Austin Apartment Market: Rent Growth to Resume

I'm sure every multifamily GPs investing in Austin is sharing this article from The Wall Street Journal with all their LPs today. "Renting in Austin, Texas, is about to get more expensive again." Austin's apartment market has been on a heckuva roller coaster these past six years -- from the nation's hottest market to now the nation's biggest rent-cutting market. Is Austin really about to boom again? It'll happen eventually, yes, but it feels like this article is a tad early. Austin rents boomed after COVID, and the supply boom followed. The Austin metro area added 87,000 units over the past five years. That ballooned Austin's apartment stock by 33%, more than any other major U.S. market. Or put another way: ONE IN FOUR AUSTIN APARTMENTS WERE BUILT JUST IN THE PAST FIVE YEARS. That's a wild stat. And the supply impact has yet to mitigate. Austin rents are still down 8% year-over-year. It's been hovering around that mark since early 2024, and that followed a 6% cut in 2023. Concessions remain very elevated. We haven't yet turned the corner. On a nominal basis, even with 33% inventory growth (which should raise the average rent simply as a function of higher-priced product entering the market), average effective rents today are the lowest they've been since May 2021. That's what supply does when added in big numbers. It's all about supply and demand. But don't forget the "and demand" part. We've all seen the dumb headlines suggesting "Austin is dead," full of random anecdotes about California techies moving to Austin, learning the weather is hot, and moving back to California. I'm sure those anecdotes are real, but they're obviously outliers. By nearly all demand-side measures, Austin still ranks among the national leaders. Of course, growth has normalized or softened everywhere, but on a relative basis, Austin is still a net winner. Furthermore: Austin is well positioned for the next boom whenever that arrives. -- Rent-to-income ratios have fallen to a very affordable 20%, as wage growth has far outpaced rent growth. -- Supply growth drops to 2.9% in 2026 and 2.2% in 2027 -- well below pre-COVID norms. -- New construction is still tough to pencil out, with rents for 2020+ vintage apartments down 17% since 2021, which will make it tough for most construction projects to pencil out. -- And Austin is still Austin. It's a cool city that will continue to draw people in the apartment renting demographic. Austin will be fine. But it may still take some time before the rent rebound kicks in. #austin #apartments #multifamily https://lnkd.in/gAExDrxU

I'm sure every multifamily GPs investing in Austin is sharing this article from The Wall Street Journal with all their LPs today. "Renting in Austin, Texas, is about to get more expensive again." Austin's apartment market has been on a heckuva roller coaster these past six years -- from the nation's hottest market to now the nation's biggest rent-cutting market. Is Austin really about to boom again? It'll happen eventually, yes, but it feels like this article is a tad early. Austin rents boomed after COVID, and the supply boom followed. The Austin metro area added 87,000 units over the past five years. That ballooned Austin's apartment stock by 33%, more than any other major U.S. market. Or put another way: ONE IN FOUR AUSTIN APARTMENTS WERE BUILT JUST IN THE PAST FIVE YEARS. That's a wild stat. And the supply impact has yet to mitigate. Austin rents are still down 8% year-over-year. It's been hovering around that mark since early 2024, and that followed a 6% cut in 2023. Concessions remain very elevated. We haven't yet turned the corner. On a nominal basis, even with 33% inventory growth (which should raise the average rent simply as a function of higher-priced product entering the market), average effective rents today are the lowest they've been since May 2021. That's what supply does when added in big numbers. It's all about supply and demand. But don't forget the "and demand" part. We've all seen the dumb headlines suggesting "Austin is dead," full of random anecdotes about California techies moving to Austin, learning the weather is hot, and moving back to California. I'm sure those anecdotes are real, but they're obviously outliers. By nearly all demand-side measures, Austin still ranks among the national leaders. Of course, growth has normalized or softened everywhere, but on a relative basis, Austin is still a net winner. Furthermore: Austin is well positioned for the next boom whenever that arrives. -- Rent-to-income ratios have fallen to a very affordable 20%, as wage growth has far outpaced rent growth. -- Supply growth drops to 2.9% in 2026 and 2.2% in 2027 -- well below pre-COVID norms. -- New construction is still tough to pencil out, with rents for 2020+ vintage apartments down 17% since 2021, which will make it tough for most construction projects to pencil out. -- And Austin is still Austin. It's a cool city that will continue to draw people in the apartment renting demographic. Austin will be fine. But it may still take some time before the rent rebound kicks in. #austin #apartments #multifamily https://lnkd.in/gAExDrxU

I'm sure every multifamily GPs investing in Austin is sharing this article from The Wall Street Journal with all their LPs today. "Renting in Austin, Texas, is about to get more expensive again." Austin's apartment market has been on a heckuva roller coaster these past six years -- from the nation's hottest market to now the nation's biggest rent-cutting market. Is Austin really about to boom again? It'll happen eventually, yes, but it feels like this article is a tad early. Austin rents boomed after COVID, and the supply boom followed. The Austin metro area added 87,000 units over the past five years. That ballooned Austin's apartment stock by 33%, more than any other major U.S. market. Or put another way: ONE IN FOUR AUSTIN APARTMENTS WERE BUILT JUST IN THE PAST FIVE YEARS. That's a wild stat. And the supply impact has yet to mitigate. Austin rents are still down 8% year-over-year. It's been hovering around that mark since early 2024, and that followed a 6% cut in 2023. Concessions remain very elevated. We haven't yet turned the corner. On a nominal basis, even with 33% inventory growth (which should raise the average rent simply as a function of higher-priced product entering the market), average effective rents today are the lowest they've been since May 2021. That's what supply does when added in big numbers. It's all about supply and demand. But don't forget the "and demand" part. We've all seen the dumb headlines suggesting "Austin is dead," full of random anecdotes about California techies moving to Austin, learning the weather is hot, and moving back to California. I'm sure those anecdotes are real, but they're obviously outliers. By nearly all demand-side measures, Austin still ranks among the national leaders. Of course, growth has normalized or softened everywhere, but on a relative basis, Austin is still a net winner. Furthermore: Austin is well positioned for the next boom whenever that arrives. -- Rent-to-income ratios have fallen to a very affordable 20%, as wage growth has far outpaced rent growth. -- Supply growth drops to 2.9% in 2026 and 2.2% in 2027 -- well below pre-COVID norms. -- New construction is still tough to pencil out, with rents for 2020+ vintage apartments down 17% since 2021, which will make it tough for most construction projects to pencil out. -- And Austin is still Austin. It's a cool city that will continue to draw people in the apartment renting demographic. Austin will be fine. But it may still take some time before the rent rebound kicks in. #austin #apartments #multifamily https://lnkd.in/gAExDrxU