Would-be homebuyers aren’t the only ones struggling to find an affordable place to live in the Austin area — new data shows rents skyrocketed in 2021, moving the goalpost for affordable housing even further out of reach for some.
According to ApartmentData.com, rents in the Austin metro went up about 25% between December 2020 and December 2021. The median rent for an apartment in Austin hit $1,560 last month, the highest level of all major Texas metros.
This rent spike is unlike anything the Austin market has ever seen. Median rent climbed steadily in the past decade, except for 2020, when it fell 3.9%. The highest year-over-year change was between 2012 and 2013, when rent rose 7.6%, according to ApartmentData.com.
Experts attribute the exploding rental market to job growth, an influx of remote workers and a highly competitive single-family housing market.
“People are becoming renters first or renters longer,” said Bruce McClenny, president of ApartmentData.com.
The apartment market faces similar issues as the single-family home market. The apartment construction pipeline is robust in Austin, with 47 communities totaling more than 13,000 units currently under construction, and another more than 37,000 proposed units, according to ApartmentData.com. Even still, it seems no match for the rising tide of demand.
In the past year, 14,763 new units opened in metro Austin. During the same time, 22,281 were “absorbed,” meaning they went from being vacant or not on the market to being occupied. McClenny said absorption is one of the easiest ways to track demand.
“Any time you have such a disconnect between absorption and the new supply, you know we’ve got some issues with supply and demand,” he said.
McClenny said the metro area needs more supply, but the construction time necessary for dense apartment developments means there will be some growing pains.
Austin is a majority-renter city: About 55% of residents rent rather than own, according to U.S. Census Bureau data. But the rental market extends beyond just apartments. Single-family rentals have risen in popularity in recent years, a trend spurred on by the pandemic as people seek homes with more space and privacy than traditional apartment buildings.
Jonas Bordo, CEO and founder of apartment rental agency Dwellsy, said Austin’s single-family-rental market is one of the things that makes it so attractive to people looking for a new place to settle.
For the entire rental market, including apartments and single-family, median rent in Austin went up 38.8% — from $1,405 to $1,950 — in 2021, according to Dwellsy.
The home-rental market is starting to look a lot like the home-buying one. A recent report from KUT notes that bidding wars — renters offering landlords more than asking rent — have begun to occur in Austin.
Bordo said this phenomenon makes sense given the rapid and massive increase in rents for single-family properties, which in Austin were up 84% in 2021, according to Dwellsy data.
“With rents up at that much, I’m not the least bit surprised that you’re hearing about bidding wars on rental homes,” Bordo said. “When things are moving that fast, and prices are rising that quickly, nobody knows what the right price is.”
Rental bidding wars seems to be the exception, not the rule. It’s also less likely in large, corporate-managed communities.
“All this bidding up is shadow-market activity, which adds and better explains that it is out of the mainstream, professionally managed apartments,” McClenny said.
Austin’s rental rise, while huge, follows a national trend. In 2021, nationwide median rent jumped 11%, three times the normal increase, according to Dwellsy.
Publication: Austin Business Journal