August 5, 2022 – 4 Minute Read
In the technology industry, talks of emerging “new Silicon Valley” are hot, and Austin is a contender to become the newest tech hub. The current hub in California is seeing a decline in popularity among both residents, future residents, and companies.
This trend in migration of tech companies out of California and to new communities increased speed due to the pandemic. Factors include the rise of remote work and a raised cost of living especially in California. Commuters used to being in the office many days a week, for over 8 hours a day, were suddenly working from home and had the freedom to live anywhere while keeping their job.
All of this, of course, raises the potential of the Austin real estate market for investing exponentially.
As the pandemic shifted the economy, the cost of living became more apparent. Cities like Austin became attractive for both workers and employers, as the state offers no personal income tax and an overall lower cost of living, according to Better This World.
Not only are tech employers paying attention to the benefits of the city, but venture capital firms and other corporate industries are as well. In 2021, Austin made headlines for being “the place” of venture capital and startup founders. Simply put, more VC money is being funneled into Austin. According to Pitchbook, All of the top 10 deals for Austin in 2021 amounted to $100 million or more. In 2021, several Austin startups passed $1B valuation, including The Zebra, Firefly Aerospace, Abrigo, ZenBusiness, and Iodine Software. SparkCognition. Firms in the city are boasting bigger closings than ever before, namely Next Coast Ventures and S3 Ventures. On March 29, 2022, the firm announced that it closed $310 million across three funds. This was shortly after S3 Ventures announced that it raised $250M for its Fund VII.
A variety of industries and markets are starting to call Austin home, as the city shakes its initial reputation for housing software companies. Today, growing business sectors in Austin include crypto/web3, real estate tech, CPG, and insurance technology according to TechCrunch. Since 2020, major tech players such as Tesla, Oracle, Google, Apple, Amazon, Facebook, SpaceX, and more have moved to Austin.
The workforce and simultaneously potential new homebuyers, in the area is also becoming more diverse than in California. For years, Austin was over-indexed on founder and C-suite talent, but now, the city has a bigger market of VP and junior talent with VC-backed experience, says Chris Shonk, co-founder and managing director of ATX Ventures.
From May 2020 to April 2021, Austin gained tech workers at a higher rate than any other US metro by far, according to LinkedIn data.
Preston James, founder of the nonprofit DivInc, which matches underrepresented entrepreneurs with resources, describes the workforce in Austin has an “insane talent pool”, and notes that several new emerging funds exclusively focused on Black, Latinx and women founders, including BEAM, The Fund, New Type Ventures, Agave Fund, Silicon Hills Capital and True Wealth are forming.
With all of this growth in the economy, the prime living conditions, and increasingly vibrant and diverse communities, the real estate market is expected to continue to grow even more. With the influx of financial opportunities, the relocation of major companies, and the job growth, nearly 185 people are moving to Austin per day. There is a massive need for new housing.
Many new multifamily and multi-use complexes are being built in the city, as well as single-family residences. According to a Redfin report, Austin is the leading metro building new single-family homes in the US. Construction is at an all-time high, as well as the need for housing. If you’re considering investing in your own, or rental property in Austin right now, now is a great time.
When considering what to charge, consider how much the average tech employee in Austin makes, as that may be your main target market. According to Hired data, tech workers in Austin earn an average annual salary of $144,378. The salaries of candidates in this role range from a low of $60,000 to a high of $220,000, with a median salary of $150,000.
Mortgage-wise, if a candidate who made this much and had an average credit score, their purchase budget could be around $560,000. If they opted for a 30-year mortgage, with a current 3.81% interest rate, they could utilize a $60,000 down payment and roughly a $1,379 monthly payment.
Are you looking to take advantage of this exciting moment in Austin Texas Real Estate? Consult our industry experts. Book your consultation here.