Austin, Texas attracts venture capital firms, tech giants, and a large number of professionals from different American cities. This drives the demand for commercial and residential real estate in Austin.
In early 2021, the Austin Chambers of Commerce published a report that said the city had lost 33,400 jobs in 2020 in the wake of the pandemic.
The situation was pretty much the same wherever I looked. Jobs were vanishing, businesses were closing their doors, and government shutdowns were the norm. Economic desperation prevailed on a large scale.
Where Austin did much better than other major cities was in restoring those jobs and opportunities and softening the blow.
A series of pro-business policies, an enviable (affordable) housing market, and a steady stream of technology companies along with jobs contributed to Austin’s transformation.
Empty commercial space and enclosed restaurants give way to the vibrant offices and lively cafés of Austin, Texas. The transformation has been so great that according to the National Realtors Association, Austin is the hottest real estate market in the US right now!
Millennials, tech giants and investors: the golden trio drive Austin real estate
Mike MacDonald, president of Cushman & Wakefield (real estate, insurance and pension funds) spoke to the New York Times and said the influx of millennials to Sunbelt City was the single most important factor driving Austin’s growth.
Millennials were tired of the crowds and rat races in general (mostly in New York City and Silicon Valley) they wanted to move to a place that was quiet and relaxing. They were looking for affordable housing options, low personal income taxes, and a better standard of living.
Once working professionals (Millennials) started moving to Austin, it was only natural for companies to start their operations. This was followed by institutional investors who followed the companies.
The COVID-19 pandemic has been physically and emotionally difficult for millennials. They experienced economic hardship and saw loved ones die. This made everyone realize that they should step back and spend time on the important things. This has forced thousands of millennials to migrate from New York City, California and other centers to Austin and other cities in the Sunbelt area.
- Tech giants and companies
Texas has always been a business friendly country. This was evident in its policies that promoted the 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 no regulations, you’re looking for a trading paradise. Everyone from Elon Musk to Larry Ellison decided to move from the Canyon to Silicon Hills.
Brayer Capital, Next Stone Ventures, 8VC, and Bedrock Capital are just a few of the venture capital firms that raised more than $5.5 billion in 2021 alone. This is thanks to the pioneering wave and spirit that can be found in the Texas capital. It’s also driven by the advent of brilliant and skilled entrepreneurs from Silicon Valley who opened a store in Austin. Investors are more than willing to support these entrepreneurs and their innovative ideas.
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Austin real estate market: trends and insights
“Austin will be the greatest boom America has had 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 attracted companies with its lower tax policies and other incentives.
In the wake of the coronavirus pandemic, the city of Austin witnessed something unique that affected its real estate market. The city has seen an influx of professionals exhausted from epidemics unlike any other part of the country.
You had some huge tech companies like Samsung and Oracle shifting base. You also had physically tired and mentally exhausted techs working 16 hour shifts in search of a break and, most importantly, a better quality of life!
In a 2021 Yahoo Finance survey of the housing market, Austin outperformed every other major city, including Los Angeles, New York and San Francisco. Let’s have a look at some important facts and figures related to the real estate market in Austin-
- In a report published by the National Association of Realtors, home prices rose 16% from 2020 to 2021 in Austin. This is among the highest in the country.
- Single-family homes and their median prices rose more than 33% to nearly $500,000 in the last quarter of 2021 in Austin.
- The list price of a home according to NerdWallet is up 29% in Austin compared to the same price just one year ago.
- 54% of individuals who were looking to buy homes in Austin were not originally from the city or state. 46% belong to different US states and cities.
- Prices of homes listed for sale in the third quarter of 2021 increased more than 73% as home sellers wanted to take advantage of higher growth and prices.
- In the last quarter of 2021, homes in Austin were listed for only 22-24 days before they were purchased. If you compare the same with the US average, it is 40 days.
- Of all the neighborhoods in Austin, Tarrytown is the most expensive with a median home price north of $2 million. The West University area is the most expensive.
- Average rent increased more than 20% year-over-year from 2020 to 2021. Three-bedroom property rents increased 27% in one year.
- According to a Kiplinger report, home prices in Austin have increased more than 95% since the last housing market boom in 2006.
- US News voted Austin number one to live in the US in 2019. This was based on affordability, job opportunities and standard of living.
Final takeaway
Almost predictable indicators, trends, and insights suggest that Austin will continue to be America’s top real estate market for at least the next few years. With its amazing culture, rich history, active lifestyle, and a relatively laid-back kind, Austin has become a major destination for tech companies, professionals, students as well as investors. As an unofficial ambassador for Austin for many years, the great Matthew McConaughey once said, “I’ve been waiting for the secret to be revealed.”