Texas Rental Outlook Strong As People Keep Moving In

Photo courtesy of Texas A&M University 

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Migration to Texas has been robust for years. This influx of new people has forced up rents within the multifamily housing market, especially in major metropolitan areas. New arrivals tend to rent because they either lack the means to buy homes or want to get to know an area before buying.

Half Million New Arrivals Per Year

U.S. Census Bureau data, as reported by the Texas Relocation Report 2021, showed that over 500,000 people moved to Texas from out of state in 2019. In fact, since the last census in 2010, Texas welcomed 4.2 million new people for an overall growth rate of 16.4%. For seven years in a row, more than 500,000 entered the state annually. Even after taking people who move away into account, the state gained well over 100,000 people in 2019 alone. [1]

California and Florida Top Sources

According to the Texas Real Estate Research Center, California represented the number one source of new Texas residents for the previous 19 out of 20 years. Florida holds the number two position in regards to people moving to Texas. Even so, the numbers moving from Florida do not amount to half the number of people coming from California. 

As can be expected, the major cities within Texas received the bulk of transplants. Well over half of new arrivals, 60.7%, moved into just four of the state's Metropolitan Statistical Areas. [2]

Jobs and Lower Cost of Living Attract People

The strong Texas economy has created many new employment opportunities for both Texans and new arrivals. Successful oil and gas, technology, manufacturing, and business services sectors provide plenty of jobs. 

Wages are relatively appealing as well. As a whole, Texas has an average personal income of $38,000. Although modest, that number is still $9,000 higher than the national average. In big cities, salaries are much better. For example, the average yearly salary in Dallas is $67,500. 

The cost of living on the West and East coasts of the country still exceeds what people pay in Texas. Although rents are rising in big cities, people still enjoy lower prices for transportation and consumer goods. The state does not have a personal income tax either. 

Aside from good jobs and a lower cost of living, Texas has some qualities that also attract people, including:

Numerous recreational activities
Multiple large urban areas
Diverse population
Great educational systems [3] 

Texas Rental Outlook Strong As People Keep Moving In

Swelling numbers of newcomers mean strong demand for rental units. Although the pandemic caused some markets to dip in 2020, the rebound in demand and rents has been impressive. The Business Journals reported in September 2021 that:

Dallas-Fort Worth rents rose 9% 
Austin rents went up by 10.5%
Houston rents increased by 4.8%
San Antonio rents increased by 6.3% [4]

These days, the multifamily housing market responds quickly to increased demand. Apartment complex companies track demand with algorithms. If applications from renters jump in one week, then the management company will immediately raise rents. 

Builders have been working to provide new housing supply for years. For example, more than 5,000 new rental units have been built around Austin every year since 2014. Record-setting numbers of new units are expected to hit the market in 2021 and 2022. Despite new inventory, the number of people needing homes remains chronically higher than what they can find on the market. [5]

As a result, the coming years will allow multifamily real estate investors to keep both occupancy rates and rents high. 

References

[1] [3] https://apnews.com/article/texas-business-census-2020-science-0d436b250dc07111bff4b4f6cdd6682b
[2] https://www.recenter.tamu.edu/articles/research-article/Where-did-new-Texans-come-from-2324
[4] https://www.bizjournals.com/dallas/news/2021/09/01/apartment-rent-occupancy.html
[5] https://www.texasstandard.org/stories/the-average-monthly-rent-in-austin-is-now-1500-prices-are-rising-at-the-fastest-pace-ever/