Austin, Texas attracts VC firms, tech giants and a crowd of professionals from different American cities. This increases demand for commercial and residential real estate in Austin.
In early 2021, the Austin Chambers of Commerce released a report that found the city lost 33,400 jobs in 2020 in the wake of the pandemic.
Everywhere you looked, the situation was pretty much the same. Jobs were lost, businesses closed and government lockdowns were the norm. Economic despair was widespread.
Where Austin did much better than other metropolitan areas was in reclaiming those jobs and opportunities and softening the blow.
A series of pro-business policies, an enviable (affordable) housing market, and a steady influx of technology companies and jobs all contributed to Austin’s turnaround.
Empty commercial spaces and closed restaurants have given way to bustling offices and bustling cafes in Austin, Texas. Such was the turnaround that Austin is currently the hottest real estate market in the United States, according to the National Realtors Association!
Millennials, tech giants and investors: the golden trio driving Austin’s real estate
Mike McDonald, chief executive of Cushman & Wakefield (real estate, insurance, pension funds), speaking to the New York Times, said that the influx of millennials to the Sunbelt City is the most important factor behind Austin’s growth.
Millennials, tired of rushing and the general rat race (predominantly in NYC and Silicon Valley) wanted to move somewhere that was a lot more chilled and chilled. They were looking for affordable housing, low personal income taxes, and a better standard of living.
When working professionals (millennials) first started moving to Austin, it was natural for companies to start doing business. After that came the institutional investors who followed the companies.
The COVID-19 pandemic has been tough on millennials, both physically and emotionally. They experienced economic hardship and watched their loved ones die. This made everyone realize that they should step back and spend time on things that matter. This has forced thousands of millennials to migrate from NYC, California and other centers to Austin and other cities in the Sunbelt region.
- Tech giants and companies
Texas has always been a business-friendly state. This has been evident in its policies that have made doing business easier. In 2021, the state announced more than $19 billion in incentives for businesses in the state. With hassle-free paperwork, property availability, and zero regulations, you were looking at a business paradise. Everyone from Elon Musk to Larry Ellison chose to move their base from the Valley to Silicon Hills.
Brayer Capital, Next Stone Ventures, 8VC, and Bedrock Capital are just a few of the VC firms that have amassed more than $5.5 billion in 2021 alone. This is thanks to an entrepreneurial wave and spirit that can be found in the Texas capital. It is also being propelled by the coming of brilliant and experienced Silicon Valley entrepreneurs who have set up shop in Austin. Investors are more than willing to support these entrepreneurs and their innovative ideas.
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The Austin Real Estate Market: Trends and Insights
“Austin will be the biggest boomtown America has seen in 50 years” – Elon Musk.
In fact, Austin, Texas, has been in the news since about the latter 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, Austin experienced something quite unique that impacted its real estate market. The city saw an influx of professionals exhausted by the pandemic like no other part of the country.
They’ve had some big tech companies like Samsung and Oracle shifting their base. They also had physically tired and mentally exhausted tech pros working 16 hour shifts looking for a break and more importantly, a better quality of life!
In Yahoo Finance’s 2021 Housing Market Survey, Austin ranked above all other major cities, including Los Angeles, NYC and San Francisco. Let’s take a look at some key facts and figures about the Austin real estate market.
- In a report published by the National Association of Realtors, Austin home prices rose 16% from 2020 to 2021. This is one of the highest in the country.
- Single-family homes and their median prices in Austin rose more than 33% to nearly $500,000 in the last quarter of 2021.
- The list price of a home in Austin is up 29% year over year, according to NerdWallet.
- 54% of people who wanted to buy a home in Austin were not originally from the city or state. 46% belonged to various American states and cities.
- Homes listed for sale in the third quarter of 2021 surged more than 73% as home sellers looked to take advantage of high growth and high prices.
- In the last quarter of 2021, Austin homes were only listed for 22 to 24 days before they were bought. If you compare the same to the American average, it’s 40 days.
- Of all Austin neighborhoods, Tarrytown is the most expensive with an average home price of just over $2 million. The West University area is the cheapest.
- The average rent has increased by more than 20% year-on-year from 2020 to 2021. The rent for a three bedroom property has increased by 27% in a single year.
- According to a Kiplinger report, Austin home prices are up over 95% since the last real estate boom in 2006.
- US News ranked Austin the number one resident in the United States for 2019. This was based on affordability, employment opportunities and standard of living.
The last snack
Nearly predictable signs, trends and insights suggest that Austin will remain America’s fastest growing real estate market for at least the next several years. With amazing culture, rich history, active lifestyle and a relatively laid-back vibe, Austin has become a top travel destination for technology companies, professionals, students and investors. As Austin’s longtime unofficial ambassador, the great Matthew McConaughey once said, “I was just waiting for the secret to come out.”