Texas Market Reports

By Taylor Williams First things first: By most objective metrics and standards, multifamily assets in major Texas markets still represent strong investment propositions relative to certain other commercial sectors, as well as to the stock market, the other long-term vehicle to which real estate investments are most commonly compared. But as we cross the midpoint of 2022, the U.S. economy finds itself awash in a unique combination of challenging and extreme circumstances. Mainstream news coverage increasingly includes the word “record” in reports on inflation, one-off interest rate hikes and movement in the 10-Year Treasury yield. The yield on two-year Treasury notes recently eclipsed that of the 10-year, creating the “inverted curve” that has historically been an indicator of an upcoming downturn. Rumblings of an imminent recession grow louder by the day. Fear is contagious, and some markets are already showing signs of hunkering down in anticipation of a downturn.  The expectation of recession, let alone the materialization of it, impacts even the strongest of markets, including multifamily assets in Texas. Investors and brokers who specialize in the property type recognize that certain factors — net in-migration of hundreds of thousands of people per year, exceptional corporate relocation activity, and supply …

By John D. Hutchinson, vice chairman, global head of origination, Trez Capital The COVID-19 pandemic brought mass migration to the Sun Belt states, and by far, the most sought-after location of the pandemic migration boom was Texas. Multifamily investment demand remains strong due a higher quality of living, affordability and job growth. People are leaving high-tax, high-regulation states and moving to states like Texas with lower taxes and more favorable business climates.  Austin, specifically, has outshone the top cities in the “Texas Triangle” with its large influx of both people and jobs. Austin’s exponential population growth, attractive cultural qualities and high-income jobs have created demand for  and premium prices on real estate. Although the U.S. economy has seen changes in the last couple of months, such as inflation and interest rate hikes, the city still affords a great opportunity for multifamily investors. According to data from CoStar Group, Austin has doubled its construction starts over the past year and is expected to add 15,827 new units in 2022. In fact, there was a record 25 percent rent growth and strong occupancy at the end of 2021.  A Growing Market In 2021, the Austin area’s net population growth was about 16 …

By Al Silva, senior managing director, investments, Marcus & Millichap; and Ford Braly, first vice president, investments, Marcus & Millichap The multifamily segment in Fort Worth is in a great position. The metro’s vacancy rate slid down to a multi-decade low of 3.1 percent last year, which facilitated stellar rent growth as the number of available rental units plummeted.  Fort Worth’s average effective rent grew more than 15 percent in 2021 to $1,276 per month, and the elevation in 2022 is expected to remain in the double digits. Behind this momentum is robust household formation as citizens relocate to the metro for greater job availability, cost-of-living considerations and quality of life. An average of 16,300 new households were created annually in the Fort Worth metro area over the past decade, and the 2022 addition is expected to eclipse that benchmark by about 20 percent. This rate of household creation is about twice as fast as the national pace and is happening at a time in which the barriers to homeownership have rapidly intensified, pushing much of the new demand toward the rental segment.  Barriers to Homeownership  The median price of a single-family house in the Fort Worth area climbed to …