Austin Real Estate Update - 2024

Comprehensive Real Estate Report: Austin, Texas

Introduction

This report provides an in-depth analysis of the real estate landscape in Austin, Texas, focusing on the most popular and fastest-growing zip codes, crime rates and trends, economic and development plans, and demographic and population growth information. Austin, known for its vibrant culture and booming tech industry, has seen significant growth, making it a focal point for real estate investors and homebuyers alike.

1. Popular and Fast-Growing Zip Codes

Austin's real estate market has been expanding rapidly, with particular ZIP codes showing significant growth. The northwest sector of Austin, specifically Cedar Park and Leander, has been identified as the hottest areas for real estate. ZIP codes such as 78641 in Leander and 78704 in South Austin have seen a surge in sales and popularity. The 78704 area, known as 'South Austin,' includes neighborhoods like Barton Hills, Travis Heights, and Zilker, which offer a mix of outdoor activities and cultural events. Meanwhile, 78731 in Northwest Hills offers an upscale, family-friendly environment with easy access to amenities and a peaceful vibe.

More neighborhoods and zip codes information are here

2. Crime Rate and Trend

The crime rate in Austin has been a growing concern, with serious crimes showing an upward trend. As of April 2021, murders in Austin were up significantly, with a 200% increase compared to the same period in 2017. Aggravated assaults and car thefts also saw increases of 36% and 77%, respectively, while burglaries decreased by 9%. The violent crime rate in Austin is one of the highest in the nation, with a one in 186 chance of becoming a victim of violent crime. However, when compared to other cities of similar size, Austin's overall crime rate is lower than average, indicating that it is safer than most cities of comparable size (NeighborhoodScout, 2023; KVUE, 2021).

3. Economy and Development Plans

Austin's economy is thriving, with a focus on tech innovation and a strong labor force. The city is expected to become the fastest-growing large metro area in the country by 2028, with a projected population growth rate of 13.55%, potentially reaching over 2.7 million people. This growth is part of a broader trend across the Sun Belt, including states like Florida, North Carolina, Tennessee, and Texas (Site Selection Group, 2023).

Significant investments in infrastructure and development are underway to support this growth. For example, Apple plans to build a $1 billion campus in Austin, creating at least 5,000 jobs. Transportation is also a key focus, with plans to expand I-35 through Austin starting in late 2025. High-speed rail has been suggested as an ideal option for the region to alleviate traffic congestion (Texas Tribune, 2023; KVUE, 2024).

4. Demographic and Population Growth Information

The Austin and San Antonio regions are expected to grow from 5.2 million to 8.3 million people by 2050. This growth is driven by factors such as in-migration, younger demographics, and high labor force productivity. Austin's population has historically doubled every 20 years, and this trend is expected to continue, with the population projected to reach 4.5 million by 2040. The demographic shifts include significant growth in Asian and Hispanic households, with more families choosing to live in the suburbs due to affordability and lifestyle preferences (KVUE, 2024; Texas Tribune, 2023).

5. Business Incentives Attracting Companies to Austin

State-Level Incentives
The Texas Enterprise Fund (TEF) is a significant "deal-closing" fund in the nation, utilized as a performance-based financial incentive tool for projects that offer substantial projected job creation and capital investment when a single Texas site is competing with out-of-state options (Source: Texas Economic Development & Tourism). The TEF has awarded $609 million since its inception in 2004, demonstrating Texas' commitment to investing in its future by offering competitive incentives to companies driving innovation and job creation within the state (Source: KVUE).

Local Incentives
Austin has implemented a range of local incentives to attract and retain businesses. These include tax incentives, rebates, fee waivers, and Chapter 380 agreements, which are designed to recruit and expand businesses. As of the latest reports, Austin had eight active incentive agreements, amounting to $11,507,810 in tax incentives, rebates, and fee waivers in the previous year (Source: KVUE). These agreements are performance-based, ensuring that incentives are provided only after the businesses have demonstrated their commitment to hiring local workers at higher wages or making significant investments in the region (Source: City of Austin Economic Development Department).

New Economic Development Plans
Recognizing the evolving economic landscape, Austin is working on new economic development plans to address the needs of both large and small businesses. The city aims to align its policies with current economic conditions, potentially offering more support to smaller, locally owned businesses (Source: KVUE).

