Austin, Texas, continues to see explosive population and job growth, which is contributing to a robust multifamily market.
“Austin is unique in a few regards. Depending on what segment of the market, you have built-in demand with a large state university and private universities,” says Zumper senior data analyst Jeff Andrews. “The other factor with Austin especially is that it has become an ‘it’ city in the South. That’s been the case for the past three decades, but it’s been supercharged during the pandemic with tech companies opening offices in the area.”
Texas’ capital city ranked first in demographic expansion in 2020, gaining nearly 69,000 residents, up 3.1% above 2019’s growth rate, according to Doug Ressler, manager of business intelligence at Yardi Matrix. The city’s population experienced a 32.9% expansion during the decade.
The midsized city has been the beneficiary of the tech boom, touting the likes of Apple, Oracle, Tesla, and Toyota, to name a few. The Tesla Gigafactory Texas, which serves as the company’s new global headquarters as well as the U.S. manufacturing hub for its Model Y vehicle and the future home of Cybertruck, opened in April.
It is one of the few metros that has recovered jobs lost during the pandemic, says Ressler. The job market posted a 7.4% expansion, or nearly 86,000 jobs, in the 12 months ending in November.
The city is one of the few metros that has recovered jobs lost during the pandemic, says Ressler, with an unemployment rate of 2.9% in December. The job market posted a 7.4% expansion, or nearly 86,000 jobs, in the 12 months ending in November, outperforming the national rate.
However, even with the strong economic fundamentals, Austin is experiencing housing affordability concerns.
“Austin sits at an inflection point between midsize city and world-class tech hub, which has its advantages and disadvantages,” says Ressler. “On one hand, it boasts a strong economy that helped it recover faster from the pandemic’s woes, but on the other faces a deepening housing affordability issue, as developers struggle to work with an outdated land code to keep up with elevated demand.”
According to Andrews, Zumper data showed the median one-bedroom rent in Austin at $1,560 in April, a 32.3% year-over-year jump, and the median rent for a two-bedroom was $1,940, a 25.2% year-over-year increase.
“That’s not abnormal,” he says. “It is still shocking, but the shocking part is how many markets are in that situation.”
More apartment supply is coming to the city, and Ressler says he has no concerns about the influx since demand is strong.
“Developers delivered 1,075 units in January and had 37,813 units under construction, continuing the accelerated pace of deliveries, which last year marked the best level in a decade,” Ressler adds. “Multifamily sales recorded a new high of $4.3 billion in 2021. The largest project underway is Camber Ranch, a 483-unit property in Dessou, owned by Legacy Partners and Bridge Investment Group and slated for completion in 2024.”
