A building boom in Austin, Texas has paid off big for renters.
There, residents’ rents have tumbled 22% from their peak in the summer of 2023, Bloomberg reported. The formerly low-cost city took on a new reputation in 2021 as a prohibitively pricey locale, as companies and young workers flocked to the Lone Star State’s capital. Heavy investment in development and ambitious housing policies, however, have flipped the script between renters and landlords.
Nearly all apartments in Austin are doing some sort of special for move-ins, one agent told Bloomberg.
The city of Austin has a lot to recommend for itself — live music, outdoor adventures, mouth-watering brisket and low taxes. But in 2021, the city lacked one major amenity: enough housing.
The city’s skyline has grown rapidly in recent years. Richard – stock.adobe.com
Visitors and residents alike line up for Austin’s best BBQ joints. Getty Images
It was the year of runaway growth, as tech companies like Tesla and Oracle relocated to the city and workers followed. Rents jumped 25% and the rental occupancy rate reached 91.7%, Bloomberg reported. The city was at risk of losing its low-cost-of-living reputation.
The housing shortage and cost-of-living crisis dominated the city’s political races in recent years, Bloomberg added. The name of the game became supply.
Developers poured into the city and new policies were enacted to encourage greater housing density. City leaders scaled back height rules, ended parking mandates and shortened the permitting process.
Austin’s population boom coincided with the skyrocketing cost of living across the country. Getty Images/iStockphotoIt worked. Almost 50,000 rental units were completed in the city in 2023 and 2024 — a 14% increase in supply.
Landlords have lost a lot of leverage, Bloomberg reported, as they struggle to fill their brand new apartments and offer big discounts to potential tenants. Renters are fielding offers of two to three months of free rent, even at the luxury downtown developments.
Austin’s median rent was$1,399 in January, according to Redfin. That’s a 16% year-over-year decrease, marking the largest decline out of 44 major metropolitan areas.
From their peak in August 2023, median asking rents in Austin declined a total of 22%, or $400.
A glut of new construction projects broke ground in recent years. All that work is paying off for Austin’s renters. Shaun – stock.adobe.com
Despite booming development, the city retains its Texan charm. Khairil – stock.adobe.comRenters are having no trouble discovering good deals. In one case, Bloomberg reported, a renter interested in a $1,420-a-month apartment was offered two months free, a $600 credit and waived fees, all to get them to sign up fast and for at least 13 months.
There are, of course, those who lose out when renters win. Large real estate investment trusts have been gloomy in recent earnings calls, Bloomberg reported, with one REIT downgrading the performance of the Austin market.
But these REITs expect to see rent growth pick up again. Both rental and home prices remain well above their pre-pandemic price tags, and are expected to remain there.
