The housing market in Austin, Texas, has some of the strongest demand in the country and Dillar Schwartz, an eXp real estate agent in the area, explains the local market conditions for homebuyers and renters.
Homebuyers and renters around the country are facing a challenging landscape in terms of affordability, and a recent report identified seven markets where conditions make renting a significantly more affordable option than buying.
An analysis by Apartments.com identified the cities of Austin, Texas; Sacramento, California; Denver, Colorado; Portland, Oregon; Baltimore, Maryland; Salt Lake City, Utah; and Orlando, Florida, as metro areas where the average monthly rent is noticeably lower than the median monthly mortgage payment.
The two markets that top the list, Austin and Sacramento, shared the distinction of having average rents that are more than $1,000 lower than the median monthly mortgage payments.
Austin’s median monthly mortgage payment is $2,475, while the average monthly rent was $1,421, leading to a difference of $1,054. In Sacramento, the median monthly mortgage payment is $2,621 compared to an average rent of $1,579 per month, giving renters a $1,042 edge in affordability.
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Sacramento and Austin were the two markets with the largest difference between the cost of buying a home and renting. (David Paul Morris/Bloomberg via Getty Images)
Dillar Schwartz, an eXp real estate agent based in Austin, told FOX Business in an interview that the housing market in central Texas remains very active for both homebuyers and renters.
“We have seen an uptick in rental leads and rental inquiries, and right now, they’re across the board. They’re relocating, they’re wanting to try different subdivisions. They’re moving here for work, and there’s not one big industry that’s moving people here,” Schwartz said.
“In terms of buyers and sellers, I’m seeing more first-time homeowners come through. We’re seeing a lot of the renters who inquired, and we helped find homes about two years ago, they’re now working on getting into homeownership,” she explained, noting that there’s a “really nice mix of sellers” with listings across price points.
“There’s a nice blend. However, I feel like this blend didn’t happen until about four or five months ago – there were a lot of people just on the sidelines,” she added.
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For prospective homebuyers and renters looking to move to the Austin area, Schwartz said one of the first questions her practice likes to address is the cash reserves the home shoppers have available given the costs.
“Right now, due to Texas insurance, property taxes and the rates being high, the cost right out the gate to get in a home without even discussing a down payment is fairly high, and that trickles into the monthly payments,” Schwartz said.
The area around Austin, Texas, remains in high demand for renters and homebuyers. (Rick Kern/Getty Images)
She said that while prices in Austin have fallen, those costs are “really starting to shock buyers once they have that conversation with a lender,” adding that while rental rates are also lower, they can face a financial hurdle in getting into an apartment.
Schwartz said that for an apartment renting at about $2,000 a month, the prospective renter would need to be able to cover not only that first month’s rent but also a deposit of around $2,000, plus application fees and background checks that may run around $100 per person.
“When you add all of those costs, the average renter is going to need about $5,000 cash as well to make that move,” she said, noting that can jam consumers in certain situations.
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Schwartz said in most of central Texas, which her practice covers, “we can find you a place that’s a little bit more affordable to rent than to purchase right now.”
The Austin real estate market has solid levels of housing inventory available for both would-be homebuyers and renters, with the region having taken steps to ease regulatory barriers to increasing the supply of housing in recent years.
Texas has taken steps to ease regulatory barriers to increase housing inventory. (Joshua Lott/Bloomberg via Getty Images)
Schwartz said the city recently added a new position to its permitting department that aims to expedite the process faced by homebuilders and people flipping homes, as well as allowing more infill development on lots to increase the number of homes.
“In Austin right now, if you truly do need to buy a home and want to invest in yourself and start building that wealth, all it takes is time and patience by working with a true professional – there are deals out there,” Schwartz said.
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The same holds true for renting, she added, noting that demand remains strong and that renters are still going to need cash available to get into a property.
“The opportunity is there. The Austin market just takes a little bit more time and patience to navigate,” she said.
