On August 12, Shonda Novak wrote a piece for the Austin American-Statesman looking at what the headline called "soaring rents" and "occupancy rates" that make our apartment market the "hottest in [the] nation." I don't know about you, but those are the kinds of phrases that get my investment blood pumping. Essentially, our apartment market is right up there with big hitters like San Jose, California; San Francisco; Portland, Oregon; and Seattle. Those are all major "destination" cities and we're keeping pace. Why?

The short answer? Job and population growth. Pair that with a limited inventory of apartment units currently being built, and you're going to have some happy landlords who have every justification for reasonable rent increases. Note the use of the word "reasonable." Even when you're looking at major complexes with 96 percent occupancy, you want to position your rents fairly against the market, balancing the desire to make money, with the desire to secure long-term, high-quality tenants.

In June, rents in the Austin area reached a record high average of $772 a month for a single-bedroom, and $1,043 for a two-bedroom, according to figures compiled by Capitol Market Research. By the end of the year, overall average occupancy rates are expected to hit 97 percent. Only two new apartment communities were completed and became available for tenants in the first half of 2011, with an additional three communities (839 units combined) slated to be ready sometime during the second half of the year.

If renters can't find available apartments, they're going to start looking for small multi-unit leases or stand alone houses. When these are located adjacent to desirable venues or convenient locations -- for instance near downtown -- we're beginning to talk triple headers for renters: location, availability, price point. The balls fly for the investor as well -- occupancy, profit, low turn-over. While it may be tempting to watch the nightly news and get panicky, statistics like these prove that there's no town like Austin right now for highly successful real estate investment purchases.

And the best part about all this? Rates should continue to go up for the next year to 18 months. In December 2010 rates were averaging about 98 cents a square foot. By June, they were up an incredible 6 percent to $1.04. That's double what the experts predicted.

To get a full picture of the current rental market climate, take a few minutes to read the whole article -- particularly the information toward the bottom on the 9,200 new jobs added to the area from June 2010 to June 2011, and the fact that out-of-state job seekers and transferring employees make up 35 to 40 percent of the leasing traffic.

Posted by Monte Davis on
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