Texas Multifamily Market Finds Its Footing, but Affordability Gaps Persist

Texas multifamily has moved past its most volatile period, with improving stability tempered by rising affordability concerns and uneven recoveries across major metros.

Returning to balance: After the capital markets reset of 2023 and 2024, Texas multifamily is entering a more stable phase. Occupancy has stabilized, rent volatility has eased, and transaction activity is slowly returning, though recovery remains uneven across markets, asset types, and renter segments.

Leading stabilization: Dallas–Fort Worth absorbed a major wave of new supply without a significant leasing downturn. Rent growth flattened, occupancy stabilized, and pricing adjusted from a 2022 peak near $199,000 per unit to roughly $191,000–$192,000. Houston followed a slower correction, with occupancy returning toward the 93%–94% range and fundamentals becoming more balanced.

Working through supply pressures: These markets experienced strong growth earlier in the cycle but also absorbed some of the largest development pipelines. Austin deliveries rose from about 11,000 units in 2021 to more than 32,000 in 2024, pressuring rents and lease-up activity. Conditions are improving, but recovery remains uneven, especially for newer, higher-cost assets.

Affordability becomes a key differentiator: Texas remains more affordable than many coastal markets, but affordability pressures are becoming clearer across metros. Dallas–Fort Worth household income grew from about $76,000 in 2021 to $95,000 in 2025, though it has not fully matched previous rent growth. Demand is increasingly favoring workforce housing, while higher-priced properties face more leasing pressure.

Creating new opportunities: The market correction has pushed cap rates higher and adjusted valuations, creating a more disciplined investment environment. Investors are focusing more on current income, realistic assumptions, and operational performance rather than aggressive rent growth. Some assets from the previous growth cycle may create acquisition opportunities as they return to the market.

Tax policy shifts: Texas’ repeal of the “traveling HFC” property tax structure could impact future multifamily transactions. The model was widely used, with roughly 236 communities valued at nearly $8 billion utilizing the strategy during the 2025 legislative session. Legal challenges could increase costs and potentially bring more affected properties to market.

➥ THE TAKEAWAY

Defining the next winners: Texas multifamily remains a long-term growth story, but the next phase will favor markets that can balance rents, incomes, and new supply. Dallas–Fort Worth and Houston appear best positioned, while Austin and San Antonio still face a longer recovery.

➥ Gov. Greg Abbott's unexpected push to ban rural data centers and expand statewide regulations signals a sharp policy reversal that is reshaping Texas' AI infrastructure debate.

➥ Apartment locators are gaining influence on TikTok, but misleading listings are fueling calls for greater transparency and oversight in Texas' rental market.

➥ Toyota will invest $3.6B to return Tacoma truck production from Mexico to San Antonio, doubling its campus by 2030 and creating 2,000 new jobs.

➥ H-E-B plans a $175M refrigerated warehouse in San Antonio, expanding its distribution campus as total investment surpasses $1B and workforce growth continues.

Leasing activity Leasing activity totaled 2.0M SF feet in Q2, down 26.2% from the five-year average, as economic uncertainty pushed tenants toward Class A properties, which accounted for 70% of leasing volume.

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