Austin Multifamily Report – March 2023
While the local economy remains solid, the rental market is recording some softening.
Austin rent evolution, click to enlarge
With an ongoing economic slowdown that’s cooling investment nationwide, one of the country’s most active housing markets is ready for its test. While Austin is well positioned to weather what’s ahead, caution is still advised. The robust deliveries of 2022 have yet to be absorbed, and coupled with a seasonal slowdown, this has led rents to trend downward for five consecutive months, contracting by 0.5 percent on a trailing three-month basis as of January, lagging the -0.3 percent U.S. rate. Occupancy declined 120 basis points year-over-year in December, to 94.5 percent.
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Austin sales volume and number of properties sold, click to enlarge
Austin unemployment dropped to 2.7 percent in December, outperforming the state (3.9 percent) the nation (3.5 percent), and all other major Texas metros—Dallas (3.2 percent), Houston (3.9 percent) and San Antonio (3.3 percent)—according to preliminary data from the Bureau of Labor Statistics. Job growth softened, posting a 5.5 percent expansion in the 12 months ending in November, still 150 basis points above the U.S. rate, and the equivalent of 57,300 new jobs. Leisure and hospitality led gains, adding 24,900 positions, powered by major events supporting the sector’s resurgence.
Austin. Photo by Greg Gaynor of Fokus Waterfront/iStockphoto.com
As of January 2023, developers hadn’t delivered any new projects and had 57,031 units under construction. Last year, stock expansion amounted to 5.4 percent of total inventory, ranking Austin first in the country. Meanwhile, investors traded $148 million in assets in January, for a price per unit that rose 12.6 percent above the December rate.
