average rent
average occupancy rate
ytd sales volume
YoY rent change
yoy occupancy change
individual transactions
QUARTERLY DEMAND
YTD: 4,758
QUARTERLY COMPLETIONS
YTD: 6,941
Average Monthly Mortgage Payment
Average Monthly Rent
In the second quarter of 2023, the Austin rental market experienced some adjustments due to changing market conditions and an increase in inventory. The recorded occupancy rate was 93.5%, marking a 2.7-point annual decrease. On a quarter-to-quarter basis, occupancy fell by 20 basis points. However, it’s worth noting that not all areas followed this trend; four submarkets actually showed improved occupancy rates compared to the previous quarter. The Round Rock/Georgetown submarket performance remains particularly impressive. In this location, occupancy experienced a quarter-over-quarter increase of 60 basis points, rising to 93.8%. Notably, Class A units within this submarket exhibited considerable strength, boasting an impressive occupancy rate of 99.0%.
In the second quarter of the year, Austin’s rental market experienced a slowdown in rent growth, with an annual rental change of -1.6% and an average rental rate of $1,667. Despite the overall normalization across the metro area, submarket performance in Austin varied particularly among asset class. The Round Rock/Georgetown submarket witnessed strong rent growth for Class A properties, with an impressive 13.7% annual increase in rents in Q2 2023. On the other hand, rent performance in the Downtown/University submarket was bolstered by demand for Class B properties with annual rent growth at 9.3%, and average monthly rents as high as $2,711 in the submarket.
| Submarket | Average Occupancy | Annual Occupancy Change | Average Monthly Rent | Annual Rent Change |
|---|---|---|---|---|
| Arboretum | 93.7% | -2.0% | $1,533 | -3.3% |
| Cedar Park | 93.7% | -2.5% | $1,650 | -4.3% |
| Downtown/University | 93.2% | -2.7% | $2,711 | -4.4% |
| East Austin | 92.3% | -3.7% | $1,779 | -0.2% |
| Far South Austin | 93.5% | -2.5% | $1,564 | -2.1% |
| Far West Austin | 93.6% | -2.3% | $1,668 | -3.2% |
| Near North Austin | 93.8% | -1.8% | $1,672 | -0.1% |
| North Central Austin | 93.9% | -2.4% | $1,548 | 1.5% |
| Northwest Austin | 93.1% | -2.6% | $1,601 | -4.9% |
| Pflugerville/Wells Branch | 94.0% | -2.6% | $1,535 | -2.5% |
| Riverside | 92.7% | -3.9% | $1,580 | 1.0% |
| Round Rock/Georgetown | 93.8% | -2.5% | $1,591 | -0.7% |
| San Marcos | 93.3% | -3.0% | $1,407 | 1.1% |
| South Austin | 94.0% | -1.9% | $2,012 | -0.8% |
| Southeast Austin | 93.2% | -4.1% | $1,518 | -1.3% |
| Southwest Austin | 94.0% | -2.1% | $1,832 | -3.1% |
| Austin-Round Rock, TX | 93.5% | -2.7% | $1,667 | -1.6% |
Units Under Construction
Units UC Delivering In the Next 4 Quarters
According to preliminary data from Real Capital Analytics, individual conventional multifamily transactions in Austin, TX, reached approximately $981.2 million in the first half of 2023, marking a 55.2% decrease compared to the same period in the previous year. This decline was accompanied by a 63% decrease in the number of properties involved in trades, with 22 properties changing hands, reflecting a cautious investment climate due to stringent financial conditions. Despite this, Austin’s average price per unit experienced a yearly increase of 2.6%, reaching $277,600. Institutional buyers have been the main drivers of acquisitions thus far, while international buyers, despite volatile conditions, have shown heightened interest, accounting for 10.2% of the buyer composition in the Austin market (vs a five-year average of 3.2%) and based on preliminary numbers for the first half of 2023, Austin is experiencing its highest cross-border net acquisition in nine years.
* Trailing 4Q average PPU
* Preliminary Data from RCA – Individual transaction $2.5M +
In May 2023, the job market in the Austin Metro area showed exemplary robustness, with the addition of 50,800 new positions, according to the Bureau of Labor Statistics (BLS). The job growth rate of 4.0% was almost double the rate reported in March. Various sectors in the region experienced significant job gains, particularly the professional and business services sector, which added 14,600 new jobs, representing a growth rate of 5.4%. Notably, the leisure and hospitality sector remained the fastest-growing sector in the market, expanding by 8.7%, amounting to 11,900 new jobs. In terms of unemployment, Austin’s rate stood at a low 3.5% in May, close to the national average of 3.4%. These statistics highlight Austin’s strong economic performance, characterized by growth across multiple job sectors and average wages surpassing the national average.
May Annual Jobs Created
May 23 Employment growth
May 23 Unemployment rate
3.4% us may rate
Change from May 2022
to May 2023: 14,600
Percent Change: 5.4%
Change from May 2022
to May 2023: 11,900
Percent Change: 8.7%
Change from May 2022
to May 2023: 5,900
Percent Change: 2.9%
Change from May 2022
to May 2023: 3,600
Percent Change: 2.5%
Change from May 2022
to May 2023: 3,400
Percent Change: 4.3%
| Sector | Change from May 2022 to May 2023 | Percent Change |
|---|---|---|
| Professional and business services | 14,600 | 5.4% |
| Leisure and hospitality | 11,900 | 8.7% |
| Trade, transportation, and utilities | 5,900 | 2.9% |
| Education and health services | 3,600 | 2.5% |
| Mining, logging, and construction | 3,400 | 4.3% |
| Government | 3,300 | 1.8% |
| Manufacturing | 3,200 | 4.6% |
| Other services | 2,900 | 6.0% |
| Information | 1,200 | 2.3% |
| Financial activities | 800 | 1.0% |
Despite a general deceleration nationwide, Austin remains economically robust, with a thriving job market and steady growth. By the end of the second quarter in 2023, there were over 45,574 housing units under construction, and an estimated 32,110 of those units are expected to be completed within the next four quarters. This surge in housing supply may present some challenges to the market. However, there is little need for concern, as nearly every submarket is expected to see an influx in housing supply over the next year, with the East Austin area taking the lead with approximately 5,890 units. While market dynamics may undergo fluctuations, the impact on rent growth and occupancy rates is anticipated to be temporary. As we enter the second quarter, the strong economic conditions and demographic factors driving demand suggest a positive long-term outlook for Austin, despite these immediate challenges.
