How are Texas metros weathering the historic supply of apartment units coming online this year?
In Austin, the glut of new housing is finally having an effect on rents.
The city has grown its apartment stock by thousands of units in the past year, and, as Austin absorbs the supply, rents are falling fast.
Among submarkets across the nation with the steepest rent cuts, Austin takes up nine of the 15 spots, according to Madera Residential’s Jay Parsons.
Southeast Austin ranked first with a 12.8 percent drop in rents in the last 12 months.
The other submarkets that made the list are: Cedar Park, Far South Austin, Far West Austin, San Marcos, Northwest Austin, Pflugerville/Wells Branch, Round Rock/Georgetown and Riverside. The list also includes submarkets in Atlanta and Phoenix, plus Raleigh, North Carolina, and Jacksonville and Tampa, Florida.
Austin’s rent cuts “have everything to do with supply,” Parsons wrote.
Apartment stock in six of the city’s 16 submarkets grew by 10 percent or more in the last year, he said.
“It’s just a smaller, still-maturing market vulnerable to boom/bust swings,” Parsons said. “Some Austinites don’t like this analogy, but it’s still a younger sibling to Dallas prone to volatile mood swings. But it’ll keep growing up, and eventually grow out of it.”
The abundance of deliveries means multifamily building permits are plummeting throughout the state and around the country.
Between 2021 and 2024, building permits fell about 35 percent in Austin, 54 percent in Dallas and 66 percent in Houston, according to Parsons’ research.
The only outlier is Fort Worth, where the number of multifamily building permits filed between 2021 and 2024 was essentially unchanged.
It’s not clear what’s behind the anomalous data point, Parsons said.
Because the fundamentals are pretty similar across the Dallas-Fort Worth metro, “there’s no obvious indicators why permits would be plunging in Dallas and yet rebounding in Fort Worth,” he said.
“My assumption is that it’s just a blip, and we’ll likely see Fort Worth’s permit volumes come back down.”
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