Rents in Dallas-Fort Worth have climbed for yet another month, albeit at a diminished pace, following a national trend that's driven renters to pay historic amounts for their units.
The average monthly rent for all units in the D-FW area has climbed to $1,177 as of July, up by 0.4 percent from a month ago and by 3.4 percent since this time last year, according to research from rental listings site RENTCafe, which used data from multifamily real estate analytics firm YardiMatrix to track rents for different apartment types in metro areas nationwide.
All told, D-FW rents are still relatively reasonable, thanks to job growth that has promoted modest upticks in supply — the national average rent hit $1,409 last month, pushed along by rent growth in 88 percent of the country's largest 252 cities, according to the study.
The country's most precipitous rent hikes have hit the Permian Basin, where seemingly overnight the fracking boom has created red-hot demand for apartments in cites like Midland and Odessa, which took the number one and two spots for rent growth in the study. As of July, it cost 36.1 percent more to rent in Midland than it did a year ago, with the average rent leaping to $1,615.
And while it's certainly not getting cheaper to get an apartment in Dallas' high-demand rental market, which experts say is feeding off tight supply in single-family homes, rent growth has slowed a little. Year-to-date, rents have gone up around 2 percent. Between January and July 2017, though, they went up by 3 percent, and by 4.7 percent a year before that.
"If you look at the market right now, especially in the Dallas area, and you break it down by context, what you really see is some of the white-collar rents are softening," said Doug Ressler, director of business intelligence for Yardi Matrix. "The real demand is occurring in workforce, blue collar, the B units."
Investors label apartment complexes as Class A, Class B and Class C, in descending order of luxury and amenities. Class B apartments are generally home to "gray-collar" workers: teachers, police officers, technical professionals and so on.
It's this income group whose demand builders are the slowest to satisfy, and it's in those tranches where prices have gone up the most dramatically over time. Since 2014, average rents for workforce housing stock, as Yardi defines it, have gone up by around 27 percent. Meanwhile, rents for "discretionary" units — where the residents are well-heeled folks and have the money to own but choose to live in rentals instead — have gone up by only 13 percent.
Ultimately, it's a supply-and-demand problem, Ressler said. Builders are made skittish by the specter of rising interest rates and are hesitant to embark on large projects that could free up supply, and they have sometimes have a harder time securing financing for Class C and B projects that lenders feel aren't as profitable as luxury builds. Some developers have learned to fill in the cracks through which people who can afford to rent, just not at luxury prices, slip.
But until builders, renters and policymakers coalesce around a common goal, Ressler said, rents will continue to climb, just perhaps not as much.
