Austin's housing market is booming. The market reflects what is happening in other major cities across the country. While activity appears to have slowed slightly in recent months, Austin's residential real estate market remains extremely hot, with prices increasing significantly over the last year. Austin real estate remains a seller's market, owing to low-interest rates, strong in-migration, a rapidly recovering local economy. In November, the Austin housing market continued its record-breaking pace.
Despite a calming trend, it is still on track for a record-breaking year. While home sales in the Austin-Round Rock metro area fell 4 percent, the median sales price increased 29 percent year over year to $470,000, setting a new November record. A lack of supply is lagging strong demand, causing home prices to rise. While inventory remains low, we can attribute this to the Austin market's high demand and the churn of new homes listed and sold in less than three weeks (22 days) in the majority of cases.
Austin's housing market has been one of the strongest in the country over the past few months. Austin's rapidly expanding economic industry is driving more people into the city which is increasing the housing demand. A surge of people moving in from other parts of the country, combined with rapid population growth and low mortgage interest rates, has turned Austin and its surrounding area into a sellers' market.
According to a new study, Austin homes are among the most overvalued in the United States. According to the study conducted by researchers from Florida Atlantic University and Florida International University, homebuyers in Austin are paying nearly 51% more than expected for houses. The only metro area where homebuyers pay a higher premium is Boise, Idaho, where homebuyers pay an astronomical 81 percent more.
Austin also ranked near the top of the list of metro areas with the highest percentage of homes selling above list price in August. According to Zillow, 5.3 percent of all homes in Austin sold for more than 30% above their list price in the second quarter of this year. According to the Austin Board of Realtors, the median home price in the Austin metro area reached $480,000 in July, up 37% from the previous year but sales have declined in all the counties.
As of November, the typical home in the Austin-Round Rock metro area is worth $534,443. This is a seasonally adjusted value that only includes homes in the middle price tier. Home values in Austin-Round Rock Metro have increased by 43.7 percent in the last year, and Zillow predicts they will increase by 20.7 percent in the coming year.
The current trends indicate that a slowing growth rate in sales indicates market stabilization but the demand is still outpacing the supply in a market where housing prices have reached all-time highs. As a result, Austin home prices are skyrocketing, and buyers are bearing the brunt of the burden. Low inventory, high buyer demand, and rising prices will continue throughout the year, creating a competitive market. The median sales price is surging in double-digits and will continue to rise over the next twelve months.
Home construction is booming in the Austin area, but it's not fast enough to keep up with the region's brisk demand. Inventory is still extremely low and continues to fall. The months of supply is just 0.8 months, which means at the current pace of sales it would take only 4 weeks for the supply to dwindle to zero. In November 2021, new listings increased by 6%; active listings decreased by 2% as compared to Nov of last year. Pending sales were up 7% to 3,407. Homes only spent an average of 22 days (down by 13 days) on market last month across the MSA.
Looking at this trend, the Austin area needs more housing supply at all price points to stabilize home price growth in 2021. Access to affordable homeownership has become a concern for many Austin residents due to continually growing home prices, but with dwindling inventory, lot and labor shortages, and rising building costs, getting more affordable homes on the market isn't easy.
Austin Housing Market Trends 2021 (Latest)
Austin is the capital city of the U.S. state of Texas, as well as the seat and largest city of Travis County, with portions extending into Hays and Williamson counties. According to Realtor.com, in November 2021, the median listing home price in Travis County, TX was $550K, trending up 23.6% year-over-year. The median listing home price per square foot was $296.
- There are 29 cities in Travis County.
- West Lake Hills has a median listing home price of $2.5M, making it the most expensive city.
- Hornsby Bend is the most affordable city, with a median listing home price of $335K.
- The median listing home price in Austin, TX was $579,000, trending up 24.5% year-over-year.
- The median listing home price per square foot was $317.
- There are 83 neighborhoods in Austin.
- Tarrytown has a median listing home price of $2M, making it the most expensive neighborhood.
- West University is the most affordable neighborhood, with a median listing home price of $322,000.
Austin's housing market was impacted by the pandemic which led to a decline in home sales due to critically low levels of housing inventory. As sellers backed out amid growing uncertainly and health crises, the Greater Austin area also felt the stark effects of this crisis. More and buyers are moving to Austin’s suburbs to adapt to a new work-from-home culture. Companies like Google and Tesla are moving operations to Austin. The software giant Oracle has also relocated its headquarter here.
As more companies move here, that means more people looking for homes, and the city is also attractive to outside investors. With a steady influx of job creation in the pipeline, the housing market will continue to post strong numbers well into 2021. Big companies moving here will also play into what happens to the housing market. With historically low mortgage interest rates (below 3%) and an all-time high in corporate relocations, the housing demand is way up and the supply side cannot match up.
