Research & Forecast Report
Texas per MSA YE 2021: Multifamily Review Opaquely Crystal
After four years of interest rates being firmly fixed at 0%, in 2012, the Fed
Austin ranked #6 best performing large metro in the US (December) and is the
introduced the “Dot Plot” system into their arsenal of policy tools. The dot plot
2nd best performing metro since the beginning of the pandemic.
system allows the Fed’s 18 members to communicate to the market where, they believe, interest rates will be now to several years into the future. As of
Austin emerged as the regional leader in y/y rent growth rising 23.3% to $1,578,
December 15, 2021, 2 of 18 Fed members believed the Fed Funds rate would
a higher growth rate than the National average which increased 14.6% but still
be above 1.00% by YE 2022 with all 18 assuming rates will be above 1.00%,
$62 below the National average rent of $1,640. Dallas Mdiv came in 2nd with
but not higher than 2.50%, by YE 2023. For the Longer-Term outlook, only 2
16.2% y/y increase to $1,429.
of 18 believe interest rates will hit 3.00% by sometime, anytime, after 2024. (Continued)
Occupancy rates increased for most Texas area metros despite robust new unit deliveries. Austin witnessed the highest y/y occupancy increase, rising 3.3% to
Summary
97.1%.
Total Texas Nonagricultural Wage and Salary Employment grew by 50,000 jobs in December. Since the Covid-induced loss of 1,452,600 jobs in April/ May 2020, total nonfarm employment grew by 1,542,200 jobs to its previous employment peak.
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Employment The Houston-The Woodlands-Sugar Land MSA increased by 20,400 jobs
Nonfarm Losses Gains Employment Mar 20 - Apr 20 May 20 -Dec 21 US Nonfarm (millions) -22,362 18,790
% Recouped 76%
Arizona
over-the-month or +0.7% increase. Growth since May 2020 has brought
Phoenix
-242,800
300,600
124%
back 316,700 jobs or 88% recoupment.
Tucson
-44,300
40,600
92% 125%
Florida
The DFW MSA witnessed a m/m employment increase of 13,900 or +0.4%. Growth since May 2020 was 538,500 with the MSA now at peak employment.
Jacksonville
-82,700
103,200
Orlando
-206,700
138,000
67%
Tampa
-170,900
201,000
118%
Miami
-449,000
386,900
86%
396,300
104%
Georgia Atlanta
The San Antonio-New Braunfels MSA employment was flat in over-the-
-381,500 Texas
month readings in December. Growth since May 2020 was 146,100 with the MSA only 0.2% off peak employment. The Austin MSA increased 2,700 jobs for a +0.2% m/m increase in De-
Houston
-361,400
316,700
88%
DFW
-425,400
538,500
127%
San Antonio
-131,100
146,100
111%
Austin
-137,000
186,200
136%
98,800
151%
Utah
cember. Growth since May 2020 was 186,200 with the MSA now at peak
Salt Lake City
-65,500
employment. AVERAGE OCCUPANCY (Q1 2017 - YTD)
Occupancy
Dallas Mdiv
Fort Worth Mdiv
San Antonio
Austin
Houston
Texas occupancy rates rapidly increased over 2021; Austin witnessed the highest y/y occupancy increase at 3.3%, to become the regional occupancy leader at 97.1% along with the Dallas Mdiv. Both San Antonio and Houston increased 3.9% to 96.5% and 95.9% respectively. Fort Worth Mdiv had the lowest, but still substantial, increase at 2.1% to 96.9%.
AVERAGE RENT (2017 - YTD)
Rent Austin led in y/y rent growth rising 23.3% to $1,578, which is a higher growth rate than the National average which increased 14.6% but still $62 below the National average rent of $1,640. Dallas Mdiv came in 2nd with 16.2% y/y increase to $1,429 and San Antonio 3rd after rising 14.9% over-the-year to $1,1179. Fort Worth Mdiv increased by 14.4% (to $1,282) and Houston by 11.3% (to $1,249).
Dallas Mdiv
Houston
San Antonio
Austin
Houston
Pre-Lease Absorption
Construction Of the four MSA’s charted, DFW and Austin witnessed Planned
Absorption rates decreased in over-the-quarter readings by an average of
Development increase in both over-the-quarter and year readings rising
23% across the Metros after coming down from current cycle highs hit in
7% / 31% and 5% / 22% respectively. Both San Antonio and Houston
Q2 2021. Based on the average number of units under construction per
witnessed significant decreases in y/y readings in Planned Development
property by MSA and assuming 90% occupancy for stabilization; current
contracting 62% (to 3,529 units) and 62% (to 4,914 units) respectively.
delivery-to-stabilization period for all MSA’s is currently hovering around 16 months and below the 18-to-24-month stabilization rubric used by
Actual projects under construction continue to remain elevated. Houston
developers. Months-to-Stabilization by MSA:
witnessed the biggest y/y contraction at 22% to 21,081 units.
