Apartments keep going up; no slowdown in sight

DALLAS – With almost 25,000 apartments in the construction pipeline, Dallas ranks with Houston and New York among the top multifamily home building markets in the country.

There is no sign of a slowdown in apartment starts in North Texas and many other major U.S. markets. The 12-month total of apartment and condo starts was up more than 40 percent in April from a year earlier.

With almost 275,000 apartments under construction across the country, is it time to worry about too much new supply? “Despite what I often hear, I don’t think we are at the point where we are about to overbuild in the apartment industry,” says Mark Obrinsky, chief economist with the National Multi Housing Council.

He said demographics show there is demand for most of the apartments being built.

“We probably need something like 300,000 to 400,000 new apartments each year to keep pace with the kind of demand I expect we will see the rest of this decade,” Obrinsky said.

Effect of home sales

The current volume of apartment building in Dallas-Fort Worth is slightly higher than the peak of the market before the recession. Greg Willett, vice president of  apartment analyst MPF Research, and other analysts are not fretting that the rebound in home purchases will cause a pullback in apartment renting.

“A comeback in the for-sale market is actually a good thing in the apartment market. They do tend to move together,” he said. “Whenever you have strong home sales, that usually means you have a strong economy and are generating lots of jobs.” North Texas’ booming employment market — one of the most robust in the nation — is fueling demand for all kinds of housing.

Rising Rents

Apartment rents, which grew significantly in 2010 and 2011, are not accelerating as quickly this year.

In first quarter 2013, average apartment rents in North Texas were only about 2 percent ahead of where they were in March 2012. DFW rents are now at an average of $833 per month.