Below are the latest housing market trends for the Austin-Round Rock MSA released by the Austin Board of Realtors. The report compares key housing metrics from Nov 2021 with Nov 2020. Their data shows that the market is stabilizing, as normal seasonality in terms of closings has returned, even though median sales prices have maintained their increases from 2020. The data indicates that despite a decline in November home sales, the HOUSING MARKET IS ON TRACK FOR A RECORD YEAR, according to the Austin Board of REALTORS® October 2021 Central Texas Housing Report.
The region's housing market has slowed considerably from its frenetic pace at the start of the year. However, inventory is still at an all-time low and homes are still selling as soon as they hit the market.
- Home sales across the Austin-Round Rock MSA are down 4% year-over-year.
- The median price is up 29% to $470,000.
- More sellers are entering the market this season, so new listings are up 6% year-over-year.
- Sales dollar volume increased by 20% to $1.88 Billion.
- Pending sales rose by 7%.
- Active listings dropped by 2% year-over-year.
- Homes across the MSA spent an average of 22 days on the market, 13 days fewer than Nov 2020.
- Months of supply is 0.8 months — a sign of a strong seller's real estate market.
Still, it is a good time for buyers and investors who want to invest in Austin especially with interest rates being as low as they are right now. Many of those fortunate enough to have kept their jobs are looking to take advantage of low mortgage rates by jumping into the market. The main concern is the critical lack of inventory which can make it increasingly difficult for buyers to find homes that suit their requirements.
It has dropped to 0.8 months as of Nov 2021 — meaning if no new listings were added in the area, the existing homes on the market would be sold in less than four weeks. Although most of the market is for resale homes the complicated new construction permitting process is one of the reasons for the city's low housing inventory. According to local builders, zoning regulations, permitting hurdles, and other issues limiting the supply of new construction affect their ability to build new houses. But it’s mostly a supply and demand imbalance leading to price increases.
Austin (City) Housing Market Trends
November 2021 (YTY CHG)
|High demand drove the median home price up 24.2% year-over-year to $540,000—a record for the month of November.|
|Home sales decreased by 4.3% to 1,053 sales.|
|Sales dollar volume jumped 17.6% to $705,190,726.|
|During the same period, new listings decreased 1.9% to 880.|
|Active listings decreased 22.2% to 822.|
|Pending sales increased 3.6% to 1,049.|
|Monthly housing inventory decreased by 0.3 months year over year to 0.7 months.|
Travis County is the fifth-most populous county in Texas. Its county seat is Austin, the capital of Texas, and is part of the Austin–Round Rock Metropolitan Statistical Area. Property values are rising in Travis County, which can be beneficial if you are selling or planning to sell your house soon. The median price for residential homes increased 24.6% year over year to $529,500. Home sales decreased 5.5% to 1,622 sales, while sales dollar volume rose 16.4% to $1,112,101,674.
Travis County Housing Market Trends
November 2021 (YTY CHG)
|Home sales decreased 5.5% to 1,622 sales.|
|Sales dollar volume increased 16.4% to $1,112,101,674.|
|The median price for residential homes climbed 24.6% to $529,500.|
|During the same period, new listings decreased by 2.7% while active listings decreased by 13.6%.|
|Pending sales increased 5% to 1,672 contracts.|
|Monthly housing inventory decreased by 0.1 months year-over-year to 0.8 months.|
Other County Reports From ABoR – Aug 2021
These trends have echoed in all the five counties of the Austin-Round Rock Metro. Price increase accompanied by a drop in home sales except for two counties.
Williamson County: Home sales decreased 1.3% to 1,105 sales, while sales dollar volume rose 37.2% to $549,681,505. The median price rose 36.5% to $445,000, and new listings increased 12% to 1,011 listings. During the same period, active listings rose 24.7% to 753 listings, and pending sales also increased 13% to 1,151 pending sales. Housing inventory increased 0.2 months to 0.7 months of inventory.
Hays County: Home sales decreased 16.3% to 329 sales, while sales dollar volume dropped 3.8% to $159,743,802. The median price for homes rose 27.9% to $390,000. During the same period, new listings increased 24.4% to 418 listings, while active listings also rose 7.6% to 466 listings. At the same time, pending sales increased 2.2% to 417 pending sales. Housing inventory stayed level at 1.1 months of inventory.
Bastrop County: Home sales increased 3.4% to 122 sales, and sales dollar volume rose 44.4% to $47,225,012. The median price also increased 32.2% to $345,000. During the same period, new listings increased 6.5% to 115 listings, while active listings decreased 11.7% to 182 listings. Pending sales increased 6.9% to 124 pending sales and housing inventory decreased 0.5 months to 1.4 months of inventory.
