Impact of Regional Dynamics on Multifamily Housing Market in Dallas-Fort Worth
Across the southern U.S., the Sun Belt continues to be a hot spot for relocation. Much of the region offers an enticing combination of affordability and abundant employment. Firms nationwide are finding cost-saving advantages by shifting their operations southward, most notably to the Dallas-Fort Worth, Texas metroplex.
In many markets like Dallas-Fort Worth (DFW), multifamily real estate is playing an important role in alleviating a severe shortage of single-family homes that is contributing to homeownership challenges. This has created a favorable market for investors looking to invest in multifamily assets.
Supply and Demand
Analyzing supply and demand in housing provides valuable insights into the overall economic health, potential tenant base, rental rates, market trends, and risk factors of a market. This analysis , helps investors make informed decisions to seek to maximize their returns on commercial real estate investments. Moreover, understanding regional dynamics is essential for accurately assessing the impact of supply and demand trends on potential investments.
The Dallas-Fort Worth apartment market has been a national leader in development, leasing, rent growth, and other aspects for several years. In 2022, DFW outpaced New York with the most “new apartment construction starts” in the U.S., leading the nation in apartment development with 34,345 units slated to be completed in 2023.**
Strong demand was evident in the last three months of 2023, marking the third-strongest fourth quarter in DFW history, behind 2021 and 2005, according to Jay Parsons, Chief Economist for RealPage.** In some markets and apartment classes, however, the influx of supply is already beginning to impact demand. After a sharp rise in apartment rents in 2022, rates in the Dallas-Fort Worth area stabilized in 2023.
Occupancy rates fell from an average of 97% to 93% at the end of 2023, a rate that had not been seen since mid-2011. However, the fourth quarter is typically a seasonally slow leasing period. Results from the second and third quarters will offer a clearer picture. However, with the projected increase of 480,000 new units in 2024, vacancy rates are likely to increase.**
While 2024 may be a renter’s market with an oversupply of housing, this could be short-lived in DFW. With DFW remaining one of the nation’s fastest-growing employment and population hubs, the demand for rental units is expected to stay high this year.
For context, Dallas added more residents than any other U.S. metro between 2021 and 2022, with 170,396 new residents bringing the total to 7.9 million, according to U.S. Census data.** As businesses in the area continue to expand, more people are expected to relocate in the coming years.
A significant decline in construction permits, coupled with the area’s increasing population and job growth, should also drive the continued demand for multifamily housing in Dallas-Fort Worth.** The apartment supply in DFW is anticipated to decrease, with fewer new rental communities opening and new supply diminishing in 2025 and 2026.
Population and job growth attract a wave of families, new residents, and young adults drawn to urban living to DFW. This demographic is typically well-educated, eco-conscious, ethnically diverse, and earns above the median income. High home prices, interest rates, and a preference for flexible living arrangements lead many millennials and Gen Z to favor renting. They value proximity to workplaces, downtown areas, community life, high-performing schools, diverse cuisine, and entertainment, with many opting for long-term rentals over purchasing. **
**Texas Demographic Center
Positive Trends In Texas
Explosive growth looks to continue for the Dallas-Fort Worth Metroplex. Texas’ remarkable population surge and impressive $688.9 Billion GDP, constituting 3% of the U.S. total, the region’s economic robustness, job opportunities, and acclaimed school districts attract businesses and individuals, and projects like the $520 million Omni PGA Frisco Hotel & Resort in Frisco and the upcoming Universal theme park in Frisco draw people to the north Dallas suburbs.
Shifts in public sentiment towards renting are already benefiting multifamily real estate. While the current economic conditions compel many households to rent for longer, there is a large group of consumers choosing to rent rather than own. Consumers are increasingly prioritizing convenience, security, proximity to amenities, and job opportunities. The appeal of minimal maintenance responsibilities and the financial and lifestyle flexibility of renting compared to buying is driving this trend.
The DFW Metroplex’s attractiveness for the foreseeable future has been featured in several reports, including CBRE’s 2024 Investor Sentiment Report, Marcus & Millichap, The Annual New Construction Apartment Report from RentCafe, and the 2024 Texas Real Estate Forecast, produced by Texas A&M’s Real Estate Research Center.
Topping the CBRE Investors Intention Survey for “most preferred investment market” for the second consecutive year is Dallas-Fort Worth, With its robust population and job growth driving housing demand.
For the first time, the Marcus & Millichap 2024 Multifamily National Investment Forecast ranks DFW #1 due to its “stronger household formation among younger, renter-predisposed demographics,” among other favorable factors.
The Annual New Construction Apartment Report from RentCafe highlights national trends and regional snapshots. The report noted Dallas-Fort Worth population growth, emphasizing that “more and more people are expected to relocate to this thriving area in the coming years as businesses continue to expand.” **
The 2024 Texas Real Estate Forecast, produced by Texas A&M’s Real Estate Research Center, predicts that multifamily effective rent growth will strengthen in 2024, with growth in the largest metropolitan markets averaging 2.5 percent. The forecast focuses on the robust economic influence of the state’s real estate assets, impacting over 30 million Texans, noting, “Texas is a real estate trendsetter in the U.S., so we analyzed more data than usual to determine if the state’s statistics from the previous year could be sustainable in 2024.”
