 
Austin's Investment Real Estate Market:
It’s no secret the economic climate in Austin is one of the healthiest in the country. The 2010 census shows the metro population growth at 37% (500,000 people) over the last 10 years, with estimates of doubling over the next 30 years (Texas State Demographer, 2010). This equates to a more then 3% annual growth rate or around 50,000 new people moving to Austin each year.
A December, 2010 report shows Austin’s occupancy rates at 93% for rental units (ALN Apartment Data, 2011). This gives the city a 24-month inventory of available rental property, or 2 years until full absorption. There are few new large multifamily projects in the pipeline and tightening of development restrictions by the city is ongoing. Rental properties, mainly valued on their income, should see an increase in performance over the next two years, having a positive impact on property value.
Scarcity like that found in Austin, has been and should be the reason real estate appreciates in value. In recent years other boom towns across the nation have seen a sharp rise and fall of property value fueled by the availability of money and loose lending standards. Many of these markets were heavily reliant on owner occupied “move up sellers” using their homes as an easy way to grow net worth. This was followed by the over leveraging of those homes, in the form of equity loans, which in many cases were used to increase their standard of living, artificially inflating performance in many industries including the retail sector, and causing many companies to increase their workforce. During that time in other boom towns, job growth and sustainability were of little worry and its not hard to see why; with the housing sector, then 10% of national GDP growth, exploding the way it was with little end in sight (SETZER, 2006).
That brings us to one important aspect that sets Austin apart from other boom towns; it’s still continuing job growth rate of 2.3%, one of the highest in the nation and leading the state of Texas (Angelou Economics, 2011). This growth rate is expected to trend upward over the next few years, adding a multitude of relatively diverse positions in several rapidly growing industries, helping to feed demand for housing (Angelou Economics, 2011).
Simply put, scarcity + demand = appreciation, the most basic of real estate investment rules. The deflationary real estate value fall outs in cities across the country are directly related to lack of job growth and high unemployment rates. People lose their homes – relocate to find work – which decreases the demand for housing units – thus decreasing the value. Because central Texas had little job loss, there has been little fluctuation in the positive trend of property value in Austin, meaning investors looking for a steal in Austin are in for a surprise. Despite steadily increasing rent rates and occupancy levels, properties on the market for sale are performing quite a bit below a normal real estate investor tolerance. Capitalization rates are 6-7% in prime areas ( today's investor is looking to get around an 8-10% cap rate on any given property) (Real Capital Analytics, 2010).
Investing in Austin is more about the safety of economic integrity that is found here then it is about reaping short term high returns. In essence it’s a low risk investment that produces an appropriate return. With property values for income property on an upswing, buying what is a 6% cap rate today could easily be performing at an 8% cap rate within a short period of time depending on location, especially considering that average “per square foot” rent rates are increasing in Austin at around 6.4% per year (ALN Apartment Data, 2011). I know my clients, and I will not miss this oportunity to buy, Will you?
Works Cited
ALN Apatment Data. (2011). ALN's Apartment Monthly News. Austin: ALN Apartment Data.
Angelou Economics. (2011). 2011-2012 Economic Forcast. Austin: Angelou Economics.
Real Capitol Analytics. (2010). Austin Market Analysis. Austin: Real Capitol Analytics.
SETZER, G. (2006, August 11). Housing Bubble Watch: Housing Sector No Longer Fueling The Economy. MND News Wire , p. 1.
Texas State Demographer. (2010). Austin The Human Capitol population projections. Austin: Texas State Demographer.
If you are from out of town, here are the basic areas... 
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