What does this mean for you?
Fundamentally, it means that the price you pay for a new rental, or the price you pay to renew an existing lease, will most likely be higher than anything you've seen in 7 years. There will be fewer incentives/concessions given to renew this year as well.
If you're after a short term lease, you'll really feel the impact of the limited supply in terms of elevated prices. From a landlord's point of view, if there are more renters than there are available units, why accept a shorter term lease when there are others who will gladly take the longer lease to lock down the price?
Why are we experiencing this housing crunch? A couple of factors come in to play. Our new construction market has been white hot for some time now, and downtown condos are en vogue more now than ever before. There are just under 20 projects within 2 miles of downtown currently underway, and half as many more coming down the pipe.
Wait a minute, if they're building more, what explains our current market, you ask? It might take 3 or 4 years from conception to fruition on a high-rise condo, but a small, 30 unit community can be vacated, rehabbed & sold in just under a year. This is a huge trend for the older neighborhoods in Clarksville, Tarrytown, Barton Hills & South Central. That's a large contributor to the supply problem; The smaller investor groups who're taking an older, central Austin location, clearing out the old tenants (who were paying far less than market value) and converting them to condos to be sold. These communities rarely saw any turn over (people moving in and out; to the contrary- very stagnant), and now their displaced tenants are back in the rental pool, adding to the demand. In the past, I would get 1 call in 100 from people who's former housing was being converted. Today, that number is 1 in 4 calls. Odds are, if it hasn't happened to you, it's happened to your friends.
Another reason that we're behind the curve on rental housing is due to the 2200 people a month who move here. We grew by over 25,000 people last year, and we're setting the same pace for this year! In order to sustain housing for this growth, we need to add approximately 7-9 new communities of 300-400 units a piece per year to keep up with the demand. We haven't added more than 5 on average for the past 2 years, so we're a little behind. We're slated to open 8 new communities in '08 to address these needs.
What does this mean for 2008? Prices might come down a skosh, but we won't see anything significant until 2009. Hang in there! In 2010 they'll be giving away Cadillacs again!
Barron
Broker/ REALTOR
http://www.greenlightlocating.com/
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