Austin Q4 Market Insights: A strong close to 2022 to spark new development

Highlights

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Austin-Market-Fundamentals
  • Operating conditions in Austin ended 2022 on a high note with vacancy holding steady, strong rent growth, and construction activity picking up. With the recent surge in the development pipeline, apartment completions are expected to reach a cyclical high in 2023, only a few years after below-trend deliveries.
  • After ticking higher during the third quarter, the vacancy rate held steady in the finalthree months of 2022, finishing the year at 5.1 percent. The rate improved by 20 basis points during the last 12 months, even as more than 10,000 units were delivered.
  • Apartment rents in Austin continued to push higher in 2022, rising 9.3 percent and ending the fourth quarter at $1,585 per month. Rents have posted a cumulative gain of more than 25 percent in the past two years. Multifamily sales velocity slowed by 11 percent from the third quarter to the fourth quarter. In transactions where pricing was available, the median sales price in 2022 was $221,700 per unit, up 7 percent from the median price in 2021. Cap rates have begun to trend higher, but properties traded within a wide range in the fourth quarter.

 

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