Less than 3% of North Texas apartments were vacant at the end of 2021.
Unprecedented demand for Dallas-Fort Worth apartments has reduces vacancies to a record low and propelled area rents to an all-time high. Net apartment leasing in North Texas totaled almost 50,000 units in 2021-almost double the previous record high in 2019 before the pandemic, according to Richardson-based RealPage.
“The DFW area is number one in the country for both apartment demand and construction,” said RealPage economist Jay Parsons. More than 10,523 units were leased in the fourth quarter alone. Even though developers completed another 6,540 DFW apartments in the final months of 2021, the inventory of empty rental units in the area fell to only 2.8%, according to RealPage. Apartment leasing would have been even greater if there were more apartments available, Parsons said.
It’s a tough time right now to find any kind of housing,” he said. “A lot of people out there just can’t find availability, whether is an apartment or a single-family home.” The shortage of apartments and higher construction costs fueled a more than 17% increase in average DFW rents last year – an unheard-of increase for North Texas that surpassed the nationwide rise of 14.4% Rents for the newest DFW rental units were more than 20% higher year-over-year. Average DFW apartment rents were at $1,385 at the end of 2021. Many of the newest rental communities are going for more than $2,000 a month. “DFW is definitely getting more expensive for all types of housing,” Parsons said. “But for people elsewhere in the country, they still see Dallas as a more affordable market.” The huge demand and soaring rents have sent apartment builders are scrambling to build new units. Almost 41,000 DFW apartments were being built at the end of last year.
“We are going to see a lot more starts in 2022.” Parsons said. “They are seeing all the demand for apartments from renters and are hearing from investors banging down their doors. “They have more capital than sites to build on.” Supply chain and labor market constraints plus pushback from homeowners against zoning for new rental units will make it challenging for developers to ramp up construction. “Multifamily developers, including Legacy Partners, are hoping to ramp up construction starts to meet outsized demand but are being met with multiple barriers, including historic rising of construction costs, supply chain disruptions, lack of labor and land availability,” said Matt Brendel, senior managing director of apartment builder Legacy Partners.
RealPage estimates that median household income for renters of new DFW apartments is at a record high $65,928 – up 8.3% compared with the pre-COVID level. “The incomes are going up for renters,” Parsons said. “That’s allowing developers to pass along those costs and justify more development, which we badly need.” Apartment suppliers are likely to remain tight, RealPage predicts. Because of longer construction times, Parsons said developers won’t be able to quickly supply the DFW market with ample new rental units. “You can’t build supply fast enough when you really need it,” he said. “Long term, developers and investors still see DFW as a very attractive market.”
Source: The Dallas Morning News 1/6/22 By Steve Brown