The Dallas-Fort Worth rental market continued to heat up in 2022, sparking fierce competition from both local and out-of-state apartment seekers.
North Texas ranked as one of the top most competitive rental markets in 2022, according to a recent Rental Competitivity Report by the resident services platform RentCafe.com. To compile the report, RentCafe’s research team analyzed Yardi Systems apartment data across 135 rental markets in the United States.
Despite robust demand for local DFW-based apartments, El Paso was actually ranked as Texas’ most competitive rental market in 2022, followed by McAllen at No.2 and Dallas at No.3.
“Cities in Texas continue to attract Californians and other out-of-state renters looking to enjoy a more affordable lifestyle compared to big coastal cities as well as better job opportunities in high-income sectors,” RentCafe explained in its report.
RentCafe developed its competitiveness score, termed the Rental Competitivity Index (RCI), by examining five unique factors based on apartment data from Yardi Systems.
These factors include the number of days rentals were vacant, the percentage of apartments occupied by renters, the number of prospective renters competing for an apartment, the percentage of renters who renewed their leases, and the share of new apartments completed in 2022.
The value of each RCI score is based on the above metrics and reveals if a rental market was highly competitive (90 points and above), competitive (between 45 and 90 points), or less competitive (less than 45 points).
“Although the Lone Star state continues to be a very attractive place to live and do business, the competition for apartments in Texas was relatively reasonable compared to the national landscape,” according to the report. “This was primarily due to the state’s strong pace of apartment construction during the last few years and all throughout 2022.”
On a national level, California and Florida each ranked higher than Texas in terms of rental market competitiveness. Texas’ highest RCI was found in El Paso, with a score of 77.2%, while Orange County, California, scored 96.3%, and Miami, Florida, scored 118%, the highest RCI score throughout the U.S. in 2022.
In terms of the local RCI score, RentCafe found that more than 95% of Dallas-based apartments were occupied this year, and nearly 63% of renters decided to renew their leases. On average, 14 potential renters expressed interest in the same vacant apartment unit.
Competition for rentals in Dallas was highest at the start of the year compared to other cities whose traditional peak rental season is May through August.
El Paso’s occupied rate was found to be 1% higher than Dallas’. RentCafe cites the low supply and the slow 0.7% rate of new rentals being built in El Paso as the reason for the modest increase. In addition, El Paso had more than 60% of its renters choose to renew their leases.
Still, the pace of rental rates will likely ease in 2023 due to the expected influx of supply, according to Greg Willett, a Dallas-based housing analyst with Institutional Property Advisors, a division of Marcus & Millichap. He added that many people are choosing more financially stable living situations to avoid the volatile rent rates.
“I think fear of a possible recession has made households hesitant to actually make major housing decisions,” he said. “They’ve kind of frozen in place.”