Austin, Texas, has grown substantially in the past few years. This growth is only projected to continue. Since the COVID-19 pandemic, Apple and at least 150 other companies have announced their intentions to relocate or expand in the Austin area. With such rapid growth, both residents and Austin real estate investors question the effects on the Austin real estate market.
Tech Companies in Austin, TX
Tech companies, such as BAE Systems, have operated out of Austin for decades. However, as Austin becomes more known for its silicon engineering industry, tech companies like Samsung, Tesla, and Apple show increased interest in Travis County.
The pandemic slowed many industries and developments across the nation. As a result, these tech giants are drawn by the incentive deals Austin has to offer. Tim Cook, CEO of Apple, writes, “At this moment of recovery and rebuilding, Apple is doubling down on our commitment to US innovation and manufacturing.” Apple plans to build a $1 billion, 3-million-square-foot campus in Northwest Austin that will bring 5,000 new jobs.
Mayor Steve Adler has publicly announced his support of this extension. He states, “I think this is very important for Austin.” He cites the projected increase in jobs for Austin residents and the increase in revenue for the city government. He states he could fund improvements to transportation and city park development.
However, many residents and prospective residents are concerned about the impact of more development. Not only that but how more workers will affect the already-strained real estate market.
Austin’s Housing Situation
Housing prices in Austin have soared in the last few years. Affordable housing becomes more scarce as the population rapidly increases. As residents compete for a limited amount of housing, house prices and rent inflate.
Northwest Austin is particularly prone to the housing supply and demand issue. With the arrival of the Apple campus, the real estate market faces a potential explosion of demand all at once. Steve Crorey, the Austin Board of Realtors President, issued a direct warning regarding this issue, stating, “If we don’t get serious about our infrastructure, our traffic, putting product on the ground for everyone, we’re going to lose business like this.”
Although warnings are given, and residential developers are trying to catch up with demand, the fact remains that Northwest Austin does not have much more land that could be converted into homes.
Median Prices of Rentals and Single-Family Homes
With the influx of new workers, the median price of rentals is substantially higher than it was five years ago. Single-family rentals can include any apartment, duplex, single-family detached property, etc. Corelogic, a property data analysis firm, estimates that Austin’s single-family rent prices have increased 15% from January 2021 to September 2021. Corelogic states the average single-family median rent price to be $1,863.
The cost to own a home has also drastically increased. According to a report by Texas Realtors, the average cost of an Austin home spiked by 33% in the last year. When factoring in this spike, the median price of a single-family home comes to $465,000.
Many Austin residents have expressed concerns about these soaring costs, calling them financially unsustainable. For example, they worry about what these prices could eventually reach in the next few years.
In the future
The tech giants have their eyes set on Austin, and more development is inevitable. The property tax incentives that the city offers are generous, and the city stands to gain millions in increased revenue. The struggle ahead is to keep Austin’s real estate market stable and sustainable for its current residents and the many incoming residents.