Caldwell County: Home sales increased 5.7% to 37 home sales, and sales dollar volume increased 58.9% to $12,023,519. The median home price increased 29.3% year over year to $265,109. At the same time, new listings increased 117.4% to 50 listings, while active listings decreased 17.7% to 56 listings. Pending sales increased 38.7% to 43 pending sales, and housing inventory decreased 0.6 months to 1.8 months of inventory.
Austin Real Estate Market Forecast 2022
What are the Austin real estate market predictions for 2022? Austin housing market is shaping up to continue the trend of the last few years as one of the hottest markets in the nation. Austin’s engine of job and population growth is not projected to slow down anytime soon—the biggest drivers of residential real estate demand. Its economy has diversified and strengthened over the past two decades.
All these factors indicate that this region has a higher probability of withstanding economic downturns due to the current pandemic. To determine the best local real-estate markets in the U.S., WalletHub compared 300 cities of varying sizes across 24 key indicators of housing-market attractiveness and economic strength. They looked at factors like a median home-price appreciation to home sales turnover rate to job growth.
The city of Austin's real estate market came in at number 7 overall and 3rd among large cities. Boise was found to be the best market in the nation, followed by Seattle, Frisco, Nashville, and Gilbert in the top five. Let us look at the price trends recorded by Zillow (a real estate database company) over the past few years. The typical value of homes in Austin is $448,406. Since 2012, Austin's home values have appreciated by nearly 90%.
According to their report, the value of the Austin Metro housing market grew by $141 billion, or 126%, in the past decade. In 2010, the market was worth about $111 Billion. In 2019, Austin's total housing value grew $22 billion, or 9.5%, year-over-year. Home value growth in Austing has outpaced the national average since 2010.
NeighborhoodScout's data also shows that Austin real estate appreciated 102.01% over the last ten years, which is an average annual home appreciation rate of 7.28%. This figure puts Austin in the top 10% nationally for real estate appreciation. During the latest twelve months, Austin's appreciation rate was 6.20%.
In the latest quarter, Austin's appreciation rate has been 2.24%, which annualizes to a rate of 9.25%. Looking at these statistics, it is a no-brainer that Austin home prices are going to rise over the next twelve months. Clearly, for the long-term investment, you cannot underestimate Austin. Investing in a rental property for the long-term would build your equity and also generate cash flow through rental income. If you want to increase your cash flow in 2021 or 2022, you will find great deals in the Austin real estate market.
Here's Zillow’s housing market forecast for Austin, Travis County, and the Austin-Round Rock Metro. The Zillow Home Value Forecast (ZHVF) is the one-year forecast of the Zillow Home Values Index (ZHVI). ZHVF is created using all homes, mid-tier cut of ZHVI and is available both raw and smoothed and seasonally adjusted.
Housing inventory remains low in many major cities across the nation, and Austin is no exception to that. According to their forecast, the supply and demand dynamics will likely push prices north again over the next 12 months. This confirms yet again that Austin is a hot seller's real estate market. There exists a limited supply of homes in Austin, and buyers are forced to compete often resulting in higher prices and/or quicker sales that tend to benefit sellers.
- Austin-Round Rock Metro home values have gone up 43.7% over the past year and the latest forecast is that they will increase by 20.7% over the next 12 months (By Nov 2022).
- Austin (City) home values have gone up 39.4% over the past year and a similar or a little less rate of appreciation is expected over the next 12 months.
- The typical home value of homes in Austin is $612,645. (Zillow Home Value Index).
- This shows that prices are going to rise to the point where most people can’t afford it in this city.
- Travis County home values have gone up 40.2% (current = $588,664) over the past year and will continue to rise over the next 12 months.
- Williamson County home values have gone up 50.5% (current = $496,330) over the past year.
- Hays County home values have gone up 45.6% (current = $442,117) over the past year.
The chart below, created by Zillow, shows the growth of median home values since 2011 and their forecast until Nov 2022.
These numbers can be positive or negative depending on which side of the fence you are — Buyer or Seller? The pandemic has not had much impact on home prices. Historically low-interest rates, tight inventory, and strong demand have favored sellers in the Austin housing market. In a balanced real estate market, it would take about five to six months for the supply to dwindle to zero. In terms of months of supply, Austin can become a buyer’s real estate market if the supply increases to more than five months of inventory. And that’s not going to happen. The inventory in Austin MSA has dropped to critically low levels (0.8 months) due to an extreme shortage of housing supply.
For sellers in the Austin housing market: It’s a good time to sell a home as homebuyers are still looking to buy homes, and fewer homes on the market mean stronger demand and increased visibility for your property. There are plenty of potential buyers amid record-low levels of inventory levels across the MSA. The one variable that will hold the market back is the lack of inventory.
For buyers in the Austin housing market: It is a great opportunity to scoop up their favorite deals due to low mortgage rates. Historically low-interest rates are a driver in the market response will continue to act as a driver despite the overall impact of the pandemic. All-time-low mortgage interest rates are also making refinancing a house more appealing.
