If you've been paying rent at all in the last two years, you've probably felt the burn in your wallet.
Rent costs reached all-time highs in North Texas in 2021 and earlier this year, as demand for housing – both for-sale homes and rentals – soared to new heights and spurred a housing frenzy.
"2021 is a year that we'll probably never see anything like that again, anytime soon. Maybe in our lifetimes,” said Jay Parsons, Head of Economics & Industry Principals for Richardson-based RealPage.
“We had this perfect storm of events when COVID hit. We had this work from anywhere phenomenon. People moving around. Most people had more money than they had before thanks to stimulus, thanks to wage growth. We saw more demand for rentals in 2021 than any year in the three decades we've tracked the rental housing market."
Get DFW local news, weather forecasts and entertainment stories to your inbox. Sign up for NBC DFW newsletters.
But now, it's all changing and the market is shifting. The pendulum is finally swinging in favor of renters.
"2022 is just a very different year. Inflation has gone up, consumer confidence has gone down and people are much more nervous right now. When we're nervous, we're more likely to stay put and wait it out,” said Parsons.
He said because of those factors, rent prices have flattened over the last few months across the country and North Texas.
Local
The latest news from around North Texas.
“Just like you've seen in the for-sale housing market, there's been a significant slowdown in demand for rentals and 2022,” he said. “DFW is still booming. But in Dallas and all across the country, there has been just a freeze on household formation, housing demand, just consumer confidence, and high inflation.”
Rental markets consistently mimic housing markets so with rising interest rates, home buying has slowed. Therefore, we're not seeing huge rent increases anymore.
"No one has a crystal ball, but one thing I'll tell you is that the rental market moves with the for-sale housing market. And right now demand for for-sale homes is going away and demand for rentals is going away. I think they're kind of staying put, they're waiting it out,” