The Austin real estate market is always bustling. With a wide range of suburban and urban neighborhoods, as well as affordable living and picturesque scenery, many people look to call this big city home.
Current Austin Real Estate Market Conditions
- The median home price has soared 42.4% year-over-year.
- The number of households in Austin has increased by 31,700 households in the past year.
- Rental prices have increased as well as rental vacancy.
Buying a House in Austin
Austin Home Prices
Austin median home value: $465,000
National average: $371,000
Home prices in the Austin metropolitan area have seen an impressive increase in the past year. Nationally, home prices have risen 22.4%, which is amazing in itself. Austin, however, has seen home price increases of almost double that. At a 42.2% price increase, Austin is seeing higher prices than ever before. Homes in Austin are going for $465,000 on average, while just 5 years ago the average was just $256,000. Even better, Austin’s home prices are still on a rapid upward trend.
Austin Housing Supply
As Austin sees a spike in its housing prices, this big city faces a decrease in its housing supply. Down 1.49 months year-over-year, the housing supply here is at a 1.1 month supply now. It's seeing a similar trend to the national average, where both housing markets are usually at a 2- to 3-month supply. With a minimal supply of housing on the market, competition is high. Homes sell quickly for well above the asking price. It’s harder to get into this market now than in previous years. For sellers, this is great news, as their investments see a great profit. Demand is high and supply is low, making it a true seller’s market. Buyers need to expect to pay more for a home and to make extremely strong offers in order to successfully purchase in this city. While home prices continue to rise, investors might want to get in now while the market is hot, before prices go even higher.
Buying a Rental Property in Austin
Investors looking to buy rental properties in the Austin area need to keep in mind the increase in home prices. While home prices have gone up substantially, rental prices have not gone up at quite such a rapid pace. Vacancies are also high right now, which is something else to consider.
Austin Rental Prices
Austin median rent price: $1,504
National average: $1,704
Rental prices have seen an increase in price. Up 3.9% since this time last year, Austin rental prices are still on an upward trend. Nationally there has been an increase of 3%. However, the prices overall of rentals in Austin are low compared to the national average. Taking into consideration the median home value, Austin’s rental market has low prices compared to nationally, where the home prices are lower and the rental prices are higher. Austin’s rental prices are still seeing a steady increase over the last 5 years though, so that’s good news for investors.
Austin Rental Vacancies
Austin rental vacancy: 11%
National average: 6.8%
Currently, rental vacancies in Austin are high at 11%. They are up 2.3% year-over-year and fluctuate greatly. In October 2020, vacancies were down to a low of just 3%. While this city does have its share of ups and downs in rental vacancies, it’s important to remember that certain areas are more prone to increases than others. Neighborhoods near colleges or popular tourist hotspots are bound to have fluctuating vacancies depending on the time of the year. Suburban, family-friendly neighborhoods may have a more dependable vacancy rate.
Austin Foreclosures
Austin foreclosure rate: 0.2%
National average: 0.3%
Foreclosures in Austin, like most of the country, are at an all-time low. Down 0.1% in the last year, foreclosures are hard to come by. Given the short supply of homes, more people and investors have taken on foreclosures to redo and live in or flip and sell. The many TV shows and blogs about flipping and DIY renovations encouraged the purchase of foreclosures, resulting in a shortage. This outcome benefits the real estate market. Fewer abandoned and distressed houses on the block mean greater value for nearby homes. For investors looking to score a great deal, a lack of foreclosures means more competition and fewer opportunities to invest in.
Austin Neighborhoods
River City
River City is one of the most expensive neighborhoods in Austin. The median home price is over $1.5 million, while rentals average just about $2,500. You find larger homes here, with at least 3 to 5 bedrooms. A mixture of single-family homes and apartment complexes, occupied by renters and owners, dominates the neighborhood. Homes and complexes in this area are somewhat newer, mostly built in the 1970s to 1990s, as well as some recent builds. This wealthy neighborhood is home to highly educated residents, with a range of executive and professional jobs. Almost a quarter of these professionals work remotely in their large, stately homes. Expensive cars and vacations, as well as highly rated private schools, are the way of life for residents of River City.
E Oltorf St / E. Live Oak St.
A popular college neighborhood in Austin is E Oltorf St/E. Live Oak St. The median real estate price here is around $527,325 with rentals around $1,600 per month. Nearly 86% of residences here are renter-occupied and the vacancy rate is 7.8%. The real estate market here is dominated by high-rise apartment buildings and complexes consisting of studio and 1 to 4 bedroom apartments with some buildings dating back to the 1940s. Most are newer, built in the 1970s to 1990s. Many residents here attend college (21.5%) and hold jobs in professional settings, sales and service, tech support and fast-food restaurants. This neighborhood is considered lower-middle-income.
Hornsby Bend
Hornsby Bend is a suburban spot in Austin to take a look at. Homes here are priced around $178,133, but rentals are currently going for $2,032. That’s a great profit for investors; however, most of the real estate here is owner occupied. Homes here are primarily 3 to 4 bedroom single-family homes and mobile homes. With a vacancy rate of 4.8%, it proves to be a neighborhood in demand. Most of the homes are newer, with 62.8% of the real estate here built in the 2000s. This middle-income neighborhood is home to many residents working in manufacturing and laboring jobs, as well as some professional and sales and service occupations. Over half of the population here speaks Spanish and is of Mexican ancestry.
Austin Economic Condition
Like all big cities, the pandemic in 2020 caused huge challenges for businesses, resulting in a surge in the unemployment rate. As businesses try to get back to normal and hire employees back, the unemployment rate in Austin is dropping back down but taking time to get back to pre-Covid numbers.
Austin Unemployment
Austin unemployment rate: 5.3%
National average: 6.1%
In February of 2020, Austin was at a decent rate for unemployment of 2.6%. Then came a surge up to 11.8% while the world dealt with the pandemic and the uncertainty of jobs and businesses. While Austin’s rate has been on a decline and definitely came down from where it was, the rate still had an increase of 1.5% year-over-year. Compared to the national average, Austin’s rate is lower, but nationally the rate is still dropping. The national average has decreased by 8.7% in the last year. Austin’s unemployment rate is on its way down but still not back to where it was before the pandemic. The employment rate has shown an increase of 119,600 jobs. It will just take a little more time to get back to normal.
Austin Top Employers
The largest employer in Austin is the state of Texas. Being the state capital and second largest state in the country, Austin has a lot to take care of. The government jobs here employ over 65,000 people. These jobs range from administrative to management positions, as well as agricultural and laborer positions.
Dell Inc. (NYSE: DELL) is the next largest employer in Austin with over 17,000 employees. Dell Inc.’s headquarters is located in Round Rock, Texas. This company develops and markets computers and services and offers jobs in all skill levels.
Over 13,000 people are employed at The University of Texas at Austin, a nationally ranked research university. It offers a wide range of job opportunities as well as generous compensation. This gorgeous campus has 50,000 students enrolled in a variety of programs and majors.
The Bottom Line on the Austin Real Estate Market
Austin’s real estate market has a very promising and prosperous outlook. Home prices have increased tremendously and over 30,000 new households established themselves in Austin within the last year. Rental prices have increased and employment opportunities are rising. Demand is high for this big city, and there’s no slowing down in sight. The overall real estate market seems to be surpassing expectations.