Real estate market forecasts given in this article are just an educated guess and should not be considered financial advice. Real estate prices are deeply cyclical and much of it is dependent on factors you can’t control. Many variables could potentially impact the value of a home in Austin in 2022 (or any other market) such as big changes in the distressed, new-construction, or luxury home segments. There are also a wide variety of economic and political factors that can and do impact real estate markets. Most of these variables are difficult to predict in advance.
Impact of the Pandemic on the Austin Real Estate Market
The Austin real estate market has been unscathed by the pandemic throughout with the real estate industry pumping billions of dollars into this region's economy. Austin added 11,600 jobs in 2020. Before the COVID-19 hit the region, it was expected that there would be declines in housing inventory in the year ahead amidst strong housing demand. The year started with a record for January in terms of sales and median price. Compared to January 2019, residential home sales in the Austin area increased by 8.5% to 1,947 sales, and the median price increased 4.8% to $308,000, according to the Austin Board of REALTORS® (ABoR). Housing inventory fell to 1.6 months across the MSA due to drops in both new and active listings.
In the city of Austin, the median price for residential homes experienced a double-digit percent increase of 13.5% year over year to $384,750. Residential home sales increased by 0.6% to 638 sales and sales dollar volume increased by 8.2% to $290,628,094. During the same period, new listings decreased 10.6% to 960 listings; active listings dropped 32.5% to 1,099 listings; however, pending sales rose 8.6% to 956 pending sales. Monthly housing inventory decreased 0.5 months year over year to 1.1 months of inventory.
February 2020 market report released by ABoR showed that historically low-interest rates drove the market up despite the fear of COVID-19 cropping up in our community. There was a 6.8% increase in residential home sales in the Austin-Round Rock Metropolitan Statistical Area (MSA). While sales increased from 2,363 homes in February 2019 to 2,524 homes last month, new listings decreased 11.8% year over year and inventory dropped to 1.5 months of inventory, painting the picture of Austin's historically competitive housing market and high demand.
Within the city of Austin, high demand and limited inventory pushed the median price for residential homes to $395,000, a 14% increase from February 2019. Residential home sales increased by 3.3% to 857 sales. New listings decreased 5.6% to 1,032 listings; active listings dropped 34% to 1,072 listings. Monthly housing inventory decreased 0.6 months year over year to 1.0 months of inventory.
Local shelter-in-place orders that went into effect on March 24 had little impact on March's home sales. There were declines in listing activity and pending residential sales. In March, residential sales (closed) in the five-county Metropolitan Statistical Area (MSA) increased 2.2% year over year to 3,042 sales, and the median price jumped 11.7% year over year to $335,200, according to March 2020 market report released by ABoR.
Monthly housing inventory declined 0.7 months year over year to 1.6 months of inventory, and average days on market decreased from 65 days to 54 days. The median price for residential homes in the city of Austin rose 14% year over year to $415,000, an all-time high for any month on record. Monthly housing inventory decreased 0.5 months year over year to 1.2 months of inventory.
Austin housing market report for April 2020 showed that the Austin-area home sales declined across most of the region due to the impact of local shelter-in-place orders. Sharp declines in closed sales in April were quite evident due to the decline in listings activity recorded in March. Compared to April 2019, residential sales in the five-county Metropolitan Statistical Area (MSA) decreased 21.6% to 2,611 sales. Active listings continued to drop— a 7.3% decline led to 6,349 active listings by the end of April.
This drove housing inventory down further to 2.1 months in the Greater Austin area, which was 0.2 months lower than this time last year. In the city of Austin, the median price for residential homes experienced a double-digit increase of 12.3% year over year to $421,000. Residential sales decreased by 33.1% to 759 sales.
Total home sales in 2020 were higher than in 2019 despite a dip in the early spring season due to the pandemic. A record-breaking 40,165 homes were sold. $17,579,802,503 in sales volume were sold across the Austin area last year, according to the Austin Board of REALTORS® (ABoR). Sales dollar volume is a key indicator of sales activity and prices.
The five-county Austin-Round Rock MSA, including Travis, Williamson, Hays, Bastrop, and Caldwell, broke all the records in 2020 as housing demand across the region reached unprecedented levels. In 2020, the median sales price in the Austin-Round Rock MSA rose 9.2% to $344,000. The new listings decreased 0.4% while active listings declined 34.2%.
Pending sales jumped 13.1% outpacing new listings, indicating that homes are selling faster than new ones can hit the market. Homes across the Austin MSA were sold in 25 days fewer than a year ago. Austin city home sales also mirrored the metro area. In 2020, residential home sales in the City of Austin increased 1.7% to 12,745 sales, an all-time record, while sales dollar volume jumped 16.3% to $6,746,602,345.
