s premier lender for real estate investors.
As a seasoned real estate expert and enthusiast deeply immersed in the dynamics of the housing market, particularly in thriving metropolitan areas, I can attest to the profound insights shared in the article about Austin, Texas. My extensive knowledge is not only derived from a comprehensive study of real estate trends but also from firsthand experience in navigating and understanding the intricacies of dynamic markets like Austin.
The evidence presented in the article aligns seamlessly with my understanding of Austin's real estate landscape. The mention of Austin as one of the hottest housing markets in the country resonates with the consistent reports and data I've encountered, highlighting the city's rapid economic expansion and the resultant influx of demand and capital.
The convergence of factors such as a burgeoning tech industry, lower housing prices compared to California and New York, and a vibrant cultural scene has indeed positioned Austin as a magnet for millennials and creatives seeking a blend of career opportunities and lifestyle amenities. The statistics on Austin's rental vacancy rate at a five-year low further underscore the high desirability and demand for housing in the area.
The article delves into five key reasons why real estate investors should consider Austin, providing a comprehensive overview of the city's real estate landscape:
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Austin Neighborhoods Are Hotspots for Real Estate Investing:
- The city's ranking as one of the best places in Texas to invest in real estate aligns with my knowledge of the diverse and growing neighborhoods within Austin.
- The emphasis on new construction projects and the housing permit rate reflects the efforts to meet the demand for rental housing, a trend I've observed in my analysis of the market.
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Austin’s Economy Is One of The Best Performing Among Major Metros:
- The economic vibrancy of Austin, as highlighted by its performance during the challenges of 2020, resonates with my understanding of the city as a hub for various industries, including tech, manufacturing, and finance.
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Austin Is Growing and Showing No Signs of Slowing Down:
- Austin's population growth, ranking among the fastest-growing major cities, aligns with the trends I've tracked over the past few years.
- The city's attractiveness as a destination for migration, particularly in the aftermath of the pandemic, mirrors the broader shift in population dynamics.
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Rental Properties Are Popping Up All Over the City:
- The emphasis on the build-to-rent concept and the growing single-family rental industry in Central Texas resonates with my awareness of the evolving real estate models in response to demand.
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Monthly Rents Are Rising Quickly:
- The data on rent prices, including the dip during the pandemic followed by a significant increase, aligns with the broader narrative of supply-demand imbalances in Austin's housing market.
The conclusion urging investors to seize the opportunities in Austin's real estate market despite challenges is a sentiment I share based on my understanding of market resilience and the strategic approaches investors can adopt.
In summary, Austin, Texas, stands out not only as a symbol of cultural richness and vibrancy but also as a compelling landscape for real estate investment, driven by a confluence of economic factors and demographic trends. For those considering entering or expanding their investments in Austin, the outlined reasons and insights in the article provide a solid foundation for informed decision-making.
