Austin rents lose steam, with second-steepest decline in December among major U.S. metros

The Austin-area apartment market saw the second- largest rent decline year-over-year in December, a new study found. Jay Janner/American-Statesman

Just as it is a buyer's market in Central Texas' single-family housing market, so too is it a renter's market in the Austin-area apartment market.

Likely to the dismay of landlords and delight of tenants, Austin saw the second-steepest yearly decline among metros in the latest study by Rent.com.

Rents in Austin dropped 12.5% in December compared with December 2023, according to the study, which tracked rates in the nation's 50 largest metros.

Asking rents in Austin were $1,985 a month in December, versus $2,270 a month the prior December, the study said.

Leading December's declines was Salt Lake City, where rents dropped sharply, by almost 21%.

(Across the country, the median monthly rent in December was $1,964. Rents nationally peaked in August 2022 at $2,054, per Rent.com).

Of the 12 Sunbelt markets MRI ApartmentData tracks, Austin had the lowest level of occupancy (86%) in January, and it saw the biggest decline in rents over the past 12 months. (An average occupancy rate below 90% is the threshold where a market shifts from landlords' favor to renters' favor and concessions rise. For context, Austin's occupancy at the end of 2021 was almost 92%). However, MRI's report noted that February traditionally ushers in the “fast” leasing season, which may help to boost occupancy. 

A bit of background

In Austin, apartment rents hit all-time highs in 2022, with some tenants seeing their monthly rates skyrocket by a few hundred dollars.

But last year, local apartment market experts predicted some relief for renters, due to slower job growth and a large supply of apartment units coming online that was expected to exceed demand.

Deals to be had

In a December article on Rent.com's website, author Andrew Gardner wrote:

"Following years of whirlwind growth in lockstep with a construction boom and surging home and rent prices, Austin’s rents today have experienced some of the sharpest year-over-year declines in the nation. The downturn, partly due to an oversaturated housing supply, is empowering renters to negotiate favorable deals amid an abundance of apartment options at reduced costs, often complemented by generous rental concessions from landlords and property management companies."

Gardner went on to say: "Today’s sharp rent reductions stand in stark contrast to the city’s remarkable growth in recent years, fueled by a humming tech sector and a surge in inbound migration amid the pandemic, which sent rent prices to all-time highs."

Consider: Between October 2020 and October 2021, Austin rents grew by 31%, from $1,708 to $2,239, a $531 jump.

Even bigger gains were seen between February 2021 and July 2022, Gardner wrote, "when bottomed-out rent prices rallied from $1,179 to $1,780, marking a monumental swing of 52% and a price uptick of $601."

Despite the current declines, "Austin rents remain considerably higher today than amid pre- and early-pandemic lows," Gardner wrote. The recent drops "are more indicative of growing pains associated with the city’s rapid expansion," according to experts at Rent.com.

Bulging supply

• "Austin’s market continues to see a deluge of multi-family housing stock, with the recent infusion of 24,000 units hitting the market, an estimated 37,000 units under construction, and an additional 28,000 proposed for construction," Gardner wrote in December.

• Alvino Rosales, senior district sales manager for Rent.com’s Austin area, told Gardner that an oversupplied market will continue to drive rent declines at least through the first quarter of this year, and encouraged renters to take advantage of favorable deals. 

• “It’s a renters’ market. Do your research,” Rosales said. “There are plenty of deals and opportunities out there to take advantage of.”

The Austin-area apartment market saw the second- largest rent decline year-over-year in December, a new study finds. SARA DIGGINS/AMERICAN-STATESMAN