MARKET SNAPSHOT

2025 Austin Forecast

2024

FORECASTED ANNUAL CHANGE

2025

$1,543

Q4 AVG. EFFECTIVE RENT

0.8%

FORECASTED ANNUAL CHANGE

$1,555

Q4 Avg. Effective Rent

90.7%

Q4 AVG. OCCUPANCY

-30 BPS

FORECASTED ANNUAL CHANGE

90.4%

Q4 Avg. Occupancy

31,894

2024 COMPLETIONS

13,866

10 Yr. Avg. Annual Completions

12,750

2025 COMPLETIONS

21,852

2024 NET ABSORPTION

10,471

10 Yr. Avg. Annual Net Absorption

10,446

2025 NET ABSORPTION

Source: CoStar
Key Market Themes for 2025
  • CONSTRUCTION PIPELINE SHRINKING EXPONENTIALLY

    Construction starts have dropped significantly, declining by 66% in 2024 to a ten-year low. Consequently, unit completions are projected to decrease by 60% in 2025, while under-construction inventory has already fallen by 55% in 2024.

  • RENT GROWTH EXPECTED TO RETURN

    With supply and demand fundamentals improving, average rents are expected to return to a positive trend by year-end. Suburban submarkets, which faced less new supply in 2024, are likely to experience rent growth even sooner.

  • OCCUPANCY IMPROVEMENTS DRIVEN BY POPULATION GROWTH

    Austin’s rapidly growing population and strong in-migration, coupled with sustained economic expansion, will continue to support robust absorption levels. These trends are expected to drive occupancy rates back to historical norms.

2025 SUPPLY TRENDS

MULTIFAMILY STARTS DECREASED IN 2024

MULTIFAMILY STARTS DECREASED IN 2024

2023: 19,049 units > 2024: 7,398 units

Annual Decrease of 11,651 units or 60%

10 Yr. Historical Annual Average: 14,896 units

UNITS UNDER CONSTRUCTION TRENDING BELOW THE 10 YEAR AVERAGE

UNITS UNDER CONSTRUCTION TRENDING BELOW THE 10 YEAR AVERAGE

21,441 units under construction as of December 31st 2024

10 Yr. Historical Annual Average Units UC: 23,235

8% Lower than historical average

UNIT COMPLETIONS PROJECTED TO DECREASE SUBSTANTIALLY IN 2025

UNIT COMPLETIONS PROJECTED TO DECREASE SUBSTANTIALLY IN 2025

2024: 31,894 units > 2025: 12,750 units

Annual Decrease of 19,144 units or 60%

10 Yr. Avg. Annual Completions: 13,765 units

Austin’s reputation as a tech hub, along with exceptional job and population growth, has attracted a well-educated and skilled labor force, fueling housing demand and leading to a surge in development beginning in 2021. However, declining occupancy rates, stringent underwriting standards, and rising capital costs have caused many developers to shelve projects over the past year. Consequently, the market’s construction pipeline has been decelerating.

The number of construction starts declined by 43% in 2023 and 60% in 2024, reaching a ten-year low of 7,398 and falling below the historical 10-year average of roughly 14,900 units. Similarly, the under-construction inventory fell below its 10-year historical trend in 2024 for the first time since the pandemic, decreasing by 55% over the past year. As a result, new completions are expected to decline significantly in the latter part of 2025 and into 2026, with 12,750 unit deliveries projected for 2025—representing a 60% decrease from the 2024 total and falling below the historical average.

Of Austin’s 25 submarkets 20 are expected to experience inventory expansion. Among those with at least 1,000 units, Far North Austin is projected to see the largest growth, with inventory increasing by 15%. Hill Country and Downtown Austin follow closely, with anticipated expansions of 14% and 13%, respectively. This widespread growth, though slowing, across nearly all submarkets highlights the ongoing development activity expected throughout the Austin metro in 2025.

2025 RENT & OCCUPANCY TRENDS
ANNUAL RENT GROWTH & OCCUPANCY
OCCUPANCY TRENDS

The gap between supply and demand in Austin’s multifamily market narrowed to its smallest margin since late 2021, with unit completions exceeding net absorption by only 500 units in the final quarter of 2024. While supply is expected to outpace demand again in 2025, the disparity will be considerably smaller than in recent years. This shift toward a more balanced supply-demand environment is anticipated to mitigate severe vacancy spikes and foster greater market stability this year. Although the construction pipeline remains sizable, with over 20,000 units underway, it is rapidly shrinking.

Austin’s sustained population growth—projected by ESRI to increase by 11% in the MSA by 2029—and robust economic expansion, driven primarily by the tech sector, are expected to support continued absorption in the coming years, eventually driving occupancy levels higher. Leasing activity has been bolstered by strong domestic migration from both within Texas and out of state. Suburban submarkets like Far North Austin, Far West Austin, and Hill Country are performing well, attracting renters with lower housing costs and expanding retail amenities. These submarkets are expected to maintain average occupancy rates near 93%, in line with the MSA’s 10-year average, and to remain stable or improve slightly through 2025.

