Home News $1,700, $2,900, $3,200 a month? What’s the real cost of rent in Austin?

$1,700, $2,900, $3,200 a month? What’s the real cost of rent in Austin?

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Rent in Austin is too expensive. But how high?

Axios recently released data showing median rents in Austin A whopping $2,930 per month(This includes rental homes of all sizes.) Another report from Bloomberg, published in July, cited data from Rent.com, and found that Austin’s one-bedrooms were: said to It costs $3,257 per month.

Which of these reports gives you the best understanding of what people in Austin are really paying?

Probably neither. Please let me explain.

So is it $2,930 per month?

The numbers come from Dwellsy, a rental property site that launched in 2019.

and Recent reportsthe company used the site’s listings to calculate the average rent for homes of all sizes in the Austin Subway. ) What did you find? The current median rent for locations on the market is $2,930 per month, just $100 less than the asking rent for locations in New York City.

However, this data is limited. First, Dwellsy pulls these numbers from its own list. Dwellsy has no data unless the landlord lists their home on the site. (This also applies to other rental listing companies that publish data, such as Zillow and Rent.com.)

Second, there are many detached houses The rental properties listed on the Dwellsy site represent a portion of the single-family homes rented by renters in the Austin area. About half of Dwellsy’s listings are single-family homes or townhomes. In the Austin area, about a quarter of renters live in single-family homes or townhomes, according to the latest census.

CEO Jonas Bordo said he believes Dwellsy’s data for single-family homes may have skewed the numbers higher. Single-family homes are usually larger than apartments and sit on more land, so they tend to rent at a higher price.

Economists agree that the best way to get an accurate percentage is to compare the same apartment from year to year.

“I think we’re oversampling single-family homes a little bit,” he said.

Dwellsy’s report also notes that Austin’s rents are rising 86% annually. This number compares August 2021 listings with August 2022 listings. This is not a good way to measure price growth over time. For example, if the company’s site had only small, cheap apartment rentals in one year, and big, luxurious single-family homes the next year, the percentage would be the type of home, not the price. It reflects change.

Economists agree that the best way to get an accurate percentage is to compare the same apartment from year to year. This is called a repeating index.

Bold called this criticism “fair.”

“What we try to do is give the renters a worldview,” he said. “Last year, what did renters looking for a place in the same period see compared to market availability? this year? So how did that change? “

understood. So how did we get to $3,257 a month?

The origin of this number published report By another rental property site, Rent.com.

According to a methodology posted online, the company uses lists posted on the site to reach this (very high) number. If a landlord doesn’t use her Rent.com, the company isn’t collecting that rent data.

In that same report, which represents June 2022 data for the city of Austin (not the metropolitan area), the company reports that rents have more than doubled over the past year. Rather than comparing the same apartment over time (as Dwellsy does), I made sure to simply average the asking price of the listing for one year and then compare that to the average price for the following year.

This begs the question: What types of units will be listed on listing sites like Dwellsy and Rent.com? Jake Wegmann, who has written a paper on the lack, says the internet is not where many renters find affordable homes.

This could mean that your listing site rents more than you are actually paying.

“It’s not just the wealthy using Zillow,” says Wegmann. “But low-end rental units are less likely to be like Zillow. …more low-end rental units are promoted by word of mouth or just advertising [for rent] sign. “

Others, including Bordo with Dwellsy, agreed with this characterization.

“Many of the people buying yard signs are not yet in the dataset,” he said.

Is there a better solution?

KUT spoke to economists, real estate professors, rental listing companies and rental data companies. Many people agree that there is no one-stop-shop for comprehensive rental data compared to data on home sales prices.

For example, county appraisers each year calculate how much each home in the area could sell for. The same is not done for rent.

“[Rental data is] It’s not perfect, it’s sporadic and it measures different parts of the market,” Wegmann said. “It’s like choosing your poison.”

The ‘poison’ of rental property sites doesn’t bother Charles Heimsath, who runs Capitol Market Research.

Heimsath doesn’t always ignore rental data from companies that research landlords. These companies call hundreds of landlords every month and ask: (KUT uses rent figures published by such data companies.)

That’s what the people at Austin Investor Interests LLC do. The company’s owner, Robin Davis, said one of the things included when reporting rents is the discounts offered by landlords.

“Let’s say they’re charging X amount of market rent, but they’re giving away a month for free. That would be annualized at a much lower rate,” Davis said. Said. “We’re only tracking what they’re actually getting in their rent.”

However, this data also has limitations. Many of these companies, including Davis, only survey landlords with 50 or more rental units. This excludes small landlords and often single-family home data.

In addition, the landlord must answer the phone and answer questions about rent honestly.

“Sometimes you have to call a property 12 to 20 times to reach someone,” says Davis.

Taking these restrictions into account, rents reported by these companies this summer are much lower than data from Dwellsy and Rent.com. For example, Davis’ company says that in the third quarter of 2022 (July-September), renters in the Austin area are likely to pay her $1,720 for a rental home of any size. discovered.

How much have rents increased in the past year? Davis and other data company owners KUT spoke to say he’s closer to 10% than 86%.

Without good data, what is at stake?

Using either “poison” or rent price tag can have serious consequences.

For one thing, people considering moving to Austin might see numbers like $2,930 a month and choose not to come here.

“It can be detrimental in the sense that other people thinking about moving here think, ‘Oh my God, I can’t afford that. I’m not going to move there,'” said the community. and Liz Muller, professor of regional planning at UT Austin, said.

Inflated numbers can also impair a renter’s ability to bargain with landlords if or when they face a rent increase. If so, you might think that even a small increase is fine.

“They are at a disadvantage and don’t know exactly what they can negotiate for their housing situation,” said Zillow economist Jeff Tucker.

So next time you run into big rent numbers here in Austin, take a breather. Ask where the data came from. The price you’re looking at could collapse when it stands up to the slightest scrutiny.

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