2021 Austin Real Estate Market Investing Forecast | Millionacres – Motley Fool

Anchor industries

Austin is home to a number of diverse economic industries but definitely has several core categories and big-name employers, including:

  • Finance and technology (fintech): Finance and technology, also known as fintech, play a huge role in Austin’s economy. Austin is predicted to become one of the leading fintech cities in the world moving forward, currently producing just over 135,000 jobs in the management, business, and financial operations occupations.
  • Manufacturing: In 2020, 12% of Austin’s GDP came from manufacturing. The city saw $153 million in venture capital invested in consumer goods in 2019 and is one of the top 20 metros for research and development in the manufacturing field.
  • Life sciences and healthcare: The city of Austin is home to over 260 different life science– and healthcare-related companies, creating 16,300 jobs in this field. The National Science Foundation dubbed Austin the third-hottest emerging market for life sciences.
  • Computers and engineering: Austin is one of the top 20 markets for global tech, having 87,800 jobs in software engineering, IT, cybersecurity, clean tech (sustainable engineering and development), and computers.

Some of the largest employers in the area include:

  • Amazon (NASDAQ: AMZN)
  • AT&T (NYSE: T)
  • Charles Schwab (NYSE: SCHW)
  • Ebay (NASDAQ: EBAY)
  • Facebook (NASDAQ: FB)
  • GM (NYSE: GM)
  • Google (NASDAQ: GOOGL)
  • Oracle (NYSE: ORCL)
  • 3M (NYSE: MMM)

Schools of note

The largest university in the greater city of Austin is the University of Texas at Austin (UT), which has nearly 52,000 students enrolled. Additionally there are several private and nonprofit universities in the area, including St. Edward’s University, Huston-Tillotson University, and Concordia University Texas, which have a combined total of just under 8,500 students enrolled.

Neighborhoods of note

Areas around University of Texas

The area surrounding the University of Texas can be a notable area for investors simply because of the continued demand for student housing. There are several distinct neighborhoods that provide student housing, both in the form of single-family homes, duplexes, condos, or apartments, but two of the most popular and affordable are North University and Hyde Park. Properties can range anywhere from the upper $100,000s to low $300,000s, depending on the size, condition, location, and features of the property, which leaves room for rental returns for investors.

Central East Austin and East Austin are also desirable areas for UT students, but prices for single-family residences are much more expensive than other areas. This can be a good market to purchase and rent an apartment in a larger development, a popular method for owning student housing.

Johnston Terrace and MLK

The east side of Austin is one of the fastest-growing, highly sought-after areas of Austin. Its proximity to downtown, hip bars and restaurants, and more affordably priced real estate make it a desirable area for young professionals and families.

The group of neighborhoods including Johnston Terrace, MLK-183, and East MLK has a mixture of single-family homes and historic homes, making it an ideal location for fix-and-flip investors, developers, and buy-and-hold landlords. There’s a lot of activity in this area for both rehabbing and long-term buy-and-holds. Homes run anywhere from the low $400,000s to upper $700,000s, depending on condition, size, and location, and rents can range from $1,700 for a one-bedroom, one-bathroom up to $4,000 for a larger-sized unit or home, meaning room for a rental return is substantiated despite a higher price tag.

South Austin

South Austin has become one of the most popular destinations for families, singles, and couples. Its access to outdoor amenities of the area, proximity to downtown, and hip bars and restaurants make it one of the coolest places to live in Austin.

However, that also means the price tag for real estate makes it one of the least profitable areas, particular for rental investors. Fix-and-flip investors have major potential to earn here, but neighborhoods just south of the popular neighborhoods, such as Bouldin Creek, Zilker, and Travis Heights, provide more room for returns, particularly, the area of South Manchaca. Prices start in the upper $300,000s ranging to upper $400,000s, while rents fall in the mid-$1,000 range, making it a fairly affordable price point for investors.

Round Rock

Round Rock is the largest suburb outside of the greater Austin metropolitan area and has become a desirable destination for families and those seeking more affordable prices and space. Sitting to the north of Austin, it’s a fairly short commute to the city center, with access to all of the amenities and benefits a suburb traditionally offers. Real estate values start in the mid- $200,000s and stay in the low $400,000s, although there are some pockets with more expensive real estate. The long-term appeal of this area and high-ranking schools make this a good buy-and-hold investment area.

The Millionacres bottom line

Austin, Texas, is rapidly growing, and with that comes opportunity and challenges for real estate investors in the next few years. High demand from expansion, job opportunities, and desirable city amenities mean higher prices and a more competitive market.

There is definitely opportunity to invest and profit in this area, but investors should get to know the market intimately and determine the best target market for them based on their investment goals and criteria. Right now is still a good time to get into this budding city, which is poised to become a huge player comparable to Seattle; Portland, Oregon; or even San Francisco.

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