Are you interested in buying an investment property in Austin this year? Great news for you: the Austin real estate market continues to be one of the hottest markets in the country! 2017 was a great year for Austin real estate, and this positive trend is expected to continue in 2018. According to the Emerging Trends in Real Estate report’s forecast for 2018, Austin ranks second on the list of cities to watch in the US with the most positive real estate market outlook.
Related: What Are the Hottest Real Estate Markets 2018 in the US?
Many factors play a role in this positive trend. So, without further ado, let’s dive into what real estate investors need to know about the Austin housing market trends and the reasons why buying an investment property in Austin real estate is a smart investment decision.
Buying an Investment Property in the Austin Real Estate Market Reason #1: Healthy Economy
The majority of the Austin real estate market’s strength is owed to the city’s thriving economy and consequently healthy job sector. Austin has become a hub for large businesses and great careers, especially in the tech industry, which has a positive impact on the city’s economic performance. Employment rates are rising, and job growth rates are expected to reach 3.6%, which is significantly higher than the national average of 1.9%. Moreover, unemployment rates have also improved (to 3.4%, which is 1% better than last year) and are lower than the national average (4.9%).
Not only does Austin have a healthier unemployment rate, but experts also believe it will only continue to improve, which without a doubt will contribute to the population growth and the supply and demand within the housing market. This brings us to the second reason why real estate investors should consider buying an investment property in the Austin real estate market.
Buying an Investment Property in the Austin Real Estate Market Reason #2: Population Growth
The positive economic and employment outlook affects the population growth – more employees and people who need jobs are attracted to the city. This is another key incentive for buying an investment property in the Austin real estate market. In fact, Austin is one of the fastest growing cities in the country, and experts expect that the population will continue to grow throughout 2018 and into the next few years. Over the next five years, experts project a population growth of 2.8%, resulting in an additional 42,000 residents moving to Austin per year!
The healthy job sector is not the only reason contributing to Austin’s population growth. Austin is one of the top Green Cities with plenty of outdoor activities. This is a lifestyle that many people are seeking, especially millennials who have already recognized Austin as one of the top destinations to relocate to, and now represent one-third of the city’s population.
Related: Should Real Estate Investors Consider Moving to a New Location in 2018?
With more and more people looking for places to live in, this is a great opportunity for real estate investors thinking of buying an investment property and renting it out. This is also a good time for property investors looking to sell their investment properties, whether single-family homes or multi-family homes, as there are plenty of buyers ready to make a purchase.
Buying an Investment Property in the Austin Real Estate Market Reason #3: Supply and Demand
The increasing population along with the steady property inventory has fueled and created more demand for Austin real estate. The increasing demand and low supply results in rising home values. In addition, homes are sold twice as fast in the Austin real estate market than the national average. According to Redfin, investment properties for sale in the Austin real estate market spent a median of 18 days on the market during June 2017, while the national median was 36 days. This is obviously good news for real estate investors buying an investment property in the Austin housing market for the purpose of selling it, as buyers are quick to purchase investment properties once they find them.
Related: What Are the Expected Residential Real Estate Trends in the US Housing Market for 2018?
The high demand and low supply don’t only create great opportunities for those thinking of buying an investment property in th Austin real estate market, but also for homebuilders. In fact, thanks to the recent success of the Austin housing market, new construction is on the rise with a focus on single-family homes.
Buying an Investment Property in the Austin Real Estate Market Reason #4: Home Values
As mentioned above, high demand and low supply resulted in increasing home values. According to the real estate research team at Zillow, home prices in the Austin real estate market are expected to rise by 3% in 2018. This adds more equity into the housing market, making it far above the national average.
Moreover, even with high appreciation rates, investment properties in the Austin real estate market are still considered affordable. Of course, this means that for those planning on buying an investment property in Austin, it’s financially better to do so sooner rather than later before home prices become too high.
Click here to start analyzing and comparing investment properties in Austin based on their prices to find the best one in the housing market!
Buying an Investment Property in the Austin Real Estate Reason #5: Rising Mortgage Rates
If the rising home prices were not enough to urge buying an investment property in Austin, consider the rising mortgage rate. Although mortgage rates have been low recently, the chances of them staying down are low. Right now, the average rate in the Austin housing market is around 4%, but Realtor.com predicts that mortgage rates will gradually rise and hit 6% by 2019 or 2020.
The message here is loud and clear: Real estate investors planning on buying an investment property in the Austin housing market should consider making the purchase sooner rather than later due to the forecast higher costs down the road.
Buying an Investment Property in the Austin Real Estate Market – Market Statistics
Now that we’ve covered the key factors that make Austin real estate attractive for real estate investors planning on buying an investment property, here’s an overview of this housing market’s statistics:
- Median Property Price: $465,000
- Traditional Monthly Rental Income: $2,190
- Traditional Cash on Cash Return: 2.1%
- Traditional Cap Rate: 2.1%
- Airbnb Monthly Rental Income: $1,320
- Airbnb Cash on Cash Return: 0.7%
- Airbnb Cap Rate: 0.7%
Buying an Investment Property in the Austin Real Estate Market – Conclusion
Overall, the Austin real estate market is one of the best and hottest markets in the country. So, if you’re looking to buying an investment property, you should definitely consider investing in the Austin housing market as it’s expected to continue growing, and there appear to be no signs of slowing down in the area. However, make sure you invest sooner rather than later!
Click here to start searching for the best investment properties to buy in the Austin real estate market.
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