Market of the month: If you are wondering what are the best real estate markets to invest in this coming year – then you are at the right place! In this edition of Market of the Month, we will present data that shows that the best real estate investments at the moment are in Austin, Texas.
Let’s start with why, as a real estate investor you need to consider the Austin housing market.
Why should I invest in the Austin housing market?
If you’ve been in the real estate business for a long time, chances are you’ve heard of using the term “hot real estate market” when describing the best place to invest. For a while, Austin, Texas was considered one of the hottest housing markets in the country!
Here is a chart showing the median price of Austin housing sales:
As shown in the chart above, the average home price in Austin as of August 2021 is $ 562,500. Saw strong YoY growth.
Here is another bar graph to illustrate YoY growth:
Given these figures, Austin, TX is definitely an elite appreciation market. In the last five years alone, the average selling price in Austin has increased by 66%!
This city, in particular, has become the most desired location for investors for several reasons:
- Growing technology companies
- Low Austin home prices
- Population growth in Austin in 2020
- Increased housing demand after the epidemic
After the epidemic, a strange economic side effect was the explosion of the real estate market. With Austin home prices so low, the city is one of the warmest options for investors looking to capitalize on a fast-paced real estate market.
So, what are the current trends in this city in the real estate market?
Austin Real Estate Market Trends
Although the epidemic has caused economic uncertainty, Austin has risen to the top of the real estate market. Part of this is due to the relocation of tenants and buyers from San Francisco to Austin.
By the end of 2020, Austin’s population had actually grown by more than %%, which is rare for a large metro area. It follows that the demand for housing increases with population growth, which is great news for real estate investors!
In addition, over the past few months, the average rental price in Austin, TX has begun to accelerate. As we can see in the chart below, rents were relatively flat in 2019 and early 2021. But, in the last few months, rents have risen by more than 10%.
Relatively speaking, the rent is now around 9% YoY, as evidenced in the table below:
So, taking this data and translating it into the real estate market, what does it mean for buyers, investors and sellers?
What Buyers, Investors, And Sellers Should Consider When Investing In The Austin Housing Market
This information means that cash flow investments are hard to find in Austin, TX. Although rents have risen sharply over the past few months, it has not kept pace with property prices.
Below is a heat map showing the average rental price ratio (RTP) between Austin, TX by zip code. RTP is a great proxy for cash flow. As a reminder, there is a possibility of an RTP cash flow above .6, and some very strong cash flows around 1% are considered. As you can see, there is no zip code in this city that offers strong cash flow possibilities.
Wait a minute! If cash flow investments are hard to find, shouldn’t investors stay away from Austin, TX?
What’s worse is the hard cash flow for an investor to find.
Not necessarily! Just because Austin, TX, does not provide strong cash flow prospects as measured by RTP, does not mean that real estate investors should ignore this real estate market!
Instead, note that Austin is an excellent appreciation market and can actually provide cash flow to investors interested in a variety of investment strategies:
- Short-term rental property investment
- Room rent according to situation
- Other creative investment strategies
So, what are some aspects of buying real estate in the Austin market that homeowners should consider?
What buyers should consider
Here’s a list of some of the most important things a home buyer should know when buying a home in Austin:
- High quality educationMost Austin schools boast 10 out of 10 ratings on the Net Quality Education Score, which makes this area more desirable for families.
- Job demand is high– The demand for skilled workers is high due to the growth of technology companies, so there is no shortage of jobs right now.
- ActivitiesUst Austin plays an active community with many outlets for entertainment for people of all ages. Some activities include hiking trails, lakes for water sports, biking routes, boating, parks and picnic areas.
So, let’s consider some aspects of investors.
What investors should consider
- Strong job marketTech The big tech companies that moved to Austin during the epidemic or are on their way there have greatly increased the value of real estate.
- Advantage– The diversity and abundance of dining, entertainment, educational and retail opportunities make Austin, TX a great destination for families, singles and couples.
- Growth of skilled workers– Labor growth means higher demand for rental properties and faster Austin housing sales!
- Low foreclosure rate– From the perspective, where the national average of foreclosure rates is 1.1%, the Austin foreclosure rate is about 0.4%. This alone is a good sign that the Austin market is a stable and secure investment.
What sellers should consider
- Increase in the price of Austin HomeFrom Austin, Texas is such a hot market right now, with demand rising, this is wonderful news for a seller because it means you are more likely to get the price you ask for!
- Austin Housing Sales CompetitionAs demand increases, competition not only increases your value but also means you have a better chance of selling your home faster.
Questions that investors in the Austin real estate market should ask themselves
Here’s an important list of questions for yourself before diving into the Austin real estate investment process:
- What about potential assets?
- Is this potential investment area a good rental market?
- Have a HOA?
- Am I true to my budget?
- Am I properly verifying my potential tenants?
- Do I have an exit strategy?
You just have to be more discriminating with the help you render toward other people. By digging and comparing something in the Austin area you are looking to invest, you are preparing yourself for a successful investment.
A major advantage of investing in Austin is the high rental occupancy rate. Although the occupancy rate in these cities is generally high, they have become more prevalent in recent months. This means you don’t have to worry about loss of income due to vacancies.
With a low zero rate, your investment assets create a positive cash flow. In addition to a secure investment, there is a great opportunity to pick and choose your tenants because of the competitive rental market.
In addition, a competitive market means landlords can raise tenants ’rental rates.
Start Market Analysis (The Right Way!)
Whether you plan to flip a home or buy and hold a property, an accurate real estate market analysis is the key to your success. But how do you know where to buy? See us Free Apprentice guide for real estate market analysis!
One of the best investments in the Austin market is diversified assets. Chances are, each unit will be rented continuously due to the high occupancy rate in this city and you can rent more due to market competition.
So, should you consider Austin’s real estate market right now as a real estate investor? In short, absolutely. Why? Because the data showed, the Austin real estate market is one of the best real estate markets in the country. The market trend of the Austin real estate project will continue to grow with buyers and tenants in the coming months and years, which means now is the time to invest!
If you are a real estate investor who currently invests in Austin, TX, or you are interested in investing in this city, let us know what you think about this data and the market in the comments below. We are happy to answer any questions and we would especially like to hear from investors in Austin soil about their experiences in the comments below!