13 Dec Looking Beyond the Trends
Making sound investments isn’t just about picking up on the latest trends – it’s about really understanding the market, the factors that affect it, and making thoughtful decisions based on those details. A great example of what it takes to do solid projects is our approach to multifamily housing in the Dallas Fort Worth metro area.
Dallas Housing Market Trends
For owners and developers in the Dallas Fort Worth area, economic growth since the Great Recession has meant a real estate market with plenty of opportunities. Year over year rent increases and above-average equity appreciation have become the norm since 2010 as the population has swelled and job growth has steadily been on the rise. In fact, the Dallas/Fort Worth MSA ranks second in both rate of job growth and number of jobs added nationally, according to the U.S. Bureau of Labor and Statistics. Dallas’s population alone has increased more than 10% since 2010.
For renters, however, that increase in rental rates is problematic. According to Bloomberg, renters nationally are spending more of their disposable income on rent than they have for the past 60 years.
It has accordingly become difficult for renters in the DFW area to find affordable housing within a reasonable distance from their work. New supply is coming online, but at a slower pace than over the past five years. Barring an economic calamity, this will continue to keep pressure on rents.
One solution is to provide affordable units through government sponsored loans. These loans provide some incentive to the developer or buyer to designate a certain number of units at a defined income level. The loan incentives can often offset the decreased rent received from the affordable units.
Presario Ventures often tries to work with local municipalities to produce a public-private partnership to further enhance the affordability component of multifamily projects. Depending on the structure of the partnership, we can usually produce more units at an even more affordable price – a win-win for all stakeholders involved. The region gets quality affordable housing, the renter has access to top quality construction at a reasonable price and the developer can execute the business plan within this framework. That will also help the DFW workforce live closer to jobs.
With Texas population forecast to continue its growth over the next 40 years, there will be an increased need for quality apartment units that are also accessible to renters attracted to Texas for its job growth and low cost of living.
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A variation of this article, featuring Presario Principal and Co-Founder Tom Burns, originally appeared in GlobeSt.com on November 22.