When investors seek their next lucrative opportunity, they turn to seasoned sponsors like Viking for expert guidance. As multifamily syndicators, Viking has a dedicated team committed to uncovering prime investments in the multifamily real estate market. Our meticulous vetting process ensures that each acquisition not only meets feasibility standards but promises profitability.
At the forefront of our criteria is location, and Viking zeroes in on areas with robust landlord rights and strict tenant enforcement. We prioritize cities experiencing exponential population growth and anchored by strong economic drivers. That’s why our latest venture is in Texas.
Texas has emerged as a beacon of growth, attracting national attention with its remarkable population surge in recent years. According to data from 2020-2021, California, Florida, Louisiana, New York, and Colorado were the top five states fueling this migration, with California alone contributing nearly 53,000 households to Texas.
The surge in net domestic migration has been a pivotal catalyst, driving over 55% of Texas’ growth since 2020—an impressive leap from the 31% witnessed in the previous decade spanning from 2010 to 2020.
This growth of new residents has drastically affected the state’s economy. In fact, these newcomers have injected an astonishing $27.5 billion into the Texas ecosystem. Austin and San Antonio are among the top three Texas cities for the highest number of domestic migrants since 2020 and both rank in the top five Nationally. This article discusses the economic impact on these two cities, the factors driving it, and the outlook for the future of these two merging metropolitan areas.
Austin’s Population Growth
According to the latest population estimates from the U.S. Census Bureau, the Austin metropolitan area has experienced the highest growth rate among the top 50 U.S. metros between 2020 and 2022. The area has seen a significant increase of over 120,000 people, the equivalent of 5.3% growth. In 2022, Austin’s population grew at a rate of 77.3%, which is higher than the whole state of Texas! This is due to the massive economic push driven by many Fortune 500 companies relocating to what is now known as the “Silicon Hills” in Austin.
Austin’s Economic Impact
Austin has recently been recognized as the fastest-growing tech hub in the nation. It has been awarded the title of the ‘Best Place to Start a Business’ and has been ranked as the number one Tech Town since 2020. It is also the leading city for college graduates. With all these accolades, it’s no surprise that the city is experiencing tremendous growth. This growth has led to significant capital injection into the economy. One of the most prominent Fortune 500 companies, Tesla, has chosen Austin as its new home, expected to bring a $2 billion impact. Another major player, Apple, is expanding its Austin Campus, which will create an additional 12,000 jobs and contribute $256 million to the Texas economy. These and other big companies are expected to create over 40,000 new jobs in Austin starting this year!
Austin’s Housing Market
Since the pandemic in 2020, an unprecedented number of people have migrated domestically to Austin. Many have been attracted to the city’s lack of state income tax, lower cost of living, and access to outdoor activities. However, this large influx of residents has created an imbalance between supply and demand, resulting in higher prices for both single-family and multifamily housing. The median home price has increased by 55.6% since 2019, now sitting at $500,000. This is primarily due to the relocation of many New Yorkers and Californians to Austin, who were willing to pay more for housing. As the saying goes, the value of something is the amount of money someone is willing to pay for it. In other words, Austin’s real estate market saw the increased purchasing power of these new residents and raised home prices accordingly.
As we enter 2024, it has become apparent that a growing number of residents in Austin are unable to afford the rising cost of living in the city. As a result, many of them are choosing to relocate to the surrounding metropolitan areas that offer a more affordable cost of living. However, these areas are still within a 30-mile radius of Austin, allowing them to enjoy the benefits that the city has to offer.
San Antonio’s Expansion
San Antonio is the seventh-largest city in the United States, and it continues to grow rapidly, making it one of the country’s fastest-growing urban centers. Between 2020 and 2023, the San Antonio metro area welcomed 135,473 new residents, marking a notable increase of approximately 5.3%. As of 2024, the metro area’s population stands at 2,491,000, reflecting a 1.51% rise from the last year. This city is known for its rich cultural heritage steeped in history. It boasts a thriving culinary scene and iconic allure that consistently captivates leisure travelers from across the nation.
San Antonio Economic Impact
In 2023, San Antonio claimed the prestigious title of ‘Best Vacation Spot in the US’ by Travel and Leisure. The city’s remarkable attractions and robust tourism industry contribute over $19 billion annually, with a steady 10% growth year-over-year. Additionally, San Antonio is home to the NBA’s five-time champions, the San Antonio Spurs, whose presence generates a staggering $4 billion economic impact each year. With the spotlight on San Antonio’s attractions and tourism, the San Antonio International Airport is currently undergoing a $2.5 billion expansion project. This expansion will introduce new flights, airlines, and a state-of-the-art terminal, further enhancing the city’s connectivity and appeal to travelers.
San Antonio’s Housing Market
San Antonio, known for its stability and strong military presence, has emerged as a thriving hub for in-migration, healthcare, and technology sectors in recent years. While the market has experienced a surge in inventory, akin to other major markets, short-term projections may show a slight dip compared to previous years. However, the long-term outlook remains promising. The city’s rapid growth signals a potential stabilization in the market, poised to fuel demand and fortify the housing market. These positive indicators prime San Antonio to maintain its trajectory toward a robust and resilient future.
The Newest Texas Metroplex
As Austin and San Antonio undergo rapid growth and expansion, they are mirroring the evolution of Dallas and Fort Worth. Formerly distinct cities, Dallas and Fort Worth now comprise a singular Metroplex area. Similarly, the Greater City of Austin encompasses 23 cities across 6 counties, while San Antonio sprawls across 50 cities spanning 8 counties.
Bordering cities such as New Braunfels and San Marcos are witnessing exponential growth as they become integral parts of these expanding metropolitan areas. The soaring prices of single-family homes in the primary markets have spurred a significant influx of residents to the surrounding areas, where they can enjoy the city amenities while commuting for employment. The phenomenon is quickly narrowing the distance between Austin’s and San Antonio’s metros creating a collaborative evolution becoming the next Texas metroplex.
The Takeaway
The emergence of a new metroplex is underway, as Austin and San Antonio evolve into a collaborative urban entity, akin to the Dallas-Fort Worth Metroplex. Bordering cities like New Braunfels and San Marcos are also experiencing rapid growth, fueling the integration of these expanding metropolitan areas. Economists foresee a bright future, projecting that the combined growth of Central Texas’ two largest metro areas will eventually surpass the current populations of Dallas-Fort Worth and Houston.