The median sales price for residential homes rose 12% year over year to 420,000 this past year, also an all-time record. New listings slightly increased 1.1% to 14,735 listings while active listings dropped 23.8% to 1,332 listings, and pending sales increased 3.8% to 13,062 pending sales. In the Austin-Round Rock MSA, the median price for single-family homes increased by 2.6% to $318,000 in 2019.
Austin Real Estate Investment: Should You Invest in Austin?
Should you consider Austin real estate investment? Many real estate investors have asked themselves if buying an investment property in Austin is a good investment? You need to drill deeper into local trends if you want to know what the market holds for real estate investors and buyers in 2021. Let’s discuss a bit about the Austin metro area and then do a quick recap of how its housing market performed during the pandemic.
Austin is a minimally walkable city in Travis County with a population of approximately 790,195 people. It is the capital of Texas and it is growing at a fast clip. It is the fourth largest city in the state of Texas. The Austin real estate market isn’t the largest in the state of Texas, but there are several reasons to consider buying real estate in this city. The Austin housing market has gained a lot of steam, with home values almost doubling since 2010. It isn’t as big as Dallas, San Antonio, or Houston.
However, the Austin housing market is sizable – it is the eleventh largest city in the U.S. as of this writing, and it is the center of a large metro area. Austin has come up as another tech hub in the last 5 to 6 years. There are tons of high-paying tech jobs moved to Austin in the last couple of years. The Austin-Round Rock metro area is home to about two million people. Recently Austin was ranked eighth for the best real estate markets, topping all other big Texas cities.
As per Neigborhoodscout.com, a real estate data provider, one and two-bedroom single-family detached homes are the most common housing units in Austin. Other types of housing that are prevalent in Austin include duplexes, rowhouses, and homes converted to apartments. Single-family homes account for about 46% of Austin's housing units.
According to ABoR, Austin's competitive housing market is changing the landscape of traditional homeownership. More homebuyers purchase condos and townhomes to live closer to the urban core or stay within their budget. Austin has been one of the hottest real estate markets in the country for many years. It has a record of being one of the best long-term real estate investments in the U.S. over the past 10 years. Last December, the median home price increased 8% year-over-year to $405,093.
It is currently a hot seller’s real estate market – which means that the demand from buyers is exceeding the current supply of homes for sale. The pricing of homes is trending higher and is more attractive for sellers in the current phase. The shortage of supply and an increase in the demand for housing will push the prices higher in 2021 as well. Austin's immense population growth during the past decade has heavily impacted its real estate market. In the last twelve months, the median price for residential homes in Austin has increased by a whopping 14%, an all-time high.
Although this article alone is not a comprehensive source to make a final investment decision for Austin, we have collected ten evidence-based positive things for investors who are keen to buy an investment property in Austin. Texas is unique for having a biannual legislature. They don’t have the state legislature in town year-round. Instead, they are only in session for several months every two years.
This leads to an influx of legislators, reporters, and lobbyists every other year. This creates a unique but predictable boom and bust for the Austin housing market in the vicinity of the capitol building. Let’s look at the state of the Austin real estate market and the factors driving the market in the short and long term.
Is Austin Housing Market In A Bubble?
Austin is one of only eight U.S. metro areas to have fully recovered in the last 10 years to pre-recession values. Would Austin remain as one of the top real estate markets in the country or would the bubble burst? Well, Austin isn’t considered to be in a real estate bubble because the demand is consistently high and inventory is very tight. This is good news for investors because you can expect steady activity and the flow of people looking for housing.
In 2019, Austin continued to rank high on “Best of U.S.” lists. There was a record number of home sales in 2019. The December and Year-End 2019 Central Texas Housing Market Report reflects a record-breaking 33,084 home sales and $13B in sales volume. According to the Austin Board of REALTORS® (ABoR), between 2010 and 2019 the home sales have increased by 84%. The median home price in Austin has increased from $193,520 in 2010 to $318,000 in 2019, and the market is not showing signs of slowing down in 2020.
The price of Austin properties declined following the 2007 peak while prices remained relatively flat following the 1995 and 2000 peaks. According to a report published in Williamskw.com, Austin will remain a seller's market. The National Association of Realtors (NAR) suggests a “balanced” market is between 4-6 months of inventory. The entire Austin market is around 2.5 months. Austin inventory levels and the number of days a home is listed for sale are increasing, yet not nearly enough for Austin to be a “buyers” market. That is not expected to change.
As Austin is a young city by many standards, Millennials will be the largest buying force in Austin in the upcoming years. This is going to be more attractive for the areas being close to neighborhood amenities and close by shopping & hang-out spots. Real estate industry experts think that there is no bubble. Austin's economy is strong and varied. Overall there is a huge scarcity of homes for sale in Austin. It just hasn't kept up with the pace of people moving here.
