Market Spotlight: Austin, Texas
It’s no mystery why people are attracted to Austin, Texas, the Live Music Capital of the World®. The city has long been home to unique individuals who welcome anyone who appreciates art, culture, music, the outdoors, and a laid-back way of living.
Since the start of the pandemic, people moved away from their homes and looked for a place with an affordable cost of living, lower taxes, job opportunities, and an overall better quality of life. Austin checks the boxes for individuals and families looking for a new start.
With the excitement in and around Austin, it has become a hotspot for investors and developers who want in on the action. When we look at new markets to invest in there are a variety of measures we research and take deep dives into. To name a few, the new market must have proven population growth, job, and salary growth, and most importantly a high demand for rentals. Continue to read to find out more about the Austin market and why we are ready to invest.
Why we love Austin!
Austin is more than just a college town (Hook ‘em!) or the capital of Texas. It’s home to beautiful parks, famous festivals, like South by Southwest (SXSW) and Austin City Limits Music Festival (ACL), and headquarters to some of the country’s most prestigious companies including Tesla Automotive Company. Austin also offers an elevated nightlight with upscale and casual culinary experiences, and various entertainment districts to fit anyone’s interests.
Ranked as the #4 market in the nation to watch for overall real estate prospects on the 2023 Emerging Trends in Real Estate, Austin continues to expand. Over the past two years, Austin has experienced tremendous population growth at an average of 3.6%, which is more than four times the U.S. population growth. The pandemic caused a huge increase in population growth in the Sunbelt states, with Texas being the most popular.
Why Texas, you may be wondering?
Unlike other states, Texas offers a business-friendly climate because there is no corporate or personal income tax. This is an advantage for a strong economy and welcoming to the startup and entrepreneur culture. The Austin Chamber reported there was $5.6B invested in startups in 2021, for Austin this creates a diverse workforce and appeals to many people.
Tech Hub Of Texas – Positive Job Growth
Austin’s current economy is heavily driven by major companies relocating to Austin providing jobs and salary growth. There are a few key industries like government, healthcare, life sciences, and high-profile (and startup) technology companies. Let’s examine the job growth tech giants are bringing to the area and why Austin gained a new nickname; The Tech Hub of Texas.
High-tech job growth continues to increase thanks to big tech companies leaving Silicon Valley and establishing new HQs, like Tesla and the growth of companies who have called Austin home for quite some time, like Dell, IBM, and Samsung. The Austin Chamber reports close to 9,600 employers are in the high-tech industry in 2021 and tech jobs are responsible for 16.7% of jobs in the Austin MSA. High-income opportunities are the driving force behind attracting and retaining experienced and talented individuals. As a result, many Austinites are finding themselves in higher-paying jobs. Job candidates looking to work in the tech industry will find the average tech salary is $157,612-ranking Austin as number 5 among the markets for the highest local tech salaries in 2022.
Adding to the overall economic outlook in Austin, the city has proven to be resilient in tough economic times. The pandemic still has lingering effects the nation is feeling, but in February 2020 Austin saw job growth of 8.6% and leads 50 of the biggest metro areas with the lowest unemployment rate in Texas at 3%.
Who is calling Austin home
Millennials are now the largest demographic but they’re not buying houses. Between 2018 and 2022, the rate of millennials, under 35, “expected to always rent” increased from 13.3% to 24.7%. The demographic finds freedom in renting but also expects more from their apartment complexes. They are looking for trendy properties that provide modern-day amenities that meet their lifestyle. Some of these features include tech-ready units, dog parks, state-of-the-art on-site gyms, work-from-home workstations, and recreational areas.
SmartAsset’s annual “Where Millennials Are Moving” report, found Austin had a net migration increase of about 10,500 in 2021. Overall, millennials make up 31.3% of Austin’s population, putting Austin at the 11th highest population for the generation. Why do they love Austin so much? Millennials are finding it’s the ideal city where they get the best of both worlds-living in the city with walkable restaurants, and stores nearby and being so close to nature with parks and lakes located in the city.
Closely following millennials is the younger Gen Z demographic who are entering the rental market. Many Gen Zers are calling Austin home because of the affordability, career opportunities, and how welcoming the city is to young people.
Current Multifamily Landscape
In a recent 2022 Q3 multifamily report by real estate company, JLL, the Austin multifamily market saw an occupancy of over 5,900 units in 2022 equating to an average of 93.5% occupancy. With an estimated rate of 1.72% annual population growth, there is a substantial demand for housing, keeping occupancy levels high.
Rent.com is reporting an average rent range for 2023, to be between $974 and $1,909, depending on square footage, amenities, and location. Although apartment rental rates have increased, renters still find it affordable compared to buying a house. With salary rates in Austin increasing by 4.7% year-over-year, residents are able to afford the rent growth the city is experiencing.
Get Ready to invest in Austin
Austin has proven over the years; it’s not slowing down. It’s an attractive market that investors are flocking to. The strength of population growth, job growth, and the demand for multifamily are pillars we must have in new markets we expand to. REEP is excited about our upcoming Austin opportunity and wants you to come along with us up I35. If you have not joined our network yet, we invite you to join us and learn more about this exciting opportunity. It’s going to be a good one. Click here to get started.