- El Paso was Texas’ most competitive rental market in 2022, followed by McAllen and Dallas.
- Central Texas and Lubbock joined El Paso on the list of Texas markets with the biggest competitiveness changes this year. All were warmer in the first part of the year.
- The rapid pace of apartment construction has not been enough to dampen demand in markets like Houston and San Antonio, which have warmed up during peak rental season.
- Houston was 60% more competitive in peak rental season compared to the first part of the year.
Texas cities continue to attract Californians and other out-of-state renters looking to enjoy a more affordable lifestyle compared to larger coastal cities as well as better employment opportunities in high income sectors. Although the Lone Star State continues to be a very attractive place to live and do business, competition for apartments in Texas was relatively reasonable compared to the national landscape. This is primarily due to the state’s steady pace of apartment building over the past few years and throughout 2022.
But when – and why – did major Texas rental markets warm up during 2022? To determine this, RentCafe.com looked at five important factors based on apartment data from Yardi Systems:
- the number of days that the rentals remained vacant
- the percentage of apartments occupied by tenants
- how many potential tenants competed for an apartment
- the percentage of tenants who have renewed their lease
- the share of new apartments delivered in 2022
Based on these measurements, each rental market in Texas was assessed using a Rental competitiveness index (RCI), looking at three different time periods: the first part of the year (January to April), the peak rental season (May to August), and the year 2022. The value of each RCI score indicates whether a market was very competitive (90 points and more), competitive (between 45 and 90 points) or less competitive (less than 45 points).
El Paso led the hottest areas in Texas for apartment rentals in 2022
When it comes to renting an apartment, Texas was less competitive in 2022 (with an RCI score below 45), lagging behind the more competitive California or the hot state of Florida – and even below the national RCI score of 59.9.
Most Texas markets were more competitive during the first part of the year, including places like El Paso, McAllen, Dallas, Fort Worth and Austin. At the same time, San Antonio and Houston have become hotter during peak rental season.
El Paso was the hottest market in Texas in 2022, with an ROI of 77.2. More than 96% of apartments were occupied this year and very few new rentals were built — the area’s apartment supply increased by only 0.7% this year. In addition, more than 60% of tenants have decided to renew their lease, which has only fueled competition in the sector.
Likewise, McAllen became the second hottest market in the Lone Star State, mirroring trends in El Paso. Although there were only nine tenants competing for the same vacant apartment (fewer than most parts of Texas), apartment occupancy averaged 96.2% this year. Moreover, nearly 68% of tenants have decided to stay put and renew their lease. This led to an RCI score of 70.2, nearly double the state’s score of 44.4.
Further north, more than 95% of apartments for rent in Dallas were occupied this year, especially as nearly 63% of tenants decided to renew their lease. As a result, Dallas’ RCI score was 56.9.
Nearby Fort Worth, similar trends were seen, reaching an RCI score of 52.8. Interestingly, El Paso, Dallas and Fort Worth received the most interest from tenants in all of Texas this year, with 13 to 15 applicants, on average, competing for the same vacant apartment.
Central Texas saw the biggest change in competitiveness in 2022
This year, competitiveness has fluctuated the most in Central Texas, but El Paso and Lubbock have also seen significant changes. All three markets became less competitive during peak rental season, making it easier for renters to find an apartment. Fewer lease renewals and fewer apartment occupancies compared to the first part of the year as well as a higher share of new apartments built in 2022 were the main factors driving the change.
Central Texas was 21.2% less competitive during the summer months when its RCI dropped 12.1 points to 50.6. The lease renewal rate in the area rose from 62.1% in the first months of the year to 57.1% in the high rental season. At the same time, the occupancy rate went from 95% to 93.4%, which helped to slow things down.
El Paso, Texas’ hottest rental market in 2022, was nearly 18% less competitive during peak rental season compared to the first part of the year when its ROI was near 90. The 15% drop .8 points of its RCI score can be attributed to fewer lease renewals (58.4% versus 61.4% in the first four months of the year), lower occupancy (96 % vs. 96.7%) and new apartments added to the market (0.7% through August).