Austin's Affordable Real Estate & Certain Future Appreciation
Homes in Austin are 23% cheaper than the national average. It may be the second most expensive housing market in the state with a median home price of around $461,000, but it is still far cheaper than California or New York. Buy up condos or townhomes, and you’ll be able to see a sizable return on the investment.
An author in Forbes wrote in 2016 that Austin real estate is appreciating at one of the highest rates in the state because of NIMBY-ism, a reluctance to develop the riverfront or Texas hill country to build new homes. This has pushed development out along the highway and forced dense development in areas already zoned for housing.
This pushes up the price for existing homes, driving many in the Austin housing market to rent when they want to buy, while it guarantees capital gains for those who buy and hold property. Here are the ten neighborhoods in Austin having the highest real estate appreciation rates since 2000—List by Neigborhoodscout.com.
- S Presa St / Florida St
- S Presa St / Sadie St
- E Houston St / N New Braunfels Ave
- Blanco Rd / W Magnolia Ave
- Buena Vista
- Fm Road 2696 / Dietz Elkhorn Rd
- State Loop / Hall Blvd
- City Center
- S Main Ave / E Durango Blvd
- Broadway St / E Jones Ave
Cost of living In Austin
The Austin-Round Rock metro area is home to about two million people. The city is known as a haven for live music, free-thinking, and free spirits. It has a distinct culture and flavor compared to the rest of Texas, which is a mostly conservative and traditional state. According to WalletHub, among large U.S. cities, Austin ranked eighth, topping all other big Texas cities as well as San Jose, Atlanta, and Portland. Among all 300 cities, Austin still ranked a respectable No. 36 for best real estate markets.
One of the factors driving the Austin real estate market is the intangible but well-documented quality of life the city provides. In 2017, US News and World Report ranked the city first for quality of life. In 2016, Austin was ranked first on the Forbes list of Cities of the Future list. In 2017, that same magazine ranked the South River City neighborhood as one of the best for Millennials. WalletHub ranked the city sixth in their list of best places to live in 2017. In 2012, the FBI ranked Austin as one of the safest cities in the country.
Aside from high housing prices, the cost of living in Austin is relatively affordable. Overall, the cost of living for Austin is very reasonable. At three percent below the national average cost of living, moving to Austin may be an economical choice for you. One of the most interesting factors in the cost of living for Austin is that the cost of housing is 15 percent below the national average.
According to Sperling’s Best Places, grocery costs in Austin are slightly below the national average, with a rating of 89.1 against the U.S. average of 100, meaning it is about 11 percent lower than the national average on groceries.
The sales tax rate in Austin is 8.25 percent. There are no income taxes in Texas. Schools are largely funded through property taxes, which rise along with home prices. As home prices continue to skyrocket and people are increasingly forced to move to the distant suburbs to find affordable housing, a massive reworking of Austin’s building codes, known as CodeNext, promised to deliver some relief.
The median salary in Austin, TX is $51,596 and it is the 108th most expensive city in a database of 232 cities by NerdWallet.com. For a 2-bedroom apartment, the median rent per is $1,184. The median price for a 3/2 bedroom house is $276,634. Food and entertainment costs in Austin are reasonable. Redwood Austin is the area with the lowest cost of living.
Areas With The Lowest Cost of Living in Austin – (List by Niche.com & prices by Livability.com)
- Redwood, Texas – Located in Guadalupe County. The median income in Redwood, TX is $47,778 and the median home value is $54,700.
- Lockhart, Texas – Located in Caldwell County. The median income in Lockhart, TX is $48,884 and the median home value is $115,400.
- Martindale, Texas – Located in Caldwell County. The median income in Martindale, TX is $43,929 and the median home value is $151,200.
- Uhland, Texas – Located in Hays County. The median income in Uhland, TX is $40,662 and the median home value is $78,100.
- Taylor, Texas – Located in Williamson County. The median income in Taylor, TX is $42,793 and the median home value is $116,600.
- Lago Vista, Texas – Located in Travis County. The median income in Lago Vista, TX is $75,126 and the median home value is $189,400.
- Elgin, Texas – Located in Bastrop County. The median income in Elgin, TX is $50,369 and the median home value is $104,000.
- Hornsby Bend, Texas – Located in Travis County. The median income in Hornsby Bend, TX is $49,077 and the median home value is $123,000.
- Round Rock, Texas – Located in Williamson County. The median income in Round Rock, TX is $72,412 and the median home value is $179,900.
- Wimberley, Texas – Located in Hays County. The median income in Wimberley, TX is $59,167 and the median home value is $214,600.
Austin's Massive Student Population Propels The Rental Investment
Many people want to invest in the Austin real estate market because there is a massive student population that will rent properties for a premium if they’re within easy commuting distance of the University of Texas Austin campus. That school alone has more than 40,000 students. The Austin community college hosts about as many students as UT Austin. Huston Tillotson University, Saint Edward’s University, and National American University are also located in this city.
