A new study has found that out of the 50 largest U.S. metros, 33 have rents higher than a typical monthly mortgage payment, including insurance and taxes. This can put homeowners and investors in the unique opportunity to rent out their homes for more than their monthly mortgage payments. The difference can be used for spending, saving, or investing.
Rents increased by 9.2% year over year in July to an average of $1,843 per month. Rents in nine of the nation’s 50 largest metros increased 10% higher than the projected rent levels for July based on pre-pandemic trends. Memphis was first with the typical rent at $1,504 in July. The monthly mortgage payment was at $948, creating a $556 difference. Miami came second with a $522 difference, and Atlanta in third with a $424 difference.
Why Austin Rents Are Increasing
With the market the way it has been, competitive and low inventory, many prospective buyers either couldn’t compete or were exhausted by the process. Those who couldn’t buy were left to continue renting.
According to the Austin Board of Realtors, Austin’s median home price increased by $142,450 year over year in May this year for an all-time. In July, the median sales price increased by 37% for a total of $480,000 in the Austin Round Rock market. Homes are spending an average of 12 days on the market, and there are only 0.9 months of inventory. For the real estate market to balance out, inventory should be at a healthy six months.
Another reason is due to the many companies relocating or expanding to Austin. Data from the Austin Chamber of Commerce shows over 100 companies are expanding or moving to Austin since the beginning of the year. Tesla and Amazon are expected to create 5,000 and 2,000 jobs with their expansions. Employees transferring and moving to Austin for these new jobs can turn to the rental market if they also can’t compete in the current real estate market. This is another reason rents are increasing as competition to rent is increasing.
Austin Rent Increase
The average Austin rent began to increase in December. According to data from ApartmentData.com, the average rent in July was $1,442/month. This increased from July 2020’s rent of $1,278 and even July 2019’s $1,311.
The good news is that occupancy rates have increased from 89.3% in 2020 to 91.4% this year. Only 20% of units are rented with concessions like one-month free specials or other discounts. This number has dropped compared to the 26% it was in June and 44% in July 2020.
Austin ranks the highest in Texas for the most expensive and quickest increase in rent. Austin is in first place with the average monthly rent at $1,422, then Dallas/ Fort Worth at $1,271, then Houston at $1,116, and San Antonio in fourth at $1,059.
If you need help finding an affordable apartment in Austin and its surrounding communities, contact us! Or, if you need help finding a place to rent or are ready to rent out your place, contact Prism Realty today! We’re here to offer our expertise and help you achieve your real estate goals.