OCTOBER 2016 ABILENE AREA RENTAL REPORT

by John Hill

October 2016 rents remained flat at 75¢ per square foot and were 1¢ below the twelve-month average for Abilene area rentals.  This is better news than fall 2015 when rents fell 3¢ per square foot between September to October in 2015.

 This overview utilizes NTREIS data on leased properties in Abilene, Texas. This data provides 13 months of data spanning October 2015 to October 2016, allowing the user to look across these months at changes in rental prices, days on market and inventory available town wide, both by school district and by ZIP code. The percentage changes calculated in this table compare the current month’s statistics to an average of the last 12-months and the data from the same month in the 2015. 

This report has been generated for rental data going back to December 2013.  Looking across this period and smoothing monthly fluctuations, nominal rent – rent unadjusted for inflation - has increased 3.8%.  When one considers that inflation (captured by the Consumer Price Index for housing) has increased by 2.2% per annum over this same period, Abilene landlords have realized a real gain in rent of 1.6% per year. 

Rent/sqft data is graphed in the table below.  The blue line is nominal rent/sqft as reported by realtors for each house rented. The red line is real rent/sqft.  Two black trend lines the growth in rent - the steep line is unadjusted for inflation; the line with the flatter slope captures the real growth in rent. Instead of percentages, these trend lines deal with gain in pennies per square foot per month and looking at the flatter line you see each month improves rent by .00004¢/sqft.  The interpretation of this parameter is nothing to set the world on fire - .01¢/.00004¢=250 or translation: after 250 months (roughly 20 years) you can expect to see a .1¢ gain in rent. 

Between September to October, rent in 79601 rose 4¢/sqft and in 79601 continuing the 3rd quarter trend for rents in this ZIP code. Rents rose 5¢/sqft in 79605 and this, along with gains in rent in 79601, enabled a 3¢ gain in per-square-foot rents in the Abilene ISD.  Rent per square foot remained flat at 87¢/sqft in the Wylie ISD.  

Given that Wylie ISD draws from 79602 and 79606 it is counter intuitive that rents in these ZIP codes fell, however the drop in rent for these areas can be attributed to Abilene ISD homes in those ZIP codes.  October 2016 rent/sqft in 79602 and Wylie ISD was 91¢/sqft while homes in 79602 and Abilene ISD leased for 69¢/sqft.  Similarly, October 2016 rent/sqft for homes in 79602 and Wylie ISD was 81¢/sqft while 79606, Abilene ISD homes leased for 70¢/sqft. 

For a 14th month in a row, Abilene area rentals leased slower than the same month in the prior year. In October 2015, homes leased on average in 31 days.  In October 2016, the average home leased in 35 days or a 4-day difference.  Homes in 79605 fared the worst at an average of 42 days on the market with a 3-month streak of increasingly delayed leasing.  

Town-wide, average total September rents fell $64 from the previous month.  In part, this is driven by a decrease in rent/sqft, but part of this is explained by the fact that September 2016 homes were 76 square feet smaller than homes leased in September 2016.  Security deposits, a measure of rental quality, fell 3.6% when compared to the 12-month average.  Pet deposits were above 5.7% the 12-month average and the number of homes accepting pets was flat for the third month at 36%. 

According to NTREIS, 73 single-family homes were leased in October 2016. These units leased at, on average, 75₵/square foot and were sized at 1,421 square feet.  Consequently, these leases are estimated to deliver a October 2016 value of $77,973 to the Abilene economy.  Considering the coming 12 months and the leases executed during October 2016, these leases potentially account for a $935,684 annual contribution to Abilene’s economy.