COVID-19 pandemic could be reshaping Austin’s apartment market

Construction crews work on an apartment building going up just off Interstate 35 in the downtown Austin area on March 1.  The ongoing boom in apartment construction, coupled with a decline in demand due in part to the coronavirus pandemic, has changed the dynamics of the Central Texas apartment market.

For years, landlords have had the upper hand in the Austin region’s booming apartment market, where demand for rental housing has outpaced supply and sent rents soaring ever higher.

It appears the COVID-19 outbreak has changed that, at least for the time being.

The shift in the market began with the pandemic-induced stay-at home orders put into place last spring and summer, and it has been extended by a decline in the number of people who typically move to Central Texas from out-of-state, market experts say. At the same time, new apartment projects that were planned before the pandemic continued to be completed, adding even more available units into the market.

The upshot is that, for the first time in years, renters and landlords in the Austin area appear to be approaching equal footing, market experts say.

The point at which tenants and apartment owners have equal sway – that is, with neither having an advantage – is at about a 92% occupancy rate, real estate consultant, Charles Heimsath said.

Construction continues on an apartment tower near downtown Austin on March 1.  Apartment construction has continued at a rapid pace during the coronavirus pandemic.

In Heimsath’s most recent apartment survey, the average occupancy rate among the 244,000 apartment units he tracks was 91%. That’s down from an average of 93.3% at the end of 2019.

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When the occupancy rate goes above 92%, rents typically rise, said Heimsath, who is president of Austin-based real estate consulting firm Capitol Market Research. When the occupancy rate slips below that number, rents typically decline, he said.