RENT TRENDS

After experiencing one of the steepest surges in rental growth nationwide—peaking at approximately 16% in late 2021—Austin’s average asking rents have since stagnated and declined. This downturn is primarily driven by a substantial influx of new inventory that has outpaced demand, creating an intensely competitive market for apartment owners and operators. Price-matching and widespread concessions are prevalent in the Class A segment, with spillover effects impacting the Class B segment, as the narrowing rent gap between the two classes encourages renters to upgrade. In response, operators have prioritized occupancy over rent increases, resulting in stagnated growth within the Class B segment.

Looking ahead, the pace of rent declines is expected to improve in 2025 as supply and demand dynamics begin to rebalance, albeit gradually. While annual rent growth is projected to remain negative for much of the year, a modest rebound may be possible by the final quarter if net absorption keeps pace with new supply. Current forecasts project a minimal 0.8% annual rent increase by the end of 2025, with further acceleration to a range of 2% to 3% in 2026 as the oversupply conditions ease.

Submarket Rent & Occupancy

2024 INCOME & EXPENSE ANALYSIS

12-month period ending November 2024

CLICK TO VIEW FORECAST DATA

INCOME

INCOME
Income AssumptionsValue / UnitYear Change (%)
Occupancy (%)91.50%-0.4%
Rental Income / Occupied Unit$1,572.70-3.2%
Recoverable Expenses / Occupied Unit$83.017.5%
Other Income / Occupied Unit$97.433.1%
Total Income / Occupied Unit$1,753.14-2.4%
Operating Income
Rental Income$1,439.93-3.6%
Recoverable Expenses$76.007.1%
Other Income$89.212.6%
Total Income$1,605.14-2.8%

EXPENSES

EXPENSES
Operating ExpensesValue / UnitYear Change (%)
Payroll$151.163.0%
Marketing & Advertising$35.5010.5%
Repairs & Maintenance$94.47-0.7%
Administrative$43.742.8%
Management Fees$48.12-5.6%
Utilities$101.814.9%
Real Estate & Other Taxes$316.11-7.0%
Insurance$57.1517.0%
Other Operating Expensees$3.63
Total Operating Expense$851.68-0.8%
Net Operating Income$753.45-5.0%
Please note that the income and expense data presented in this section is sourced from trusted third-party data providers and does not reflect the entire market. While we strive for accuracy, our firm does not provide any warranty or guarantee regarding the reliability or precision of this information. We recommend users exercise discretion and professional judgment when interpreting and utilizing this data.
MARKET OUTLOOK

The Austin multifamily market is set for gradual stabilization in 2025, supported by improving supply-demand dynamics. A sharp reduction in unit completions—projected to decline by 60%—will bring deliveries closer to historical norms, providing an opportunity for net absorption to catch up with the excess supply that has accumulated over the past four years. As supply pressures ease, market fundamentals are expected to show modest improvement by year-end, paving the way for a more balanced environment.

Economic and demographic trends remain strong, reinforcing Austin’s long-term growth prospects. The metro continues to benefit from robust population gains and corporate expansions, which will underpin housing demand and gradually push occupancy levels higher as development activity returns to more sustainable levels. Rent growth is projected to resume by late 2025, with suburban submarkets expected to lead the recovery, benefiting from lower exposure to new supply and strong leasing demand from cost-conscious renters.

While near-term challenges, including elevated vacancies and stagnant rent growth, persist, Austin’s long-term fundamentals remain solid. Sustained economic expansion, driven by a thriving tech sector and a growing population, positions the market for a steady recovery, with stronger performance anticipated by 2026.

Disclaimer: This multifamily forecast incorporates data from reputable third-party sources, including Costar, Yardi Matrix, the U.S. Census Bureau, the U.S. Bureau of Labor Statistics, and ESRI. While we make every effort to ensure accuracy, we cannot guarantee the reliability of the projections provided. Forecasts are inherently subject to change due to evolving market conditions, economic factors, and unforeseen events. We strongly encourage users to conduct independent due diligence and consult with an MMG Advisor before making any investment decisions based on this information.

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To gain further insights into the Austin market, contact our local team:

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Michael Watson

Director of Revenue Production/Managing Director
Michael Moffit

Michael Moffitt

Managing Director
Mike Miller

Michael Miller

Managing Director
Derek Wilson

Derek Wilson

Senior Director
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Mark Diebold

Senior Director
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Alex Thompson

Senior Advisor
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Thomas Rodriguez

Associate Advisor
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Link Browder

Associate Advisor
Chris Peck

Christopher Peck

Associate Advisor
Alex Blagojevich

Alex Blagojevich

Executive Managing Director / Co-Founder
Michael-Sullivan

Michael Sullivan

Executive Managing Director / Co-Founder

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