The Carvajal Group Blog

Allandale/Rosedale leasing market analysis

July 15th, 2011

We have all heard that Austin’s population is growing. We know that the job growth and stable economy are attracting future residents to popular neighborhoods such as Rosedale and Allandale. We know WHY people are moving here, but WHAT does this mean for your investment?

When the housing market collapsed so did the construction of new homes and apartments. Now we see construction picking back up, but not fast enough to meet the demand of our new residents. This coupled with an 8% decrease in home sales compared to last June, we are seeing an increasingly competitive market.

The Rosedale and Allandale leasing market has seen a lower home inventory level compared to 2010. In fact, new listings decreased by 7.1%. The Year-to-Date statistics below show that the average rental rate has increased 11.35%. This is probably due to simple economics of decrease supply causes an increase in demand and price. We have seen a 7% decrease in the days on market from January 2011 to May 2011. However, from May 2010 to May 2011 there is a more significant decrease of 16.7% of average days on market.

So why so much talk about the leasing market? In my experience, the thousands of re-locators are opting to lease rather than buy. We could imagine this to be true due to the fact they are in a new town and want to scope out the areas before purchasing. That of course is in addition to confidence levels in the real estate market and the ability to get a loan. According to Austin Board of Realtors, despite the decrease in sales volume, housing values are continuing to appreciate. We saw a 4% increase in median home value since May of 2010. This would indicate a long-term strength in the Austin real estate market. I see these statistics in two different lights.

From the homeowner’s perspective, I see three great advantages to leasing a home. 1) keep the property while it appreciates 2) rental income can cover mortgage, taxes and insurance payments 3) repairs and property management fees are tax deductible.

From the renter’s perspective, I see three disadvantages. 1) We are in a landlord’s market because they are setting the price. 2) In the areas such as Rosedale and Allandale the cost to rent is almost the same as some mortgage payments (given interest rate, loan etc). 3) Lease prices are increasing, especially in these summer months.

Overall, the Area 4 market is decreasing new listings, seeing higher rental rates and fewer days on market. The 78756 neighborhood is one of Austin’s fastest growing neighborhoods. We see residents move away from the congested downtown area, but still seek the central Austin atmosphere. Rosedale/Allandale will continue to be a hot housing market as Austin expands.




Tags: Austin Investment Property · Austin Neighborhoods · Austin Real Estate · Austin Rental Property