AUSTIN, Texas — A new report by CoStar Group Inc. shows Austin has the sixth biggest drop in rent prices since the start of the pandemic in March.
The director of analytics Sam Tenenbaum said over the past year, vacancies in Austin increased by about 2%, mostly due to construction.
CoStar Group, which owns Apartments.com, found in the second quarter of this year alone, the Austin area gained 4,000 new apartment units with about 14,000 more units under construction. Because of this, the Austin area has the fifth highest apartment vacancy rate of any large market in the country.
Tenenbaum said the construction of new apartments is part of the reason why rent dropped by about 2.4% since the start of the pandemic in March. He said this is the first time that rent on a year-over-year basis has declined in Austin since the last recession in 2008.
Downtown Austin, Pflugerville and Cedar Park are seeing the biggest drops in rent. The report found that the average rent for a one-bedroom apartment in the Austin area is more than $1,300.
"Rents at this time last year were about $20 more expensive than they are today," explained Tenenbaum."So we're not talking about this huge rent drop everywhere."
Even though it's not a big drop in rent, Tenenbaum said leasing companies are on edge, many of them offering deals like living rent-free for the first month or two.
"With the travel industry shut down, with few people moving in the middle of a pandemic, I think it puts a lot of pressure on developers to make projects work," said Tenenbaum.
The report shows that in May until the end of June, rent prices started to stabilize, but by early June it started to increase slightly. Tenenbaum said once COVID-19 cases started increasing, rent started to fall slightly again.
When looking at the long-term effects, Tenenbaum said he believes this will be short-lived because of Austin's growing workforce, but he is concerned about the next few months.
"The current $600 a week payment that folks are getting right now is going to basically disappear at the end of the month unless there's some expansion that's agreed to and passed as part of another round of the CARES Act, but right now there is nothing," said Tenenbaum. "A lot of people that are unemployed right now are thinking, 'How am I going to make rent this month or next month?'"
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