Apartments rents on the rise.
Average price up about $100 a month since 2005.
By Shonda Novak and M.B.
Taboada, AMERICAN-STATESMAN STAFF
Wednesday, January 09, 2008
Prices for apartment rentals in Austin are on the rise as occupancy rates increase,
according to Capitol
Market Research.
One-bedroom apartments have
increased to an average of $714 a month, about $100 more than they cost two
years ago. Two-bedroom, two-bath units are up to $938, also about $100 more
than two years ago, according
to the Austin-based real estate consulting firm that tracks the market.
The occupancy rate for 2007
rose to 96.6 percent, up from 94.4 percent two years ago.
"Everyone is upping their rents like crazy," said Susan Albertson,
a broker with Austin City Locators.
Albertson said the market is seeing a mix of newcomers and renters who are shopping
around after their rents
were raised. Also, more people have moved into the apartment market because
of tighter credit standards for
getting mortgages.
"There are people who are not able to pay their mortgage, and we're starting
to see a lot of people who aren't
buying a home," Albertson said.
Charles Heimsath, president
of Capitol Market Research, agreed that the credit crunch has been a plus for
landlords.
"To the extent to which
first-time buyers are on the sidelines because of the difficulty in qualifying
for home
mortgages, I think that's going to tend to keep people in apartments longer
and will serve to maintain
occupancy," Heimsath said.
He predicted that occupancy rates will hold at 96 percent this year.
Strong job growth in the past 12 to 18 months has also kept the apartment market healthy.
"It's still very positive,"
Heimsath said of job growth, although it has slowed in recent months. Employers
in
the five-county Central Texas region added 22,500 jobs from November 2006 to
November 2007, an annual
growth rate of 3 percent. "The main driver is always job growth."
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Rents have lagged occupancy
for nearly three years, Heimsath said, but the market has strengthened to the
point that landlords are comfortable raising rents.
"After almost three
years of average occupancy being above 92 percent, finally rents are beginning
to move
upward," he said.
Landlords and leasing agents
previously had been hesitant to raise rents, he said, because it had been a
tenants' market after the technology bust in 2001.
However, landlords now can
afford to be pickier and are becoming stricter in looking at renters' credit
histories, apartment locators said. Some homeowners who are nearing foreclosure
are finding difficulty
renting because of their tainted credit.
Another indicator that the
market has shifted in landlords' favor is that some are passing along the costs
of
utilities, trash service and pest control, helping push rents up.
Heimsath predicts Austin-area
rents will rise 5 percent to 6 percent this year, with ample demand to fill
the
estimated 6,000 units that are expected to open. Last year, the market absorbed
5,600 units.
"We should remain very
high occupancy and continue to be able to push rents throughout 2008 and into
2009," Heimsath said.
Albertson also expects rents to climb this year, with fewer incentives.
"It's going to be a tough summer if it's already like this in January," she said.
snovak@statesman.com, 445-3856
mtaboada@statesman.com, 912-2942
Dianne
Lee, Realtor®
Office:
(512) 692-9670 | Direct:
(512) 743- HOME |
