According to the Austin Business Journal, "A Phoenix-based builder of rental homes is increasing its investment in the Austin area to $164 million with its latest land purchase.
NexMetro Communities LLC announced Sept. 16 the purchase of 25 acres in Liberty Hill, where the company will construct a neighborhood of 260 single-family rental homes called Avilla Rio Oaks. It will join two other NexMetro projects in the works for in the suburbs around Austin; the company already announced another in Liberty Hill and an additional community in Georgetown.
"NexMetro is actively seeking new sites ideal for our luxury leased Avilla Homes neighborhoods in multiple Austin submarkets," stated Jason Flory, managing director of NexMetro's Austin division. "Liberty Hill and Georgetown are examples of two submarkets that have strong demand drivers of strong household incomes, growth and great proximity to retail, freeways and job corridors."
It fits into a trend of built-to-rent neighborhoods popping up across the Austin metro. Proponents argue they add to the types of housing available as the region grapples with a shortage of places to live, and that they can provide greater flexibility for those who want the comforts of a single-family home but not the commitment of a mortgage. However, some market observers lament the fact that residents cannot build equity in these communities.
The new NexMetro neighborhood will offer single-level one-, two- and three-bedroom homes between 700 and 1,265 square feet with 10-foot ceilings and open floor plans. Each home will have a private backyard, front porch, granite countertops and stainless steel appliances. Site work for Avilla Rio Oaks will begin "immediately" near County Road 263 and Seward Junction Loop, according to the announcement.
The company did not disclose what the homes will rent for.
DTJ Design Group is attached to the project as architect and a general contractor has yet to be decided upon.
Close of escrow for the site occurred Sept. 15. A purchase price was not disclosed. NexMetro bought the site from HoganWyatt LP, and Josh Bryan with Bryan Haggard Land Group represented both buyer and seller in the deal.
NexMetro’s other Liberty Hill development, Avilla Vista Ranch, will be built on 14 acres southeast of County Road 266 and State Highway 29. That development will have 150 homes.
In Georgetown, the 224-home Avilla Berry Creek will be built on 25 acres southwest of Berry Creek Highlands Way and East of State Highway 195.
Site work is already underway at both Avilla Vista Ranch and Avilla Berry Creek.
Between all three communities, NexMetro is developing 634 rental homes in the metro. While it did not detail how much it was spending on each, the company disclosed Sept. 21 it has invested $164 million in the Austin area so far.
NexMetro is credited with being a pioneer in the current build-to-rent trend and as of 2020 had invested $1 billion across four states, Phoenix Business Journal reported.
According to a January RentCafe report, 2021 was a record year for single-family rental home construction, with 6,740 built-to-rent homes completed nationwide. The same report predicted 13,910 completions for 2022. Austin ranked No. 13 among U.S. metros with 1,390 total rental homes.
Two other rental neighborhoods were announced this summer: In June, Ohio-based Coastal Ridge Real Estate Partners LLC and Florida-based Halstatt LLC announced plans to erect a 225-home rental neighborhood on 20 acres within the 1,200-acre Avery Center community in Round Rock. And in July, AHV Communities LLC announced plans to build 244 rental homes on 48 acres alongside the western edge of U.S. Route 183 in Leander.
These kinds of rental homes are appealing to consumers seeking a new home without a mortgage or maintenance responsibilities, Flory said in a statement. Mortgage rates have been creeping higher for months and the Federal Reserve announced Sept. 21 another 0.75 percentage point hike in the federal funds rate.
"As interest rates inch upward, more potential homebuyers have lost purchasing power, which makes this best of both worlds option even more appealing," Flory stated.
It's worth noting that a cooling in Austin-area housing is restoring some of that power, although it's too early to call it a buyer's market.
The metro’s housing inventory hit 2.9 months in August, the highest level since September 2018, according to Austin Board of Realtors data. Meanwhile, the metro median sale price fell to about $496,000 last month, down from $550,000 in April and May and under $500,000 for the first time since February.
Lindsay Neuren, a Realtor with the Speed & Neuren Group at Compass Realty, said that as the market becomes healthier for buyers, sellers are being more realistic.
"[Sellers] understand, for the most part, when I talk to them about pricing, how we need to price aggressively and competitively," she said. "Gone are the days where sellers are sort of unrealistic."
Sellers on the market right now tend to be motivated and want or need to sell, Neuren said, which is good leverage for buyers.
Neuren also said that while sellers might not see the record sale prices of April and May, they’re still likely sitting on a good deal of equity and shouldn’t consider it a loss if their home doesn’t sell for an "ideal" price."
Written by: Cody BairdStaff Writer, Austin Business Journal
Published: Sep 21, 2022