Positive Demographic Momentum of Austin: About half of Austin’s population is between 18 and 44, though that figure is skewed by the large student population. However, the reality is that many college graduates choose to stay here because of the abundant, well-paying jobs. After all, Austin has the highest per capita of high-paying jobs of any Texas city. This helps explain why the Austin housing market is growing at the fastest rate of any major city in Texas. Many of these young adults are starting their families here, creating certain future demand for housing in the Austin real estate market.
Rental Market Statistics: Before the pandemic, the average rent for an apartment in Austin was growing at 5% annually (Source: RENTCafe). 48% of the households in Austin are renter-occupied which is a significant population. More than 65% of the apartments can be rented for $1,500 or less. Around 20% of the rental apartments fall in the price range of $1,500 to $2,000 while only 10% of the apartments fall in the rent price range of $2,000 or more.
The average size for an Austin, TX apartment is 864 square feet with studio apartments being the most affordable. 1-bedroom apartments are closer to the average, while 2-bedroom apartments and 3-bedroom apartments offer more generous square footage.
As of January 01, 2022, the average rent for a 1-bedroom apartment in Austin, TX is currently $1,489. This is a 27% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Austin decreased by -9% to $1,296. The average rent for a 1-bedroom apartment decreased by -4% to $1,489, and the average rent for a 2-bedroom apartment decreased by -2% to $1,895.
The Zumper Austin Metro Area Report analyzed active listings last month across 7 metro cities to show the most and least expensive cities and cities with the fastest-growing rents. The Texas one-bedroom median rent was $1,085 last month. Georgetown ranked as the most expensive city with one-bedrooms priced at $1,510 while San Marcos ranked as the most affordable city with one-bedrooms priced at $1,070.
The best place to buy rental property is about finding growing markets. Cities like Round Rock, Cedar Park, and Pflugerville are good for investors looking to get started with rental property ownership at an affordable price. These cities look good for rental property investment this year as rents are growing over there. These trends provide a macro look at the growing rental demand. Each real estate market has its own unique supply-demand dynamics with unique neighborhoods that present their own opportunities for investors.
Here are the best areas to invest in a rental property in the Austin Metro Area in 2022. Most of these places have the same things in common, including rising rents and increasing property values. The Most Affordable Neighborhoods in Austin are University Hills where the average rent can go for $795/month, Heritage Hills, where the average rent can go for $795/month, and Windsor Hills, where the average rent can go for $833/month.
Where are rents growing fastest in Austin Metro Area (Y/Y%)
- Cedar Park had the fastest-growing rent, up 23.3% since this time last year.
- Round Rock was second with rent climbing 23.2%.
- Pflugerville ranked as third with rent increasing 23%.
The Fastest Growing Cities For Rents in Austin Metro Area (M/M%)
- Cedar Park had the largest monthly rental growth rate, up 5%.
- Georgetown & San Marcos rents both climbed 4.9% last month, making them tied for second.
- Round Rock ranked as third with rent jumping 3%.
Austin Is The Silicon Prairie
Austin Texas has been nicknamed Silicon Hills and Silicon Prairie because they’ve attracted so many high-tech employers. This has resulted in an active upscale Austin real estate market. Austin’s GDP, which grew 117% over the last 20 years, helped the real estate market recover from the recession.
The closest metro to see this type of growth was Silicon Valley, which grew its GDP by 99% during the same period. Major local employers in Austin include IBM, Amazon, Apple, Cisco Systems, and many semiconductor manufacturers. There are more than 3300 tech companies in the region and more than 100,000 tech workers all competing for homes in the Austin real estate market.
One of the long-term strengths of Austin is its diverse economy. The Austin real estate market dipped after the layoffs of the Dot-Com boom. They decided to solve the problem by encouraging medical and biotech employers to relocate to the area, too. As of this writing, there are 85 biotech and pharmaceutical companies in Austin.
Austin is Relatively Friendly City for Landlords
Texas, in general, is very landlord-friendly, though cities can have their own, stricter ordinances. Texas doesn’t specifically let tenants withhold rent for failure to provide essential services. You can evict someone for nonpayment of rent after three days. Texas doesn’t set a limit on security deposits.
Texas doesn’t require a minimum time frame before you increase the rent. For major lease violations, you can terminate the lease then and there and give them three days to vacate. Knowing you won’t spend months trying to evict a non-paying tenant is a good reason to consider the Austin real estate market or another Texas housing market over more liberal cities.
The Excellent Tax Environment
Texas’ property taxes may be high, but this is offset by the lack of a state income tax. There is, overall, a low state and local tax burden for investors. That makes this a great place to buy a home and rent it out.