Lubbock tenants faced a 15.3% less competitive market during peak rental season. The region saw similar changes in occupancy and lease renewal rates as Central Texas, as well as the fewest number of tenants competing for an apartment in all of Texas – eight applicants during the first part of the year and only five in high rental season. Surprisingly, apartments in Lubbock fill up faster during rental season than any other market in the state – just 23 days, to be exact.
San Antonio and Houston were the main Texas markets that warmed up during peak rental season
Houston was 60.3% more competitive in high rental season compared to the first part of the year. The extra heat came from the high rate of renewal of leases — 58.6% in the high season compared to only 49.6% during the first part of the year. More so, tenant interest here was similar to that of Austin, with 12 potential tenants competing for a vacant high-season apartment.
Even though the number of new apartments opening in Houston during its warmer months was higher compared to the first part of the year – 1.8% through August versus 1% through April – this did not had no impact on competitiveness.
San Antonio ranks seventh, just behind Austin, in rental competitiveness in Texas in 2022. The market was one of four regions in Texas that warmed up during the rental season, following a 7% increase from its RCI score, despite the increase in market share. new apartments added to the market until August (1.7% against 1% until April).
However, a vacant apartment in San Antonio was snapped up faster during rental season – after 29 days compared to 33 days in the first part of the year. The number of tenants competing for an apartment remained the same throughout the year – 12, the same as in Austin.
Dallas was hotter in the early part of the year when its RCI hit 55.7. Higher apartment occupancy and more lease renewals than during the rental season kept competition high in the first four months of 2022. The rapid pace of apartment construction (the total rental supply in Dallas increased 2.1% through August) helped to slow things down during the peak season, when the metro was 2.2% less competitive.
However, Dallas – or its suburbs, to be more precise – continues to be the top destination for out-of-state renters from coastal areas, particularly California. In fact, Irving was named the number one magnet for tenant relocation in the United States in a report by StorageCoffee.
Austin, the Texas mecca for tech companies, also heated up in the first four months of the year. This is mainly explained by the higher lease renewal rate during this period: 58.2%, compared to 55.4% in the rental season. Still, the growing share of new apartments added to the market through August — a 2.9% increase, the highest among Texas’ major markets — helped reduce peak rental season competitiveness by 9.1%.
Meanwhile, Midland-Odessa was the easiest Texan market to find a spot in rental season when its ROI rose 23.4% from the first part of 2022, to 16.4. The high share of new apartments opening in Midland-Odessa through August (3.5%, the highest share in all of Texas in 2022) was enough to keep the apartment search process less intense compared to others towns in the region.
RentCafe is a nationwide apartment search website that makes it easy for renters to find apartments and houses for rent in the United States.
To compile this report, the RentCafe.com research team analyzed Yardi Systems apartment data from 135 rental markets in the United States. Data comes directly from large-scale multi-family properties of 50+ units. Fully affordable multi-family properties were excluded.
Markets were ranked based on a market competitiveness score. To calculate the score for each market, we used five metrics and their averages from January to August 2022: apartment occupancy rate, average total number of vacant days, potential tenants per vacant unit, renewal rate of leases and the share of new apartments completed in the first eight months. month of 2022 compared to the overall supply as of December 31, 2021.
We then compiled an average ranking by assigning a percentage weighting to each indicator: 30% for apartment occupancy rate, 15% for average number of vacant days, 15% for potential tenants per vacant unit, 30% for the lease renewal rate and 10% for the share of new apartments.
“First part of the year” refers to the period between January and April 2022 and “peak rental season” refers to the period between May and August 2022.
In this study, the terms “market”, “metro”, “zone” and “location” are used interchangeably and are defined as Yardi Matrix markets.
The Central Texas market encompasses Bryan-College Station, Corsicana, Killeen, Temple and Waco.
McAllen Market includes Brownsville, Harlingen, McAllen.
The Fort Worth market includes Fort Worth, Arlington, Euless, Bedford, Grand Prairie, North Richland Hills, Grapevine, Haltom City, Hurst and Keller.
Austin Market is made up of Austin, Round Rock, San Marcos, Cedar Park, Pflugerville, Georgetown, Buda, Leander and Hutto.
The San Antonio market includes San Antonio, New Braunfels, Universal City, Leon Valley, Schertz, Live Oak, Converse and Seguin.
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