A new report from Apartment List analyzes the top trends in the 2017 rental market and predicts their impacts in 2018. For example, the report highlights the increase in the homeownership rate after a decade of declines, as well as the decrease in the share of rental units considered affordable to the lowest-income renters. Although affordability remains a concern for those renting in Dallas, Dallas rent growth slowed as the metro added more new rental stock than any other U.S. metro. Dallas rents remain slightly lower than the national average, at $1,100 for a two-bedroom apartment, compared to $1,160 nationwide.
The Dallas market added an estimated 22,851 new rental units in 2017, more than Miami, Phoenix, Boston, and San Francisco combined, and nearly 50 percent more than the number of new units added in 2016. While rental units in Dallas remain in high demand, with 2.4 percent year-over-year rent growth, the large increase in supply decreased occupancy rates from 92.3 percent to 91 percent.
The flood of multifamily units helped soften Dallas rent growth — welcome news for Dallas renters after 3.7 percent rent growth in 2016. Dallas median rents stand at $880 for a one-bedroom unit and $1,100 for a two-bedroom. With over 21,000 deliveries anticipated in 2018, we expect rent growth to remain tempered. Unlike many coastal metros, Dallas has added sufficient rental supply to keep up with it’s growing workforce, adding 1.5 jobs per building permit.
The Apartment List report notes that despite the significant increase in overall rental stock, there remains a shortage of rentals affordable to low-income renters. Nationwide, the share of occupied rental units under $800 fell by 27 percent from 2005 to 2016. Over the same period, the share of rentals costing more than $2,000 per month increased by 79 percent. In the Dallas metro, 45.3 percent of renters are cost-burdened, spending 30 percent or more of their income on rent. Additionally, 20.2 percent of Dallas renters are severely cost-burdened, spending 50 percent or more of their income on rent. According to Apartment List, Dallas is the 18th most affordable of the 100 largest U.S. metros, and the most affordable large Texas metro.
The share of cost-burdened renters in Dallas has decreased since 2005, when 48 percent of renters were cost-burdened. Part of this decrease is driven by a change in the renter population, with more high-income renters delaying homeownership, due to a shortage of available starter-homes, and more low-income renters moving to cheaper areas or doubling up with family. The share of low-income renters in Dallas fell by 4.9 percent, while the share of middle- and high-income renters increased by 1.7 percent and 3.3 percent, respectively.
While affordability will remain a concern for Dallas renters in 2018, with rent and home prices continuing to rise, Dallas remains more affordable than many large U.S. metros. Dallas experienced the largest net Domestic migration of any U.S. metro from 2010 to 2016, and renters continue to move to the area due to the relatively affordable cost-of-living and strong job market. The rapid growth of the multifamily industry will continue to support the growing renter population, and continued investment in affordable housing remains crucial for low-income renters.
Sydney Bennet is a senior research associate who writes about apartments and more for ApartmentList. Contact her at email@example.com.