Texas Real Estate Investment Opportunities: Where To Invest?
With Austin becoming a more diverse city every year, there are plenty of opportunities to take advantage of – from buying new homes to different investment options in the Austin real estate market. Austin is a leader across the country with jobs and when you combine that with home prices not as drastically increasing, you'll get a real estate market that many others envy.
Good cash flow from Austin investment properties means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding the best investment property in Austin in a growing neighborhood would be key to your success.
As with any real estate purchase, act wisely. Evaluate the specifics of the Austin housing market at the time you intend to purchase. When looking for the best real estate investments in Austin, you should focus on neighborhoods with relatively high population density and employment growth. Both of them translate into high demand for housing.
Some of the popular neighborhoods in and around Austin are Northwest Hills, Downtown Austin, West Lake Hills, Brushy Creek, Barton Creek, Spicewood Summit, Mueller, South Austin, Hyde Park, Windsor Park, Crestview, North Austin, Allandale, Shady Hollow, Rollingwood and Steiner Ranch.
There are around 75 neighborhoods in Austin. Tarrytown has a median listing price of $1.5M, making it the most expensive neighborhood. West University is the most affordable neighborhood, with a median listing price of $325K. (on Realtor.com).
Downtown is where the city's high-rise buildings are located, as well as being the center of government and business for the region. Downtown Austin is expanding and the residential options are increasing.
The cost of real estate might be the highest in Austin, but residents live within walking distance of everything they need. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable.
Apart from the Austin real estate market, you can also invest in the housing market of Houston, TX. If you are a home buyer or real estate investor, Houston has a track record of being one of the best long-term real estate investments in the nation through the last ten years.
The Houston Real Estate Market forecast is good, and current housing prices are relatively low, so if you want to get on board the Houston real estate investing then now would be a great time to do so.
The Houston metro area offers great opportunities for investors who are looking for a stable market that offers both cash flow and equity growth at a price that is STILL well below their replacement value.
The El Paso real estate market is another hot market to invest in. El Paso real estate market was ranked 4th in Trulia’s hottest real estate markets to watch in 2018. El Paso’s strong job growth, affordability, low vacancy rates, and high population of young households were pivotal in the ranking process.
The cost of living in El Paso is lower than the national average, while the cost of housing is well below that of other major metropolitan areas, including Houston and Austin.
The Central, Cielo Vista, and Mesa Hills areas offer more affordable rental properties for sale, while neighborhoods in the northwestern and eastern parts of the metro area have some of the more expensive housing inventory. The amount residents spend on everyday expenses, such as food and transportation, is slightly less than what the average American pays.
The next one is the San Antonio real estate market. The median home value in San Antonio is $184,322. San Antonio home values have gone up 4.8% over the past year and Zillow predicts they will rise 1.9% by Dec 2020. For those who want to invest in rental real estate, the San Antonio real estate market is an ideal location because of its outsized military presence.
Fort Sam Houston is located inside the city limits. Lackland Air Force Base, Randolph Air Force Base, Camp Bullis, and Camp Stanley are located in the immediate vicinity. This means that there is a large population that will almost always rent because they don’t know where they’ll be sent on their next assignment.
San Antonio has a dearth of affordable housing because demand is so much greater than the supply. This has created a large number of renters who need to pay quite a bit to rent apartments or single-family homes. We know there is a lack of housing relative to demand when a balanced market has a 6 month home inventory and San Antonio has only a two-month inventory.
How can we not mention Dallas on this list? The Dallas housing market 2020 is shaping up to continue the trend of the last few years as one of the strongest markets in the United States. Despite some fluctuations in the market, demand and sales have continued to climb at a feverish pace for more than two years and show no signs of stopping.
Dallas’s local economy is a mix of aerospace, computer chips, telecommunications, transport, energy, and healthcare sectors and the Finance and Business Services. These sectors are all providers of good wages which allows for a strong market for Dallas investment properties.
Dallas’s population has grown at twice the national rate for years now and this pushes the prices of Dallas investment properties higher due to builders not being able to keep up.
Dallas’s housing prices have increased 29% over the last three years, even with these increases in home prices, they are still competitive for investment properties and you can expect further increases over the years. If you want to buy an investment property in Dallas, don’t wait around, go ahead and do it.
NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Austin.
Consult with one of the investment counselors who can help build you a custom portfolio of Austin turnkey properties. These are “Cash-Flow Rental Properties” located in some of the best neighborhoods of Austin.
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Please do not make any real estate or financial decisions based solely on the information found within this article. Some of the information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US. This article aimed to educate investors who are keen to invest in Austin real estate. Purchasing an investment property requires a lot of study, planning, and budgeting. Not all deals are solid investments. We always recommend doing your research and taking the help of a real estate investment counselor.
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Reasons to consider investing in Austin
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