In recent years, there has been a significant surge in rent prices, outpacing the growth in wages. However, last year provided a glimmer of hope, as wages outpaced rent increases nationally and in nearly half of the major U.S. metropolitan areas — including in Dallas
According to a recent analysis of rental data from Zillow, U.S. rents have been growing 1.5 times faster than wages since 2019. The demand for rentals from the sizable millennial generation, many of whom have opted to rent for longer durations compared to previous generations, as well as from Gen Z adults, has collided with the nation's housing shortage, leading to a rapid escalation in rent prices.
Last year, that trend slowed down, with national rent growth at 3.4%, falling behind wage growth at 4.3%. Robust multifamily construction has played a key role in meeting the demand for apartments, slowing rent growth across many parts of the country.
In Dallas, rent increased by 1.1% as wages increased an average of 2%. However, the North Texas city is still playing catch-up. From 2019 to 2023, rent increased by 29% while wages increased by only 19.5%.
Local Profile previously reported that in 2023, nearly 2,700 rental homes were built in Dallas. Over the past five years, Dallas built more than 6,500 single-family rental residences, comprising 62% of the total rental housing stock in the metropolitan region.
The annual construction of single-family rental homes surged from an average of 6,600 in the U.S. in the years preceding the pandemic, to tens of thousands of new units each year thereafter. Following years of surging completions, the trend of build-to-rent projects reaches its pinnacle this year, with almost 45,500 new houses currently under construction.
The current surge of purpose-built rental homes is propelled by a confluence of factors: the prevalence of hybrid work arrangements and Millennials entering their family-building years, facing challenges in homebuying. With strong demand from renters, coupled with interest from institutional investors and established builders, this niche market is reaching an unprecedented historical peak.
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