Austin, Texas, is attracting VC firms, tech giants, and a slew of professionals from different American cities. This is pushing the demand for commercial and residential real estate in Austin.
In early 2021, the Austin Chambers of Commerce published a report that stated that the city lost 33,400 jobs in 2020 in the aftermath of the pandemic.
The situation was pretty much the same wherever you looked. Jobs were getting lost, businesses were getting shut down, and government lockdowns were the norm. There was widespread economic despair.
Where Austin performed much better than other metropolitan cities was in getting back those jobs and opportunities and softening the blow.
A string of pro-business policies, an enviable (affordable) housing market, and a steady inflow of tech corporations along with jobs contributed to Austin’s turnaround.
Empty commercial spaces and closed restaurants have given way to vibrant offices and chirpy cafes in Austin, Texas. The turnaround has been so great that according to the National Realtors Association, Austin is the hottest property market in the United States right now!
Millennials, Tech Giants and Investors: The Golden Trio Driving Austin’s Real Estate
Cushman & Wakefield (real estate, insurance, pension funds) boss, Mike McDonald spoke to New York Times and said that the influx of millennials to the Sunbelt City was the most critical factor in powering Austin’s growth.
Millennials tired of hustling and the overall rat race (predominantly in NYC and Silicon Valley) wanted to move to somewhere that was much laid back and relaxed. They were on the lookout for affordable housing options, low personal income taxes, and a better standard of living.
Once working professionals (millennials) started moving to Austin, it was natural for the companies to start their operations. This was followed by the institutional investors that followed the companies.
The COVID-19 Pandemic was hard both physically and emotionally on millennials. They experienced economic hardships as well as saw their loved ones pass away. This made everyone realize that they should take a step back and spend time on things that matter. This is what forced thousands of millennials to migrate from NYC, California, and other centers to Austin and other cities in the Sunbelt region.
- Tech Giants and Businesses
Texas has always been a business-friendly state. This has been demonstrated in its policies that have promoted ease of doing business. In 2021, the state announced incentives worth more than $19 Billion for businesses in the state. With hassle-free paperwork, availability of real estate, and zero regulations, you were looking at a commercial paradise. Everyone from Elon Musk to Larry Ellison decided to shift base to Silicon Hills from the Valley.
- Investors and VC Firms
Brayer Capital, Next Stone Ventures, 8VC, and Bedrock Capital are just a few of the VC firms that have pooled more than $5.5 Billion in just 2021 alone. This is thanks to an entrepreneurial wave and spirit that can be found in Texas’ capital. It is also driven by the coming of brilliant and skilled entrepreneurs from Silicon Valley that have opened shop in Austin. Investors are more than ready to back these entrepreneurs and their innovative ideas.
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The Real Estate Market in Austin: Trends and Insights
“Austin is going to be the biggest boomtown America has seen in 50 years”- Elon Musk.
To be honest, Austin, Texas has been in the news since roughly the second half of 1990 thanks to its pro-business policies. The state has always lured businesses with its fewer taxation policies and other incentives.
In the aftermath of the Coronavirus Pandemic, Austin witnessed something quite unique that influenced its real estate market. The city saw an influx of pandemic-worn-out professionals unlike any other part of the country.
You had some huge tech corporations like Samsung and Oracle shifting base. You also had physically tired and mentally exhausted tech professionals that were working 16-hour shifts looking for a break and more importantly, a better quality of life!
In Yahoo Finance’s 2021 survey on the housing market, Austin tipped every other major city, including Los Angeles, NYC, and San Francisco. Let us look at some important facts and figures regarding the Austin real estate market-
- In a report published by the National Association of Realtors, home prices increased by 16% from 2020 to 2021 in Austin. This is among the highest in the country.
- Single-family homes and their median prices rose by more than 33% to nearly $500,000 in the last quarter of 2021 in Austin.
- The listing price for a home according to NerdWallet increased by 29% in Austin as compared to the same just one year before.
- 54% of individuals that were looking to buy homes in Austin were not originally from the city or state. 46% belonged to different American states and cities.
- Homes that were listed for sale in the third quarter of 2021 rose by more than 73% as home sellers wanted to cash in on the high growth and prices.
- In the last quarter of 2021, homes in Austin were listed for just 22-24 days before they were bought. If you compare the same with the American average, it is 40 days.
- Of all the neighborhoods in Austin, Tarrytown is the most expensive with a median home price just north of $2 Million. West University area is the most affordable.
- The average rental has increased by more than 20% on a year-on-year basis from 2020 to 2021. Rent for a three-bedroom property has gone up by 27% in a single year.
- According to a Kiplinger Report, home prices in Austin have increased by over 95% since the last housing market boom in 2006.
- US News voted Austin as the number one to live in the United States in 2019. This was based on affordability, employment opportunities, and standard of living.
The Final Takeaway
Almost predictable markers, trends, and insights suggest that Austin will continue to be America’s highest real estate growth market for at least the next few years. With amazing culture, rich history, active lifestyle, and a relatively laid-back kind of a vibe, Austin has become a top destination for tech companies, professionals, students, as well as investors. As Austin’s unofficial ambassador for many years, the great Matthew McConaughey once said, “I’ve just been waiting for the secret to get out.”