6. Job Growth and Employment Information

Employment Growth
Texas has experienced a landmark surge in employment, with job growth rates surpassing national averages. From December 2022 to December 2023, Texas grew at an annual rate of 2.7 percent, a full percentage point above the nation's 1.7 percent. This growth is reflected across various industries, with significant job additions in Trade, Transportation, and Utilities; Private Education and Health Services; and Leisure and Hospitality sectors (Source: Hoodline).

Austin's Job Market
In Austin, nonfarm payroll jobs increased by 50,900, or 4.2%, over the last 12 months. The private service-providing industries in Austin saw a net gain of 51,300 jobs, or 5.8%, while employment in goods-producing industries slightly decreased. The overall private sector job growth in the Austin Metropolitan Statistical Area (MSA) was 4.9%, with gains across all major private industry sectors (Source: Austin Chamber of Commerce).

Unemployment Rates
Austin's unemployment rate has remained competitive, with the city often ranking among the lowest rates of unemployment among the 50 largest metros in the United States. The labor force in Austin has increased by 2.4%, and employment by 2.7% over the last 12 months, indicating a sustained performance relative to the state and other major Texas metros (Source: Austin Chamber of Commerce).

7. Major Employers and New Business Movements

Existing Major Employers
Austin is home to several major employers, including established tech giants and innovative startups. Companies like Apple, which is expanding its presence with a new $1 billion campus, and Tesla, with its $1.1 billion investment in a manufacturing facility, are significant contributors to the job market and economic development in the region (Source: ARC Relocation).

New Businesses and Expansions
Recent business movements include the expansion of Tesla's Giga Texas and the establishment of new office spaces like Business1121 at Symphony Square. Meta is subleasing a significant amount of office space in Sixth and Guadalupe, Austin's tallest tower, indicating the city's growing appeal to tech companies (Source: ATXtoday).

Startups and Innovation
Austin's startup ecosystem is thriving, with around 5,500 startups contributing to the city's job market. Popular startup industries in Austin include technology, healthcare, and e-commerce, benefiting from the city's favorable tax laws and well-developed retail sector (Source: Startup Savant).

8. Major Residential and Commercial Development Projects

The Texas State Capitol Complex
The Texas State Capitol Complex is a nearly $900 million project that is centralizing all state agencies in downtown Austin. This iconic development is expected to save taxpayers $25 million on leases annually upon completion (Commercial Search).

EastVillage
EastVillage is a mixed-use development in Northeast Austin, which in its first phase includes 35,000 square feet of commercial space and no more than 400 residential units. The second phase is projected to add 100,000 square feet of commercial space and up to 250 multifamily units within five years of Phase 1's completion (Commercial Search).

I-35 Capital Express Program
The I-35 Capital Express Program is a significant infrastructure project aimed at improving mobility and transportation within the city (Commercial Search).

Downtown Austin Developments
Downtown Austin is experiencing a renaissance with various projects that promise to reshape the city's core. Notable developments include:
- 321 West: A multifamily and office building with 123,000 square feet of office space and 561,000 square feet for multifamily use, expected to be delivered in the fourth quarter of 2024 (AQUILA Commercial).
- ATX Tower: A 58-story building with 368 residential units, expected to be completed in 2024 (AQUILA Commercial).

Northline
Northline is a mixed-use development in Leander, TX, encompassing 1,900,000 square feet of office space, 225,000 square feet of retail, 175,000 square feet of hotel space, 2,150 multifamily units, and 250 townhomes, with full buildout expected by 2031 (AQUILA Commercial).

9. New Construction Communities and Builders

Austin has 443 new home communities with 6,152 houses available for sale. These houses start at $195,720, and the city is among the fastest-growing housing markets in the U.S. (New Home Source).

Top Builders in Austin
- Taylor Morrison: Offering homes in communities such as Carmine in Kyle, TX, and Dovetail in Austin, TX.
- Perry Homes: Known for their developments in Georgetown, TX, with homes starting from $583,900.
- Brookfield Residential: Presenting the Tremont Side B in San Marcos, TX.
- Lennar: Providing homes in Jarrell, TX, with prices starting at $294,990.
- M/I Homes: Featuring the Balcones II in Georgetown, TX.
- Ashton Woods: Currently constructing homes in Austin, TX, with prices starting from $599,973 (New Home Source).

