Southwest Austin

They predict that a still-high demand for apartments will push up rents, which will in turn bring more renters into the housing market. A low inventory of new houses plus the building restrictions in Southwest Austin will cause local homes to retain their value.

Meanwhile, area homebuilders are feeling more confident and some are beginning long-term developments near the city limits, where there is more space than closer to downtown and fewer environmental issues.

“As long as people are working and there’s household formation, and it’s in an area that’s growing, everybody has to live somewhere,” said Scott Eckley, Pulte Homes vice president of sales in Austin. “Demand is either going to go to the rental business or a home purchase. Right now, in a lot of ways, buying makes more sense.”

Renting versus buying

Robert Grunnah, broker and owner of Castle Hill Investments, said the housing market is slow right now because it is difficult for buyers to get financing to take advantage of historically low 30-year fixed mortgage rates.

“The rates are so low that in many cases, it is less expensive to own than rent,” he said. “So why would anybody rent? Because they can’t qualify. In 2006, anyone and their mother could get a loan. Now, very few can. That results in a stagnant market.”

Last fall was a busy time for leases, said Barbara Quarles, broker associate with Pioneer Real Estate Services, located in South Austin.

“People are still moving into Austin,” the Village of San Leanna alderwoman said. “Building may have slowed down in the last year or two, but people are looking to rent.”

Jennifer Lamm, property manager of Ranch House Apartments on Slaughter Lane, said rentals are going quickly.

“Occupancies are way up, beyond where they were before,” she said. “They’ve been steady for about a year and much better than what they were two years ago. It’s exciting.”

She said local schools, the economy and the proximity to the greenbelt draw people to the area.

Grunnah said the owners and developers of multifamily dwellings will see the best return in 2012. He warned that high demand and limited supply will eventually push up prices.

“Say you can rent a house for about $1,300 [per month],” he said. “Once rents become noticeably higher than a mortgage and you can get more for the same purchase price, you’ll start to see more people move into the purchase market.”