Austin Real Estate market Price Point ????

[Tom Nguyen]

Hi, I am in Minnesota and looking to move down to Austin TX. 

I have few questions on Real estate market here. How is pricing ? is it seller market or buyer market ?

I own many duplex in MN and they are cash flow good. Example Duplex cost $230k will generate $2650-$2800 a month in rent. Will I get those number in Austin ? 

Looking to learn more about the market so feel free to response or message me. 

[David Ivy]

@Tom Nguyen

As @Andrew Allen and others have said, the Austin area market is a high growth, low cash flow market. If you're familiar with stocks, think about the difference between a growth stock (e.g., Tesla) and a dividend stock (e.g., Ford). People investing in Tesla are hoping to participate in the rapid growth of a relatively young, innovative company. They don't expect or want a dividend. People who invest in Ford know that the company's days of rapid, explosive growth are behind it. They are, instead, looking for (they hope) a lower volatility, predictable investment in a company that will reliably generate cash. Ford is able to offer a 6.96% yield to investors, and the market requires it to do so in order to attract investment. The market doesn't require that of Tesla.

There is around 2 months of housing inventory in Austin and very strong demand for housing. A balanced market is ~6 months of inventory. We are in a seller's market in all price bands up to around $700k. There is an extreme seller's market for anything below $300k. The median single-family home in Austin sells for $375k. However, the median rent is $1,878/mo. The median duplex unit rent in Austin is $1,350/mo., but the median duplex sells for $348k.

You can expect cap rates in the 5% range on commercial multifamily in the Austin area. Of course, things differ from deal to deal, but that's what I've seen.

Here's a chart of the median single-family sales price in Austin starting in 2005 broken down by year: