Texas Apartment Market in ‘Major Turnaround’
By The Texas A&M University Texas Real Estate Research Center
“A major turnaround in the Texas apartment market has lifted occupancy levels and rent growth past pre-pandemic levels,” said Dr. Luis Torres, research economist for the Texas Real Estate Research Center at Texas A&M University.
Torres says the apartment outlook has changed from “catastrophic” when the pandemic began to “positive” today. He cites several reasons for widespread optimism.
“The fiscal stimulus serves as a bridge for the unemployed,” said Torres. “It keeps incomes from falling drastically until workers get back to work. It also helps many businesses from closing permanently.”
Increasing vaccination rates are credited with keeping the economy open, especially service industries unable to socially distance. Torres said the lack of affordable housing has benefited the rental market.
“The lack of single-family homes available for sale, especially homes priced less than $300,000, has prices soaring, and the apartment market is the beneficiary,” he said. “Households priced out of the single-family market continue to rent.”
Demographics is another reason researchers see a healthy apartment market for the remainder of 2021 and into 2022.
“Texas’ population is young. People are moving here from out of state. Affordable housing is in short supply. It’s a recipe for a stronger apartment market,” said Torres.
The Supreme Court lifted the Centers for Disease Control and Prevention’s latest eviction moratorium set to expire Oct. 3. Torres says evictions will probably increase, but due to government policies, they are no longer seen as a ruinous issue. Also, this will help landlords’ ability to cover operating costs and make mortgage payments on properties.
“Unfortunately, some households will be forced to change living arrangements,” said Torres. “However, the majority of renters are better off thanks to the overall labor market recovery and government transfers.
“The June report from the National Multifamily Housing Council rent payment tracker shows rent payments above 95 percent both nationally and statewide. The end of the eviction moratorium is good news for landlords, especially small ones that have been struggling to cover costs and make mortgage payments.”
The upsurge in new Delta variant COVID cases could prolong the apartment market recovery. Until the virus is beaten, a full recovery cannot be secured, said Torres. For more, read the Center’s new 2021 Mid-Year Texas Apartment and Economic Outlook.