On May 19, real estate experts in the City of Dallas spoke to Fox 4 News about the rising price of rent. According to Fox 4, the metroplex has seen some of the highest increases in the country. It costs an average of $2,100 a month to rent a two-bedroom Dallas apartment.
The owner and CEO of Rogers Healy Companies, Rogers Healy, said that a shortage of supplies is a factor.
“It’s insane. The rental market here is crazy, if not crazier than the sales market. We saw supplies, whether it’s lumber, glass, etc., labor, everything is short. So because of that, people are having to charge more, which, again, that’s the new market,” Healy said.
The rent for one-bedroom apartments in Dallas rose 20% over the past year, and other metroplex cities saw similar increases. The cost of rent for a one-bedroom apartment in Grand Prairie increased by 55%, and in Grapevine, it rose by 44%.
Ken Nolan of the Dallas County Appraisal District commented, “The apartment market in DFW, we’ve had the highest rent increases of anywhere in the country in the last year in DFW as a whole.”
The district stated more supplies are being brought into Dallas for the construction of new apartments.
Nolan told Fox 4, “There’s more apartments under construction in the DFW area right now than anywhere else in the country.”
Healy stated that a rise in developer costs has also driven up rent in Dallas and other North Texas cities.
“The costs have gone up significantly for developers. Land acquisition is probably 35-40% higher than it was a year and a half ago,” he said. “The supplies are probably 50-60% more expensive than they were even a year ago, and then the labor. A historic shortage in labor means they have to make their money up somewhere.”
According to Fox 4, rent prices are not likely to go down soon.
“It’s a really tough time to be a renter,” Healy said. “It’s a really tough time to be a realtor. I think it’s just a very classic case of economics 101 with supply and demand where thankfully the demand is substantially higher than the supply.”
This article makes no sense. How does material cost have any effect on an existing apartment building? Also, supply chain issues are the same across the country, that doesn’t explain why rents in Dallas rising more quickly than anywhere else, as your article states.
Material costs impact market rents by contributing to the reduction in supply (available apartments). Material (and construction) costs also impact market rents by increasing owner/developer/landlord overhead; higher replacement cost = higher insurance bill = higher rent. Additionally, new apartment buildings that absorb higher material costs, such as buildings that are being built presently, will require above-market rent to maintain their margins. Every additional cost in the supply chain & development process is eventually passed on to the consumer (renters).
But none of that explains why rents are increasing at EXISTING apartments. I have a firm grip on supply chain economics, it’s my business. I’m only pointing out the fact that the article above does a poor job of explaining the reasons for rising rents in existing buildings. It’s not a shortage of units; there are plenty available.
Jason, Basic Econ 101 class on the first day teaches that inflation (price increases on the same goods) happens when demand (people wanting apartments) out strips supply (available units). “Existing” has nothing to do with it. I am a long term investor in multifamily, B and C class units. I have investments in over 40 MF apartment complexes in Dallas. 10 years ago it cost about $25K per door to buy a good complex. Today it is way north of $200K door and these are older units. Even with almost a 10:1 increase in cost, rent has only about doubled in the same time. Occupancy on any decently run apartment is at record highs in the 95%+ range. That means there are almost no available units or they turn over almost instantly. There are so many people coming to the metroplex that drive this and they don’t make more “existing” apartments. (-:
So that is why so many new ones are being made, but no one builds a new one unless it is a class A. Therefore their new rents are very, very high to cover their cost. That drives up demand on older, existing units.
Then there is the level of reconditioning going on to justify the increased rent and sales price. B&C units are getting stone countertops and stainless steel appliances, wood floors, etc. because that is what people demand. People demand more features and are willing to pay for it.
Also the government doesn’t tax owners on your property purchase price on MF apartments, they tax you based on your occupancy and current market value, so taxes are going thru the roof also.
So in short, MF property is not a simple commodity, it is a very complex item that still follows the rules of economics. Hope this helps.