We’ve been busy combing through all of the Austin short term rental market (STR) data, and compiling our annual report on key data metrics for vacation rental properties throughout the Austin area. The massive report displays zip-code specific performance data for current STRS including key metrics such as ADR, occupancy rate, and annual revenue. We paired this with median sales price data and broke it down to the bedroom level stats so you can analyze historical trends and make informed predictions about the future of the STR market in Austin. Through the process of compiling this report we came across a few key findings that will be relevant to anyone interested in the Austin short term rental market.
Interesting Austin STR Market Findings
Booking lead time for the Austin area was approximately 47 days on average for all of the Austin area zip codes we researched. This tracks with what us operators were feeling over the last year. Guests are booking their Austin STR significantly later than they have in the past. The booking lead time throughout Austin decreased about 18%. If you’re an Austin STR owner, this is a good reminder to not drop your prices too quickly. If you’re an investor looking to purchase a short term rental investment, pay attention to prospective comps bookings for the next month, but don’t give too much weight to occupancy that’s too far in the future.
Short term rentals in all of the Austin zip codes we assessed had an average stay length of 3 or 4 days. The vast majority of tourists are coming to Austin for weekend stays. The average length of stay was down slightly from 2022. Savvy STR operators should be thinking about ways you can alter your pricing and marketing strategies to entice guests to book for an additional weekday.
In 2023, the 78704 zip code had the largest number of STR listings of all of the Austin area zip codes we analyzed. The 78704 zip code which comprises various neighborhoods just south of downtown Austin including the popular South Congress strip as well as Zilker Park - home to the Austin City Limits Music Festival. Last year there were 1,630 available listings in the 78704 zip code of Austin. This is up about 3% compared to 2022.
The 78746 zip code of Austin, which encompasses the affluent neighborhood of Westlake, had the highest Average Daily Rate (ADR) for 2023. 78746’s ADR was $806 last year. It’s no surprise that properties in this zip code also command a relatively high sales price. The median sales price for single family homes in 78746 was $1,700,000 in 2023. This was the second most expensive area of all the zipcodes we analyzed. The 78703 zip code (Tarrytown, Clarksville, Old West Austin) was the only zip code with a higher median sales price last year. The median sales price for homes in 78703 was $1.823M last year.
Annual Revenue in Austin is Trending Down Overall
In almost every zip code we assessed in the Austin area, and across every property size, average annual revenue is trending down year over year for Austin short term rentals. In fact, when we broke down average annual revenue by number of bedrooms, the stats look a bit worse than we anticipated. Across the Austin area, Average Annual Revenue appears to be down about 18%. However, when you group all property sizes together average annual revenue is only down about half that.
Median Sales Price is Also Trending Down in Austin
Median sales price throughout the Austin area is also trending downward. On average we saw about a 10% drop in median sales price throughout the Austin area zip codes we analyzed. We saw the greatest drop in median sales price across the 78705,78741, and 78746 zip codes. All of these areas saw a 20% or higher drop in median sales price. Generally speaking, Austin is known for being a locale with strong appreciation rates. 2023 was a rough year for real estate sales across the country, and the Austin market was not immune to this phenomenon. That being said, we have historically seen approximately 10% year over year appreciation amongst homes in the Austin market. It may take a few years for the scales to rebalance, but we do predict Austin to continue to be a strong market for the long haul. If you’re looking for long term appreciation it’s a great time to buy in Austin.
What Type of Property Makes the Best STR Investment in Austin
Larger homes are performing significantly better than smaller homes in Austin relative to sales price. This makes sense. The biggest component of any real estate purchase in Austin is the land cost. If you have more bedrooms on a property, the relative cost of the real estate per bedroom is lower. Thus, you’ll get more bang for your buck with a larger home. Four bedroom homes in the following zip codes should perform well as short term rental investments: 78741,78735, 78745. The 78741 zip code is one we’ve been watching closely. It’s located in close proximity to downtown, but homes here have a relatively low median sales price in comparison to other areas equidistant from downtown Austin. We track average annual revenue over median sales price over (AAR/MSP) in order to quickly be able to evaluate areas of interest. Four bedroom homes in 78741 had the highest AAR/MSP at 19.74%. If you’re looking to invest in a five bedroom home, you should look into southwest Austin. We saw the highest AAR/MSP in the south Austin zip code of 78749. The 78736 and 78737 zip codes also look promising for large STR investment properties. Of course, this is a general analysis. If you can get a smaller home for the right price, it can still be a great short term rental investment.
Want to review the full Austin STR Market Insights Report? You can download it for free here!
