The Impact of Water Levels on Lake Travis Vacation Rentals

Nestled amidst the picturesque landscapes of Austin, Texas, lies Lake Travis, a shimmering gem that draws in locals and tourists alike with its serene beauty and recreational opportunities. However, when droughts occur (which are fairly common) the diminishing lake levels can wreak havoc on property values, nightly revenue, and floating boat docks.  

Lake Travis is technically a damned portion of the Colorado River.  Adjacent to Lake Travis, Lake Austin, is a constant level lake. Homes on Lake Austin are thus sheltered from the drastic revenue implications that Lake Travis vacation rental owners face.  

Historical Lake Levels on Lake Travis

Lake Travis is very low right now, it’s about 630.95 feet right now.  That level places it about the 7th lowest level of all time compared to historic lowest drought levels. In October of 2023, the lake was 626.93 feet putting it at number 5 on the lowest historic drought levels chart. At it’s highest flood level, back in 1991 the lake was at 710 feet. We’re not too far away from that right now.  In other words. Lake Travis is only half full right now.  This has serious implications for the short term rental market for vacation rentals near Lake Travis.

• Annual average revenue is down 19% year over year

• Occupancy rate is down 44%

• Average daily rate down 8% to $465.80 per night

   

Along the north shore of Lake Travis, you see a similar situation.  Vacation Rentals in the 78645 zip code which encompasses Lago Vista and Point Venture are also suffering from revenue hits this year.  In this zip code, airbnb occupancy rates are down 34% compared to last year, and annual revenue is down 7% to $58K. Interestingly, this phenomenon appears to be a direct result of low Lake Travis water levels as opposed to the theory of increased competition with a greater supply of vacation rentals.  Rental growth is actually down 12% compared to last year in the 78645 zip code.

Property Values on Lake Travis

While one would expect a similar drop in home prices for homes in the Lake Travis area, that’s not actually the case.  What we are seeing instead is a reduction in sales volume in these areas. The number of closed sales for single family homes in 78645 dropped significantly, 43.9% year over year from February 2024 compared to February 2023.  In 78734, single family home sales decreased almost 20% between 2022 to 2023, a trend that likely will continue to 2024 too.

All in all, purchasing a vacation rental near Lake Travis is not necessarily a bad decision.  However, you should anticipate fluctuating revenue in relation to lake levels and factor this into your investment projection models. Have questions about buying a short term rental near Lake Travis or elsewhere in the Austin market?  Contact us today.