Multifamily Construction Driving DFW Growth

Townhomes serve as multifamily housing | Image by pbk-pg/Shutterstock

The North Texas real estate market saw a drop in the number of construction permits issued for single-family housing in 2022 but a spike in the share of permits issued for multifamily housing.

Building permits are required for all construction projects in the U.S. and serve as a key indicator of upcoming housing activity and future market conditions, whether at the regional or national level. Likewise, a decline can indicate that developers anticipate a lack of economic growth in the near future.

The building permit processes in Dallas and Fort Worth are overseen by each city’s respective Development Services Department (DSD), which is responsible for issuing local construction permits and ensuring sustainable land development across North Texas.

In 2022, Dallas-Fort Worth issued 33,872 construction permits for new apartments and 43,574 for new single-family homes projects, placing the DFW metro seventh nationally in terms of the number of new housing units per 1,000 residents, according to a recent study from Apartment List.

DFW permitted 9.9 multifamily and single-family units per 1,000 residents last year, falling behind other major Texas regions like Austin (18.2) as well as Houston (10.5), the study showed.

A breakdown of the DFW region shows that 4.3 multifamily units were permitted per 1,000 residents in 2022, a nine percentage point increase from the 3.4 units reported in 2021. On the other hand, DFW saw a decrease from 6.7 single-family units in 2021 to just 5.6 units in 2022, a roughly 20% drop year over year.

“The overall figure between single-family and multifamily construction shows that these two segments of the housing market have been on notably different trajectories,” Apartment List said in the study.

The slowdown in single-family permit activity in DFW was largely facilitated by the flood of new units that hit the market in 2022, which Apartment List said is “crucial to relieving the pressure of this [housing] crisis.”

Apartment List noted that the City of Dallas’ 13% decline in single-family permits was mostly driven by rapidly increasing mortgage rates, which tempered demand in the for-sale market. However, as previously reported by The Dallas Express, the city’s slow permitting process and long turnaround times have also played a significant role in the slowdown. 

“While permitting activity for new multifamily housing units is currently stronger than it has been in decades, single-family construction continues to lag, keeping homeownership out of reach for many younger Americans looking for a starter home,” Apartment List said.

Dallas and Fort Worth have two separate permitting processes that are meant to deliver identical results. However, developers that want to build projects in Dallas are often hit with excessive wait times, which can lead to construction delays and additional building material costs.

The City of Dallas provides several comprehensive sources to help track single-family and commercial construction but none for multifamily projects.

Although DFW has seen a recent construction boom in multifamily projects, Apartment List highlights that “it does not change the fact that the nation is currently “in the midst of a broad housing affordability crisis that has built up over many years.”

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