Despite the annual ritual of pleading South by Southwest goers not to “move here,” Austin residents are still seeing a population influx fueled by job growth. And according to a recent report from Yardi, multifamily developers are struggling to keep up with the demand this market presents.
In March, the metroplex saw an addition of 22,700 jobs, putting Austin’s employment growth rate at 2.5%, far above the nation’s average of 1.6%. With Apple and Amazon both announcing further job expansions within Austin, there doesn’t seem to be an end in sight with regard to job growth.
In the midst of it all, rent growth rose at a 3.7% rate through April.
“Developers are struggling to keep up with demand, and the labor shortage is not helping: The occupancy rate in stabilized properties rose 50 basis points over 12 months, to 94.4% as of March,” the report states.
Even with 800 units completed by April 2019, more than 23,000 units were still underway as of that month. The majority of these developments target what Yardi refers to as the “lifestyle segment,” or, in short, renters by choice.
The real estate research and data platform describes this section of renters as those who have “wealth sufficient to own but have chosen to rent. Discretionary households, most typically a retired couple or single professional, have chosen the flexibility associated with renting over the obligations of ownership.”
Of the units 23,000 units under construction as of April, 11,000 are planned to be move-in ready by the end of the year, but the Yardi report said a jump to 4.1% rent growth is likely, even with the completed projects.
As for affordability, the disparity between incomes and home prices has worsened, but remains below the rate of many other tech cities, such as San Francisco or Seattle, according to the report. In 2018, rent accounted for 21% of the metro’s income.