Economists Sound Alarm, Predicting Short-Term Pain For Texas Multifamily Sector
The expiration of a national eviction moratorium in late March will mark a definitive and "worrisome" turning point for the Texas multifamily market, the Texas A&M University Texas Real Estate Research Center said this week.
While the Texas multifamily segment remains generally healthy across most major markets, Research Economist Luis Torres predicts at least some temporary pain when tenants reliant on the moratorium face mandatory payments or eviction for the first time since the coronavirus pandemic broke out last year.
“The short-term multifamily outlook is less than ideal,” Torres said in a statement. “The COVID-19 relief bill passed by Congress March 10 includes help for tenants who are behind on their rent and utility bills. Even with the assistance provided by the latest round of fiscal stimulus, many renters are jobless and depend on weekly unemployment benefits.”
A factor that could save landlords is being in markets where people may be interested moving to from other states. Even though some of the most attractive metros could be slightly insulated, signs point to at least a minor correction in each Texas major market.
In the last quarter, multifamily vacancy rates in Austin trended up, according to the research center. At the same time, rent growth in Austin Class-A properties and the overall market declined even as net absorption increased. The good news for Austin is rent payment percentages remain 2.4% higher than the national averages.
The Dallas and Fort Worth markets both saw occupancy rates increase as Class-A rent growth fell in the most recent quarterly report from the Texas A&M Real Estate Research Center. Market net absorption remained high even though it did dip slightly from the previous quarter.
When the center interviewed DFW tenants who are already behind on their rent, 74% said they see eviction as somewhat likely within the next two months, compared to 52% nationwide.
Houston's overall and Class-A vacancy rates also increased in the most recent quarterly report. The South Texas metro saw apartment units under construction, deliveries and net absorption fall.
Forty percent of Houston's tenant respondents said they are worried about their ability to pay next month's rent, compared to 37% nationally.