AUSTIN, Texas — New research shows that the state’s real estate markets are still feeling the effects of recent building booms, especially in the capital city.
That’s just one of the many factors driving markets that an outlook from the Texas Real Estate Research Center at Texas A&M University explained. Daniel Oney, the center’s research director, said that while Austin is only approximately 13% of the apartment market in Texas, they have 22% of those unleased apartments. He explained that a developer in Texas will typically start a new apartment every time there are two new households in a market, but now they have an oversupply.
“Austin, for a while there were four apartments for every household that showed up,” Oney says. “So they were, they were building apartments at eight times the historical rate.”
While the leasing cost of some places has gone down in recent years, some rents remain pretty high, but renters can continue to see some concessions such as free gym memberships and other move-in deals.
Oney highlighted that this trend is also depressing rental rates for some houses.
“Someone that may have the financial means to rent a nice home, may decide ‘I can rent this brand-new shiny apartment and get six months’ rent free, so maybe I’ll just rent the apartment for a while longer,’” explained Oney. “So we know that landlords of single-family homes are also having to not raise rates at a minimum.”
Based on the current leasing speeds in Austin, researchers like Oney estimate it would take approximately three years to absorb all the existing units if no new apartments were added to the market, but that timeline, of course, depends on job and population growth.