Travis County, TX Cap Rates by Neighborhood

The Headline Yield Is Misleading

Travis County's computed gross yield of 4.09% (based on a median ZHVI of $478,622 and ZORI of $1,633/month) looks like a single number, but it describes a market where a $795,000 Mueller townhouse and a $350,000 Del Valle new-build sit in the same average. The spread between those submarket dynamics is where the real investment decision lives.

A 4.09% gross yield is already thin for a market with Texas-scale property taxes. Once you apply the FY2026 Travis County tax rate of 37.5845 cents per $100 of assessed value on top of the City of Austin rate and AISD levy, net operating income compresses fast. On a $478,622 median-priced property, the county tax alone runs about $1,799 per year. The total combined burden (county, city, and school district) in Austin routinely clears 2.0%–2.5% of value annually, consuming 50 cents or more of every gross yield dollar before insurance, management, maintenance, or vacancy. The resulting net cap rate on a median-priced Travis County asset falls into the 1.5%–2.0% range, which is not a cash-flow number under any reasonable debt structure.

That math is the baseline. Individual neighborhoods can do better or worse depending on their price point, asset class, and tenant demand depth.

Neighborhood-by-Neighborhood Breakdown

East Austin

East Austin carries a median home price of about $675,000 and has posted year-over-year price appreciation of about 4.8%, making it the only named neighborhood in the brief with positive price momentum during a broader correction. Rents in this corridor benefit from deep demand from tech employees and design professionals.

At $675,000 and the county's median monthly rent of $1,633 used as a floor (premium rents in East Austin likely run higher), gross yield on a single-family acquisition here opens near 2.9%. That is below the county aggregate. The case for East Austin is not current yield; it is rent recovery on the Project Connect East Riverside Branch corridor, where TOD upzoning and eliminated parking minimums now allow denser development on parcels as small as 2,500 square feet under HOME Phase 2. The play is appreciation and eventual rent-reset, not immediate cash flow.

Mueller and Hyde Park

Mueller's median sits at about $795,000 with 3.9% year-over-year price growth. Hyde Park, north of UT Austin, anchors around $785,000. These are supply-constrained infill neighborhoods that corrected only 8–12% from peak versus suburban declines well above that range, which confirms their pricing power during downturns.

Gross yields at these price points, assuming market rents, are in the 2.5%–3.0% range. After a combined 2.0%–2.5% tax load, net yields are structurally near zero or slightly negative on acquisition financing. These assets trade on scarcity and demand depth, not yield. For an investor, they are better characterized as low-cap-rate value stores than income producers. The investor rationale here is the same as East Austin: rent recovery and inflation hedge, underpinned by proximity to UT Austin and central employment.

North Loop

North Loop's median of about $625,000 places it in a slightly more accessible tier. It shares Hyde Park's central-northern positioning near UT Austin, which supports rental demand from a student and young-professional base. At $625,000, gross yield improves modestly over Mueller but stays below the county aggregate. The HOME Phase 2 ordinance's extension of ADU rights across SF-1 through SF-3 zones is most actionable here for investors willing to add a second unit to a qualifying lot, which can lift effective yield on total project cost without a rezoning proceeding.

Suburban Travis County: Del Valle, Pflugerville, Leander

Outer-ring neighborhoods concentrated in the $350,000–$550,000 new-construction range suffered the steepest declines during the 2022–2025 correction. Del Valle carries a specific catalyst in Tesla's Gigafactory expansion, with up to $770 million in registered construction spending and about 2,500 new jobs planned. That employer demand creates a near-term rental absorption story in southeast Travis County.

At a $400,000 price point, the gross yield on county-median rents runs about 4.9%, the closest to a cash-flow-adjacent number in the market. But these assets carry the same tax burden in dollar terms and receive no homestead cap protection as investment properties. The 20% non-homestead circuit-breaker cap expires after 2026, after which assessed values can reset freely to market. Properties acquired at current discounted prices that are assessed below market face near-certain tax increases in 2027, compressing net yield at a predictable future date.

