Are Texas Developers Building Too Many Apartments or Not Enough?
Thousands of people move to North Texas every year, and they all need some place to live.
Most of the newcomers are renting. “Population growth in the last 10 years has been enormous,” said Jeanette Rice, head of multifamily research for CBRE. “When we talk about growth, multifamily is going to help provide that housing. “It’s really important.”
Rice talked about the Texas apartment market during a recent meeting at the Federal Reserve Bank of Dallas. Dallas-Fort Worth is the country’s top apartment building market with more than 26,000 new rental units opening this year. Another 16,000 apartments are set to open their doors in Houston in 2020. So far the North Texas market has gobbled up just about everything apartment builders have thrown at it.
“Are we overbuilding or are we not building enough?” Rice asked. “My worry about Dallas and for that matter all the Texas market is the construction pipeline. “We have enormous apartment demand but a lot of supply,” she said. “It’s probably too much short term. It’s very likely not enough long term.”
That’s because D-FW’s population is projected to rise by another 1 million people in the next 10 years. Rice said most of the apartments being built in Texas are higher-cost units, not the more affordable rental units that are in short supply. “A lot of the new supply doesn’t match the demand,” she said. Rice and other analysts predict that at some point millions of millennials who are now renting in the U.S. will decide to buy homes. But they are making that move later than previous generations. “Renters haven’t been moving into homeownership nearly as fast,” she said. “It’s not because they don’t want to. People are delaying getting married,” Rice said. “They are also delaying having kids.”
Young renters also have less reason to make the jump into home ownership. “They have beautiful new rental projects,” Rice said. “You see some of the most attractive new housing in America. We didn’t have this 20 years ago...”
