Austin, TX Multifamily Market Report
Market Overview
Austin stands out as one of the youngest cities in the nation compared to similar markets, boasting a substantial portion of its population in the working age bracket. The age group of 25 to 34-year-olds constitutes the largest segment of Austin’s residents, making it a key demographic for rental housing, given this age range’s tendency towards renting. Additionally, a strong job market is contributing to this trend, with employment opportunities growing faster in Austin than in other major markets nationwide.
Market Performance
The Austin multifamily market is experiencing an accumulation of excess supply, leading to a rise in vacancies from 9.8% in Q1 2023 to the current level of 14%. With nearly 25,000 units delivered in the past 12 months, the level of new constructions is at a historic high for this market, ranking as the second-highest total in the U.S. Following the 11th-highest annual rent growth rate in the country, reaching 16.2% in Q4 2021, Austin is now witnessing a year-over-year decline in average asking rents by -5.6%. This rapid change over the past three years marks one of the sharpest decelerations nationally, a trend mirrored in other markets like Orlando and Atlanta.
Apartment construction in Austin continues to hover around record levels. Currently, there are 38,000 units under construction, nearly three times the average of 14,000 units seen between 2017 and 2019. Author’s note: It is unlikely that all of the projected units under construction will be delivered this year. Despite facing the obstacles of decreasing overall occupancies, the positive outlook on Austin’s long term demographic and economic growth path is still driving investor enthusiasm for the market. Transaction activity is expected to stay subdued in the short run until there is a convergence between buyer and seller price expectations. Currently, the 12-month sales volume stands at $461 million.
By The Numbers | Last 12 Months | Source: CoStar Group
- Vacancy Rate: 14%
- Rent Growth: -5.6%
- Delivered Units: 24,877
- Sales Volume: $461M
