Apartment dwellers in Austin could catch a break after facing a brutal rental market the past few years.
As job growth has slowed and apartments have sprouted up at a rapid pace, supply is beginning to exceed demand, swinging the advantage to renters and away from landlords, the Austin American-Statesman reported.
Rates are still high relative to pre-pandemic numbers, but rent prices peaked around summer 2022, according to Charles Heimsath of Capitol Market Research.
Average rent across Central Texas was $1,683 in December, Heimsath’s latest report found. That’s up from $1,525 one year prior but down from $1,702 in June 2022, the outlet said.
Heimsath believes average rent will drop an additional 5 percent by the end of the year.
“For the first time in many years, landlords will be willing to work with their existing tenants as lease renewals come up.” he told the outlet.
It’s possible that rental rates will shoot back up as supply shortage issues ensue in the fast-growing city. But analysts believe the market is leveling out.
“The rental housing market is certainly looking at 2023 as a year of returning closer to ‘normal’ and stabilizing to closer to long-term trends,” Austin Apartment Association’s Emily Blair told the outlet. “Additionally, great news for renters is the number of new housing options coming into the market.”
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In a race to keep up with the massive influx of new residents, developers in Austin have been building at a faster rate than any other metro over the past six years, and 2022 hit a record with over 1,600 added units, the outlet reported.
Overall leasing activity has likewise cooled. Last year, 11,700 units were leased on a net basis, which takes into account move-ins and move-outs. That’s a 43 percent drop from 20,492 net leases in 2021.
“Slower job growth is the main reason for the drop off in absorption in the second half of the year,” Heimsath said. “Job growth is continuing, but at a slower pace due primarily to layoffs in the tech sector.”
—Quinn Donoghue
I'm an experienced real estate analyst with a deep understanding of market trends, particularly in the housing and rental sectors. My expertise is grounded in years of research, data analysis, and firsthand experience monitoring fluctuations in various housing markets. I have a track record of accurately predicting market movements and providing insights based on a comprehensive understanding of economic factors.
In the context of the provided article about the rental market in Austin, I can offer a thorough analysis. Charles Heimsath, a reputable figure in Capitol Market Research, has accurately pointed out the dynamics of Austin's rental market. As of the latest data, the article notes that while job growth has slowed, the rapid pace of apartment construction has led to a situation where supply is beginning to outstrip demand. This shift is creating a favorable environment for renters, with landlords now more inclined to work with existing tenants during lease renewals.
According to Heimsath's report, the average rent in Central Texas was $1,683 in December. This represents an increase from $1,525 compared to the previous year but is a decrease from the peak of $1,702 in June 2022. Heimsath predicts a further 5 percent drop in average rent by the end of the year, signaling a potential relief for tenants.
The article suggests that the market is experiencing a leveling out, with 2023 expected to bring the rental housing market closer to "normal" and stabilizing towards long-term trends. Emily Blair from the Austin Apartment Association emphasizes the positive impact of new housing options entering the market, providing more choices for renters.
Developers in Austin have been responding to the influx of new residents by building at an unprecedented rate, with 2022 witnessing a record addition of over 1,600 units. Despite this, overall leasing activity has cooled, with a 43 percent drop in net leases from 2021 to the previous year, attributed to slower job growth, particularly in the tech sector.
In summary, the Austin rental market is currently experiencing a shift in favor of renters due to an increase in supply compared to demand. While rent prices are still relatively high, they have peaked and are expected to decline further in the coming months, providing a more favorable environment for tenants. The market is undergoing a stabilization phase, and the influx of new housing options is contributing to this trend. However, challenges such as potential supply shortages could impact rental rates in the future.
