Feb 24, 2024 - Real Estate

Texas rents are softer for the rich

Change in asking rent by apartment type, Q4 2022 to Q4 2023
Data: CoStar; Note: CoStar rates multi-family buildings on architectural design, structure, amenities, site and certifications; Chart: Alice Feng/Axios

Texas renters with the deepest pockets are more likely than others to score a deal.

Why it matters: A flood of new construction is pushing down rents at the high end, where there are more apartments than renters who want them.

The big picture: Demand for more affordable apartments is helping to keep middle-of-the-road rent prices from slipping as far.

Zoom in: That's the case in Dallas, Austin and San Antonio, according to real estate firm CoStar Group, which rates buildings based on design, amenities, location and certifications.

  • Rent for middle-tier apartments in Houston and nationally was ticking up at the end of 2023.
  • U.S. rents generally are still above pre-pandemic levels, analysts say.

State of play: While the country needs more housing, most new apartments are loaded with amenities in prime locations.

What's next: It could be a few years before there's enough demand to soak up the excess supply that's overwhelming some metros such as Austin, says Jay Lybik, CoStar's national director of multifamily analytics.

What they're saying: "We've got to get these buildings finished, and start filling them, without having more come online," Lybik tells Axios.

  • The pipeline for new projects is already slowing as developers find it harder to get financing, he says.

Be smart: Prices you see in the headlines are asking rents, meaning new leases only.

The intrigue: It's not just rent deals. Another way to help fill fresh apartments is to hire an influencer.

  • Dallas-based content creator Kenzie Elizabeth recently promoted a local high-rise, and some off-campus apartments near UT-Austin use student ambassadors.

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