Partnering With A DFW Based Investment Firm
Investors interested in multifamily real estate investment opportunities should always conduct their due diligence, taking advantage of educational opportunities, webinars, and talking with team members at investment firms.
Ashland Greene focuses on investing in multifamily housing in the Dallas-Fort Worth metroplex. The team is committed to staying ahead of the curve when analyzing regional variations in national trends. This knowledge, passed along to investors, results in successful strategies and profitable investments.
“Our team focuses on primary submarkets within Texas that demonstrate strong demographics, income growth levels, supply and demand imbalances, and positive development trends,” says Shakti C’Ganti, Ashland Greene Founder and CEO.
Ashland Greene Capital offers an alternative to investing in the stock market by providing accredited investors with private placement opportunities in real estate. Ashland Greene is a vertically integrated real estate investment firm with over $1.2 billion in transactions, 1700+ investors, 170 employees, and 7,100+ transacted units, all within the Dallas-Fort Worth Metroplex.
𝘛𝘩𝘦 𝘪𝘯𝘧𝘰𝘳𝘮𝘢𝘵𝘪𝘰𝘯 𝘱𝘳𝘰𝘷𝘪𝘥𝘦𝘥 𝘩𝘦𝘳𝘦𝘪𝘯 𝘪𝘴 𝘧𝘰𝘳 𝘪𝘯𝘧𝘰𝘳𝘮𝘢𝘵𝘪𝘰𝘯𝘢𝘭 𝘱𝘶𝘳𝘱𝘰𝘴𝘦𝘴 𝘰𝘯𝘭𝘺𝘢𝘯𝘥 𝘥𝘰𝘦𝘴 𝘯𝘰𝘵 𝘤𝘰𝘯𝘴𝘵𝘪𝘵𝘶𝘵𝘦 𝘢𝘯 𝘰𝘧𝘧𝘦𝘳 𝘵𝘰 𝘴𝘦𝘭𝘭 𝘰𝘳 𝘵𝘩𝘦 𝘴𝘰𝘭𝘪𝘤𝘪𝘵𝘢𝘵𝘪𝘰𝘯 𝘰𝘧 𝘢𝘯 𝘰𝘧𝘧𝘦𝘳 𝘵𝘰 𝘣𝘶𝘺 𝘴𝘦𝘤𝘶𝘳𝘪𝘵𝘪𝘦𝘴. 𝘛𝘩𝘪𝘴 𝘪𝘯𝘧𝘰𝘳𝘮𝘢𝘵𝘪𝘰𝘯 𝘥𝘰𝘦𝘴 𝘯𝘰𝘵 𝘤𝘰𝘯𝘴𝘵𝘪𝘵𝘶𝘵𝘦 𝘪𝘯𝘷𝘦𝘴𝘵𝘮𝘦𝘯𝘵, 𝘵𝘢𝘹, 𝘰𝘳 𝘭𝘦𝘨𝘢𝘭 𝘢𝘥𝘷𝘪𝘤𝘦, 𝘢𝘯𝘥 𝘱𝘰𝘵𝘦𝘯𝘵𝘪𝘢𝘭 𝘪𝘯𝘷𝘦𝘴𝘵𝘰𝘳𝘴 𝘢𝘳𝘦 𝘦𝘯𝘤𝘰𝘶𝘳𝘢𝘨𝘦𝘥 𝘵𝘰 𝘤𝘰𝘯𝘴𝘶𝘭𝘵 𝘸𝘪𝘵𝘩 𝘵𝘩𝘦𝘪𝘳 𝘢𝘥𝘷𝘪𝘴𝘦𝘳𝘴.
**Rent Café, “New Apartment Construction: 1 Million Units Built in 3 Years, Another Million to Be Added Until 2025”, Accessed 22 April, 2024
**DFW Top Metro for Apartments “New apartment supply: Top 5 metros delivering in 2024”, Accessed 22 April, 2024
** Real Page, “2024 Apartment Supply Scheduled to Outweigh 2023” , Accessed 22 April, 2024
**MetroTex Association of Realtors, “DFW Apartment Leasing Can’t Keep Up With Construction”, Accessed 22 April, 2024
**Texarkana Gazette – Dallas-Fort Worth apartment leasing can’t keep up with construction | Texarkana Gazette , Accessed 22 April, 2024
**Multifamily Real Estate Outlook – Texas multifamily real estate outlook: Trends, projections and insights – Dallas Business Journal , Accessed 22 April, 2024
**Regional Transportation Council Report, “Progress North Texas 2023”, Accessed 22 April, 2024
**Texas Moving Statistics 2024 – Texas Moving Statistics For 2024 – Forbes Home Accessed 22 April, 2024
**Texas Demographic Center – TDC Visualization – Who’s Moving to Texas Accessed 22 April, 2024
**Texas A&M Real Estate Research Center – 2024 Texas Real Estate Forecast Accessed 22 April, 2024
**Annual New Apartment Construction Report – New Apartment Construction: 1.2 Million Built in the Last 3 Years Accessed 22 April, 2024
**High-Income Renters on the Rise – Millionaire Renters Triple as More High Earners Choose Renting Accessed 22 April, 2024
**Offices transformed into apartments –11 Stories That Will Shape Dallas in 2024 – D Magazine Accessed 22 April, 2024