10. Real Estate Listing Inventory and Price Trend Information

Market Trends
As of January 2023, the median home price in Austin dropped 6.3% to $450,000, marking the largest price drop since July 2011. Despite this decrease, the housing inventory remained flat at 2.7 months, indicating a persistent need for more housing (Austin Board of REALTORS®).

City of Austin
In January, home sales decreased by 37.3% to 439 sales, and the median price slightly decreased by 4.6% to $525,000. New listings increased by 13.0% to 886 listings, while active listings skyrocketed by 387.5% to 1,760 listings (Austin Board of REALTORS®).

Travis County
The forecast for 2024 suggests that home prices and sales will likely remain flat, with a potential increase or decrease of 5% year over year (Statesman).

Market Statistics
The Austin real estate market has seen a shift towards a more sustainable pace. In 2023, housing inventory reached the highest level in over eight years, despite a drop in closed sales and median close price (Cain Realty Group).

Future Outlook
The Austin housing market is expected to continue its growth trajectory, driven by job and population growth. The Samsung plant under construction in Taylor is anticipated to employ nearly 10,000 people, contributing to the steady flow of newcomers (Statesman).

Conclusion

Austin's real estate market is characterized by dynamism and growth, with specific zip codes witnessing rapid sales and increased popularity. Despite challenges in crime rates, ongoing efforts are being made to address these concerns. The city's robust economy, fueled by tech innovation and infrastructure development, contributes to its overall attractiveness. Demographic shifts, marked by a substantial increase in suburban living, are shaping the future of Austin, solidifying its status as a key market for real estate investment and development.

Austin's appeal extends beyond real estate, with strategic business incentives, a vibrant culture, and a high quality of life making it a magnet for businesses and talent. The proactive approach of state and local governments to economic development, including performance-based incentives and a focus on innovation, has resulted in significant job growth and a competitive job market. The expansion of major employers and a thriving startup scene further contribute to Austin's promising economic outlook.

The real estate market in Austin is undergoing significant transformation, featuring a mix of residential and commercial developments, new construction communities, and evolving market trends. While the pace of growth may be stabilizing, the city's commitment to sustainability, affordable housing, and infrastructure improvements positions it as a dynamic and attractive market for the foreseeable future. The ongoing evolution of Austin ensures that it remains a compelling destination for real estate investment and development.

To see Austin metro ranking, click here

References

KXAN. (2024, January 4). Texas accounts for almost half of the hottest zip codes for real estate in 2023. Link
NeighborhoodScout. (2023). Austin, TX Crime Rates. Link
KVUE. (2021, October 13). DATA: How has Austin’s crime levels evolved in the past decade? Link
Site Selection Group. (2023). Austin could become the fastest-growing metro area in 5 years, new report says. Link
Texas Tribune. (2023, November 9). Texas is not prepared for Austin-San Antonio population boom, experts say. Link
KVUE. (2024). In 20 years, Austin’s population will be 4.5M. Here’s what Austin will look like. Link
Texas Economic Development & Tourism. (n.d.). Incentive & Financial Programs. Link
KVUE. (2018). Courting companies: Looking into the incentives the city is offering big businesses to move to ATX. Link
Austin Chamber of Commerce. (2023). Job growth & unemployment. Link
Hoodline. (2024). Texas shatters employment records, surpasses national job growth rates in landmark 2023 surge. Link
ARC Relocation. (n.d.). Companies moving to Austin. Link
ATXtoday. (2023). New and coming-soon businesses to Austin. Link
Startup Savant. (2023). 20 Top Austin Startups to Watch in 2024. Link
Commercial Search. (n.d.). Top Projects That Will Reshape Austin. Link
AQUILA Commercial. (n.d.). 2 Downtown Austin Office Buildings Delivering in 2024. Link
New Home Source. (n.d.). New Homes for Sale in Austin, TX. Link
Austin Board of REALTORS®. (n.d.). January 2023 Central Texas Housing Market Report. Link
Statesman. (n.d.). Job, population growth key to future of Austin's housing market. Link
Cain Realty Group. (n.d.). Market Statistics on Austin TX Real Estate. Link