There’s a sudden rush of cheaper supply making previously expensive apartments more affordable — and not a moment too soon.
Until very recently, housing in the white-hot Dallas-Fort Worth economy has been on the frothy side, owing in large part to the mass influx of companies and transplant workers looking to tap into the “Texas Miracle” of low taxes, high growth and light regulation. All good news in the long run, but less than helpful to the affordability crisis hampering middle and working-class renters on the hunt for reasonably priced abodes.
Yet suddenly, for a variety of reasons, the air is starting to come out of metro-area rentals across the country, slowly but surely bringing our long national nightmare of sky-high shelter costs to an end. And North Texas is no exception.
In a study published in March, the Federal Reserve Bank of Dallas found that apartment occupancy rates and prices have started to come off the boil, as a COVID-era surge in development creates “widespread” concessions that are “pressuring valuations of new constructions and older properties.”
Now, according to Apartmentlist.com data, Dallas is one of the top 15 locations where rents are suddenly plummeting, down 10.5% from August 2022 (the peak of the “YOLO economy” spurred by the end of pandemic lockdowns and a spike in remote jobs that led to inbound migration to lower-cost states).
Falling shelter costs have been a major source of inflation that will both help locals in their search for affordable housing and incentivize short-term rentals for events like the World Cup — which is the subject of Neal Franklin’s Sunday Business cover story (his first since joining the team in February).
Global soccer’s marquee event will see nine matches hosted in D-FW, more than any other region. And as Franklin writes, the World Cup will set the stage for inflation-weary residents looking to make extra income on their homes and apartments, where Airbnb and Vrbo are seeing a surge in listings.
“Ultimately when people come up to me and talk to me about why they’re wanting to do this, there’s one aspect which is ‘Oh I really want to make this money, this money is meaningful to me, it’s meaningful to my family,’ ” Luke DaMommio, a senior director of brand and product marketing at AirDNA, told The Dallas Morning News’ Franklin.
It’s perhaps a good thing that local housing costs are coming down, because if history is any guide, one effect of the World Cup may undercut some of those benefits. That’s because short-term rentals are notorious for reducing available stock, which in turn drives up rents and home prices in the longer-term. Those dynamics have prompted cities like New York, San Francisco and Los Angeles to implement strict regulations on Airbnb and Vrbo in their markets.
But at the end of the day, the answer to cheaper housing costs is more development. As a study from the Bush Institute argued recently, what a booming region needs most of all is more market-based housing that sustainably drives down prices — an argument we’ve made before in this space.
“If development does not accelerate in the City of Dallas … prices and rents will likely keep increasing relative to the rest of the region, with the likely consequence of further hollowing out of large parts of Dallas’s urban core,” wrote J.H. Cullum, Clark Fellow at the George W. Bush Institute-SMU Economic Growth Initiative.