•
Houston: 16 months
•
DFW: 14 months
•
San Antonio: 12 months
•
Austin: 22 months Avg. Pre-Lease Absorption Rate/Property (1Q2020 to YTD) 40
MULTIFAMILY CONSTRUCTION (50+)
35 30 25 20 15 10 5 0
Q1 2020 11 11 San Antonio 12 Austin 13 Houston DFW
National Rent Payments According to the National Multifamily Housing Council
ending December, decreasing 180 bps over-the-year to 92.0%. For Phoenix, rent collections continue to remain
Houston
97.6%
rent collections saw its lowest reading for the month 94.8%
Q4 2020 13 12 12 10
Q2 2021 Q3 2021 Q4 2021 29 22 17 27 29 18 34 18 22 37 21 11
Q1 2021 13 14 18 15
RENT PAYMENT TRACKER (% COLLECTED)
National
(NMHC)’s Rent Payment Tracker, market-rate apartment
Q2 2020 Q3 2020 11 14 14 19 12 19 11 14
Fort Worth Mdiv
Dallas Mdiv
96.9%
97.4%
96.3%
Austin
96.7%
96.5%
94.9%
93.8%
93.6%
San Antonio
93.1% 92.0%
robust and well above the national average at 95%+ since March 2020 to its current 95.5%. Oct’20
Nov’20
Dec’20
Oct’21
Nov’21
Dec’21
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Permits MF & SFR
TOTAL PERMITS | SF/MF (5+)
Houston
Combined total permit levels, as of YE
DFW
San Antonio
Austin
2021, which includes both single family and multifamily permits per MSA are as follows: 49,997 25,011
•
Houston: 68,125 (up 0.1% y/y)
•
DFW: 74,746 (up 29% y/y)
•
San Antonio: 21,986 (up 34% y/y)
•
Austin: 49,977 (up 24% y/y)
21,945 16,586 10,192
21,986 74,746
59,123
44,246 70,883
68,125
35,127
Outlook – Opaquely Crystal Total US Nonfarm payrolls increased by 199,000 in December, compared with
As John Mauldin, from Mauldin Economics, states, “one consequence of inflation
the Dow Jones estimate of 422,000. The unemployment rate dropped to 3.9%,
is that it pushes “real” interest rates lower… If the Fed follows recent practice
better than the expected 4.1%. Since May, U.S. nonfarm employment has re-
and raises rates a quarter point at each meeting starting in mid-2022, it might
couped 84% (18.790M) of the job losses stemming from Covid. The Greater Sun
add up to a 1.25% hike by the end of next year…[and] will still leave negative
Belt area, including Texas, has generally recovered faster than the rest of the
real interest rates of -3%...But would markets tolerate anything tougher? Proba-
country; both Austin, #1 in Sun Belt, and DFW, #4, have not only recouped all
bly not…Most obviously, higher rates would raise borrowing costs for the biggest
jobs lost during the Pandemic but have achieved previous peak employment
borrower of all, the US Treasury. The debt has reached a size at which even tiny
levels. San Antonio is only 0.2% from peak employment with Houston at 1.9%
rate increases add big bucks to the government’s bill.”
from peak. At the current pace, employment stabilization for all Texas Metros Given that as a backdrop, it would seem continued Government and Federal Re-
should be achieved by H1 2022.
serve interdictions in the market will not only continue, but accelerate, despite In August 2020, the Fed moved to essentially re-write its mandate, i.e. letting
statements to the contrary. If that is the case, then would seem to me that we are
inflation run higher than 2% which, at the time, untethered it from all historical
much closer to negative interest rates, now, that at any point in our history. Since
regimes. Essentially, the Powell Fed bet they could ignite, and control, inflation
the 1950s, the Fed has had to adjust rates an average of 500bps lower during a
in the meaningful, but manageable, 4 to 5% range. Less than two years later,
recession and, according to the current ordering of dot plots, absolutely no one
Powell, coupled with the Pandemic and all its deleterious effects, certainly man-
on the Fed sees short term rates rising above 3.00%.
aged to jumpstart inflation with the average, annualized, monthly reading of 6% throughout 2021. Inflation, now, is so high that we are running close to the hyper-inflation days of the late 1970s/early 1980s.
Thomas Brophy Research Director | Arizona +1 602 222 5057 Thomas.Brophy@colliers.com
Colliers international | Arizona 2390 E Camelback Rd. Ste. 100 Phoenix, AZ 85016 +1 602 222 5000
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been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers