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"The housing market has achieved an ugly combination of weakening demand, falling investment, increasing supply, and rising prices that would be impossible in a just and orderly world." - Robert Armstrong of the Financial Times.
According to the newest National Association of Realtors Report, existing home sales have dipped 1.9% from last year, and new home sales have fallen 7.7% from last year according to the latest US Census and HUD data. This is resulting in decreased homebuilder sentiment according to the most recent National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), and in turn permits for new single-family homes have fallen to the lowest seasonally adjusted rate in nearly a year. Meanwhile, U.S. home prices remain unaffected by persistently high mortgage rates, posting an annual 6.5% gain in March—the ninth consecutive month of year-over-year increases and a new all-time March high—according to the latest S&P CoreLogic Case-Shiller Home Price Index. The Index has hit new highs in six of the past 12 months.
The result has been many existing homeowners remain “locked in” at ultra-low mortgage rates, unwilling to exchange for a higher rate in a high-priced housing market. Consequently, "home prices reaching new highs are creating a wider divide between those owning properties and those who wish to be first-time buyers,” NAR’s chief economist Lawrence Yun said in a release. “Still, first-time buyers in the market understand the long-term benefits of owning." Notably, Fannie Mae purchase sentiment has fallen to its lowest point ever recorded. This discrepancy has led many towards renting, especially towards SFR and BTR product.
BTR demand remains strong amidst record-high completions. According to John Burns recent report, rental demand remains strong despite supply-side pressure due to poor for-sale affordability, especially in Dallas-Fort Worth, where Dallas and Fort Worth each rank among the lowest in the nation in rent-income ratios. Despite the sunbelt markets heavy supply weighing down rents and occupancy in the short term, demand still remains the highest in these submarkets.
An analysis of 9 submarkets in Dallas-Fort Worth revealed that the current average BTR vacancy is 25% and the current average SFR vacancy rate is 14%. Fort Worth's BTR vacancy rate is the highest at 36% and Grand Prairie is the lowest at 12%. Anna/Melissa, Celina, and Fort Worth have the highest SFR vacancy rate at 16% and Arlington has the lowest at 9%. At the end of Q1 2024, our DFW portfolio's vacancy rate was at 7.5%.
Feel free to reach out to us for detailed info regarding other submarkets and associated data.
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