Dallas Multifamily Report – Summer 2020
While market fundamentals softened over the summer, the metro's rebounding economy is helping the sector stay afloat.
Dallas rent evolution, click to enlarge
Dallas-Fort Worth is still readjusting to pandemic restrictions. Overall market fundamentals continued to soften over the summer, entering negative territory across several metrics. The average rent contracted for the third consecutive month, down 0.1 percent on a trailing three-month basis through August. The occupancy rate in stabilized assets responded to consistent supply additions and COVID-19 uncertainty, sliding 70 basis points over 12 months, to 93.7 percent as of July.
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The job market contracted in the second quarter and then rebounded after the economy reopened in May and June. However, due to a spike in coronavirus cases, Texas rolled back its reopening plan. The unemployment rate dropped from 12.8 percent in April to 8.2 percent in June, while preliminary July data pointed to a promising 7.5 percent. Unemployment claims filed across the state reached almost 3.4 million between mid-March and late August, yet three sectors—led by financial activities—posted year-over-year job gains in Dallas.
Dallas sales volume and number of properties sold, click to enlarge
Uncertainty stemming from the health crisis kept transaction volume low in the second quarter, with only $1.8 billion in assets trading in 2020 through August, for a per-unit price that inched up 2.3 percent to $123,423. Meanwhile, 12,167 units came online, with an additional 51,482 apartments underway as of August. Accounting for ongoing volatility, we expect Dallas rents to fall 1.1 percent in 2020.
