To meet the tremendous demand for new housing across much of Texas, developers have been adding tens of thousands of new apartments throughout the state’s major metros at a feverish pace. There has been so much construction activity, that just in the last 12 months, developers have completed over 52,500 apartments in the Houston, Dallas-Fort Worth, Austin, and San Antonio markets, a new report from CBRE indicates. And by and large, these units are getting scooped up by renters rather quickly.
The latest stats on the Texas multifamily market are substantial. To help illustrate how much new construction there has been in Texas, the report indicates that the top five markets for recent deliveries — which includes New York, Houston, Dallas, Washington, DC and Los Angeles — account for 27% of all the nation’s new apartments in the last 12 months. And while over 50,000 new apartments were built across the state’s largest metros in the last year, nearly 85,000 units were absorbed during this time.
Breaking it down by each market, the completion numbers are staggering. In the last 12 months, Houston has seen 15,600 new units added to its market, Dallas has had 13,600 new apartments delivered, Fort Worth saw 8,100 residences completed, Austin witnessed the completion of nearly 10,000 units and San Antonio had another 5,400 added to its total inventory.
But all of this new construction is coming at a cost. While the biggest cities in Texas have seen a steep increase in total supply of apartments in the last year, rental prices are also moving in a vertical direction.
According to the report, four of the highlighted cities have seen double-digit rent growth in the last 12 months. Austin rents have increased by an eye-watering 18% year-over-year according to CBRE, Dallas rent costs are up by 11.7%, San Antonio apartments are up 10.8% while Fort Worth rent prices have increased by 10%. El Paso rent growth is just under 10% while Houston’s stands at 8.5%.
The high absorption rates and quickly increasing rent prices have lured a lot of investment to Texas cities. The Dallas/Fort Worth Metroplex has actually led the nation year-to-date for the amount of dollars invested in new rentals: $16 billion. Developers have invested $7.38 billion in the Houston apartment market so far this year, while Austin has seen $5.16 billion invested in new development.
If you’re a recent transplant to Texas shell-shocked by the prices and competition for new rentals, you’re not alone. So long as Texas’s population growth and economy continue on an upward trajectory, there will likely be similar increases in new apartment deliveries, absorption and rent growth in the coming years.