Rent prices drop more than 12% in Austin
AUSTIN (KXAN) -- For those looking for a new place to live, right now may be a good time to find a deal on an apartment.
Recent analysis from Redfin showed that Austin had the biggest drop year over year in rent prices. As of November, the median asking rent price in Austin is just over $1,400. That's down more than 12% since November 2023.
KXAN's Will DuPree spoke with Cindi Reed with the real estate software company MRI Software.
Read a transcription of the interview below or watch in the video player above. Some responses have been edited for clarity.
Will DuPree: Cindi, thanks so much for joining us. We appreciate it. You have looked at these numbers very closely. You know them well, so we mentioned what Redfin found in their analysis. What have you seen in terms of how much people are now paying for apartments, houses they can rent things like that.
Cindi Reed: Well, the average rental rate in Austin right now is at $1,456, and that is down 5% since the first of the year. So we're seeing prices still drop. Last year we saw a decrease of less than that, probably more like 4.5 so, you know, it's been a it's been a rough year. Yeah, this, this whole cycle of construction and rental rate drops and occupancy drops. It all started back in 2021. I call that the year of extreme. That's when we saw rental rates climbed at 25% higher than what we were paying in one year's time.
DuPree: So many of us in that building felt that, too.
Reed: Yes, it really was tough on everybody. And during that time, developers really swarmed Austin and started buying a plan to start building when you had that kind of, you know, revenue growth and occupancy growth. So they started building in 2021, and then all of those properties started getting delivered last year in 2023. So, in 2023 we saw about 90 new properties here, about 25,000 new units showed up in 2023. We weren't able to absorb all of those. And now 2024 rolls around, and we just delivered another 30,000 units, and our absorption rate was around 18,000 of those. So you're continuously seeing the occupancy fall. We're down to 84% in Austin. And you've seen a 5% decrease in price. rental concessions. For the viewers out there that are renting apartments now, is your time, because we're seeing an average of anywhere between, you know, six to eight weeks free on some of this new developments.
DuPree: What they're trying to get is a tenant to move in there.
Reed: Exactly. So property management companies, they're managing these properties and trying to lease them up. And for them to be considered stabilized, they need to be around 90% occupied, close to total occupancy. And those 90 properties that opened in 2023 are sitting on an average at around 79%, so we're still seeing some of those from 2023 trying to fill up. And the ones that have opened in 2024 are only 30% occupied so far. So 2025 is going to be a year where we hope we're going to have enough absorption to fill a lot of these vacancies. And that is really driven by job growth, because we look at those job growth numbers to see, and I think it's going to be somewhere around 2% is what I'm hearing. And, you know, that's just not high enough of a job growth to fill all of these up. We hope that we can get that job growth number up and start filling them.
DuPree: To boost that as well. You mentioned the development of all these different apartment complexes. It seems like no matter where you go, in any part of our viewing area, even outside of Austin, there are new complexes being built all the time. What does that look like for 2025 because you know, we're seeing these pop up, is, do you feel like there will be more development coming or a slowdown? What's your expectation?
Reed: We track that. So, we know exactly what's coming up out of the ground, and we know what's proposed. And so in 2025 we're seeing about another 15,000 units coming up. So that's half of what we delivered in 2024 Okay, which will, you know, stop some of this major impact. But it is still 15,000 units coming up out of the ground and being delivered to us. So, we anticipate to see occupancy fall, maybe from 84 to 83, maybe we see the concessions continuing, and so is a good time to rent and to get some good deals out there.
DuPree: I think that may be the message for people out there. Ultimately, this benefits you if you are looking for a new place to move.
Reed: Yes, and depending upon the sub market, I track all the sub markets to see where the hot spots are. And we're seeing the majority of construction and absorption happening in what we're calling the outlying metro areas. Outside of the core city, and you see a lot of development there, you're going to see much better pricing, because it's less expensive to move further out and to rent, just like if you were to buy a home. Same thing. So outlying metro areas, San Marcos, Kyle and Buda is another hot market right now where you're gonna see there's been about a 5% decrease in pricing there. They're only 79% occupied on average. So you'll get some good deals there. And then everybody always wants to hear about downtown, of course. Downtown, we have 3,600 units being leased up and being delivered. So they're at 89% occupied. So you're going to see there's been about a 4% decrease in pricing to live downtown.