What to Make of the Latest Texas Rent Data

If Sun Belt multifamily owners had a crystal ball, many of them wouldn’t be in such dire straits. But new rental market data in Texas suggest that conditions may be clearing on the horizon.

Even though apartment rents in most Texas Triangle cities are below where they were one year ago, some are starting to trend up, according to data from MRI ApartmentData. That means hope, perhaps short lived, for value-add multifamily shops that often factored in continued rent hikes for their Sun Belt assets in 2021 and early 2022, only to see growth fall off a cliff.

Rents are down about 4 percent in Austin over the past 12 months, but that dip hasn’t hit all neighborhoods evenly. In the outlying metro areas, which have seen the fastest population and housing stock growth of anywhere in the country, rents are up a staggering 24 percent year over year. In the region covering San Marcos, Kyle and Buda, they’re up 14 percent.

In Dallas-Fort Worth, rents dipped by one percent annually. But like Austin, the submarkets tell a different story. The outer reaches of Fort Worth, where multifamily communities spread like wildflowers, posted double-digit rent growth year over year. The area spanning southwest Fort Worth and Benbrook saw rents jump 16.5 percent, and Northwest Fort Worth, Saginaw and Eagle Mountain rents grew 17.5 percent.

Houston stands alone among Texas Triangle metros, as its rents are higher than they were in 2022 or 2021. However, the pace of that growth has slowed significantly, with rents up just 1.5 percent year over year.

San Antonio is also an outlier, as it was the only Texas city to post negative absorption in the past year. The city is riding a wave of new development, with higher-quality units coming online to challenge existing supply. That can also be tough on rents, which declined 1.4 percent in the past 12 months.

Don’t get too excited though — July is typically a strong month for rent growth as people settle in for the upcoming school year, and the same trends that slowed the Sun Belt’s extreme rent growth persist.

“People are moving out of the Class B, C and D stabilized product, and people are moving into the new product,” said Bruce McClenny, who leads ApartmentData. “It has been a drain — the rents cannot hold.”