Neighborhood Comparison Table

Gross yields estimated using county-level ZORI ($1,633/month) as a rent proxy. Actual rents vary by submarket and asset class.

Property Tax Drag on Net Cap Rates

The FY2026 county rate of 37.5845 cents per $100 is temporarily elevated by a disaster declaration following the July 2025 flooding event. The county has signaled the FY2027 rate will remove that one-time component. But the FY2026 number matters for any acquisition closing this year, and the baseline was already rising: Travis County voters approved a 2.5-cent dedicated childcare and workforce tax increase in November 2024, which alone pushed the average homestead tax bill up $1,123 in 2025 versus 2024.

Investment properties receive no 10% homestead assessment cap. The 20% non-homestead circuit-breaker runs through 2026 only. A landlord buying a $500,000 asset today should underwrite for a tax reset in 2027 if the property's assessed value has lagged market. The math on a $500,000 property at the FY2026 county rate produces $1,879 in county tax alone; adding city and school district levies totaling roughly 1.5%–1.8% of value pushes total annual tax to $9,000–$11,000, or 60–70 basis points of gross yield consumed by property tax alone.

Flood Risk Adjustment

Travis County ranks in the top 10% of flood-damage-prone communities nationally, and the July 2025 event was severe enough to trigger a special disaster declaration that changed the county tax rate. FEMA released updated preliminary Flood Insurance Rate Maps in November 2025 covering Austin and surrounding cities. Any property along creek or river corridors should receive FIRM-level parcel diligence before closing.

A mandatory SFHA reclassification adds flood insurance to the expense stack, which can run $1,500–$3,000 per year or more depending on structure and coverage level. At a gross yield of 4.09%, a $2,000 annual flood insurance premium on a $478,622 asset removes another 42 basis points, pushing the effective net yield well below 3.0% before debt service.

Cap Rate Decompression vs. Compression

Travis County prices are falling faster than rents. The ZHVI is down 5.54% year-over-year while rents (ZORI) declined 4.2% year-over-year in Q1 2025. The net effect is marginal yield improvement from the price side, but the improvement is slow. The real decompression opportunity is forward-looking: multifamily deliveries dropped 41% quarter-over-quarter in Q3 2025, and absorption of 5,700 units outpaced deliveries of 3,800 units in that same period, the first supply-absorption crossover since the construction wave peaked. Asking rents for Class C buildings fell 11.4% from 2023 to 2024, meaning the deepest-yielding assets have already absorbed the worst of the rent pressure.

Investors who lock in pricing near the current correction floor with the county's median price down 5.54% year-over-year buy into a rent recovery cycle as the pipeline clears through 2026–2027. The 7.8% multifamily vacancy rate, the highest among major Texas metros, will not clear overnight, but the trajectory is visible.

Cap Rate Outlook

The near-term thesis: gross yields on Travis County assets will improve modestly through 2026 as price declines outpace rent declines and the supply wave subsides. Net cap rates remain constrained by a tax burden that is structurally high and temporarily elevated through FY2026.

The medium-term catalyst is Project Connect Phase 1. The project cleared a Medium-High FTA rating in late 2025 and is in active bidding for the $3 billion design and construction contract. Austin City Council authorized property acquisition in September 2025. With groundbreaking targeted for 2027 and service in 2033, station-area parcels along South Congress, East Riverside, and the Guadalupe corridor now carry an identifiable transit premium that has not yet fully priced in. HOME Phase 2 zoning changes and eliminated parking minimums in transit corridors compound the developable density argument.

For investors focused on current yield, Travis County does not clear the bar without creative structuring: ADU additions on HOME Phase 2-eligible lots, house hacking, or heavy value-add repositioning of underperforming suburban assets near the Tesla employment cluster.

For investors with a 5–8-year hold horizon, the combination of a corrected entry price, a compressing supply pipeline, a high-wage employment base ($2,061 average weekly wage, the highest among the 28 largest Texas counties), and a confirmed transit infrastructure program positions Travis County as a rent-recovery market rather than a current-income market.

Model your specific deal with our investment property calculator to stress-test the tax, flood insurance, and vacancy assumptions against your target submarket and hold period.