Midland is expected to be the top multifamily rent growth market in Texas over the next five years, with rent growth projected at 5.5%, according to Markerr’s top Texas markets report.
Overall, the state’s tertiary markets are projected to perform better than larger Texas markets, particularly Austin, which is at the bottom of the projected markets list with rent growth projected to reach only 1.9%. Lingering supply issues are likely a factor, said Markerr.
Other Texas regions expected to perform well in rent growth are Odessa at 5.1% and Waco at 5%, followed by Abilene, Longview and Laredo, all with forecasts of 4.6%, according to Markerr’s ranking. In addition to Austin, Texas markets with lower projected rent growth include Tyler at 2.8%, San Antonio at 3.2%, and Dallas and Lubbock each at 3.3%.
Smaller markets in the Lone Star State remain among the most affordable, the report found. Lubbock, Amarillo and Abilene all have rent-to-income ratios below 17%. Large markets are also relatively affordable across Texas, with Houston, Dallas, San Antonio and Austin all posting rent-to-income ratios under 22%. High household incomes help increase affordability in those markets, according to Markerr.
Texas’s least affordable markets fall below the 30% rent-to-income ratio, with Odessa coming in as the most expensive with a ratio of 28%, followed by Brownsville at 23.5% and College Station at 22.8%.
All of the Texas markets tracked by Markerr continue to show both job growth and population increases, which are driving multifamily demand. Smaller metropolitan statistical areas with strong job growth are producing higher year-over-year rent growth, said the report.
For example, College Station posted three-year job growth of 10% and year-over-year population growth of 1.5%. This helped the market place first on the multifamily rent growth ranking, with a gain of 1.4%. Abilene placed second on the list, with multifamily rent growth of 1.3%, driven by job increases of 4.6% and population gains of 0.9%. Odessa followed in third with job growth of 10.2% and population gains of 2.2% helping boost rent increases to 1.2%.
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