The constant sounds of construction have become a familiar presence in Dallas-Fort Worth, with cranes and hard-hatted workers busy building apartments. Despite the rapid population growth in the area, there is currently an oversupply of apartments. Some units remain unoccupied, and rents have slightly decreased over the past year.
The oversupply is expected to peak within the next year, but experts see it as a short-term issue. Construction has slowed due to high costs, but there is confidence that the units will eventually be filled as the region continues to grow. Investors, developers, and others are looking at the long-term potential.
Since 2014, over 181,000 apartments have been built in the Dallas metro area, representing a 35.5% increase. However, this construction has not been evenly distributed across the region. Some areas have seen a doubling of apartment inventories, while others have added few new units.
Despite the drop in prices over the past year, rents in D-FW remain higher than pre-pandemic levels. As of April 30, the average rent is $1,468, a 4% year-over-year drop. The occupancy rate is 89%, with over 38,000 units recently opened and another roughly 35,000 under construction.
The oversupply of apartments is not unique to Dallas; other major Sun Belt cities are experiencing similar trends. This oversupply, coupled with slowing demand, has led to the rent drops seen in D-FW.
Looking ahead, the oversupply issue is expected to persist as more projects are completed. Rents may drop further, but construction is likely to slow down. Higher construction loan interest rates and delays are contributing to this slowdown.
Despite the challenges, experts believe Dallas is well-equipped to manage this oversupply issue, given its strong job creation and economic engine. They anticipate a shift where demand will start to exceed supply in late 2025 or early 2026, marking a change in the market dynamics.