Apartment rental rates in Austin have been mushrooming over the past four years. Between 2011 & 2012, rent rates went up by 4%, while the year 2012-2013 saw a 6% increase. Presently, the average rate per square foot of apartment rental space is now $1.15 in Austin, while the state average is around $0.60 per square foot.
In practical terms, a one bedroom apartment on the outskirts of Austin will cost a tenant between $750 & $1,000 monthly. This is between $200 and $400 above the state average. The disparity is even greater in down town Austin, where you will be fortunate to locate a one bedroom apartment cheaper than $1,300 monthly! One bedroom apartments range from $1,300 to $1,700 monthly. This is between $300 to $600 higher than the rent for a comparative one bedroom apartment in San Antonio or Dallas.
But even with these high rates, the occupancy levels in Austin apartments all Hoover over the 90% mark, year round. The average ‘Austenite’ earns less than $18 per hour, so these rates seem to price him/her out of this market. So it begs the question, ‘who are renting these high priced apartments?’
One answer to that is, the growing trend of professionals and mid to high income earners who are migrating to Austin from other states and other cities within Texas. There is no one definitive reason for this migration but it has certainly contributed to the high occupancy levels within these high priced apartments. The continued increase in demand has exponentially kept the rates spiking over the state average, as the common ‘Austenite’ continues to be further priced out of the market.
The increased rates and high occupancy levels have led to a construction binge in Austin over the past four years. Since 2010, over 25,000 new apartments have been built in the city and the boom continues with over 10,000 new apartments to be added this year. This has had a positive impact on the city’s economy with many new jobs being created and maintained. The influx of skilled and educated professionals moving into the city has also elevated Austin’s human capital over the past few years.
Many lower income earners who work in Austin, are now living further away from the city in small settlements and towns surrounding Austin. This is because they cannot afford the rent rates within the city. Most of the new apartments being constructed in Austin are in the higher price brackets, and there are very limited amount of lower priced rental apartments available. Some lower income earners choose to rent the higher priced apartments at the sacrifice of other expenses but the predominant trend is that lower income earners in Austin, are now living further away from their jobs than ever before.
As the city’s economy continues to grow, the trend of high apartment rental rates seem set to continue. The city will attract more mid and high income earners who will fill up the newly constructed apartments and more apartments will be built to accommodate the others who are coming.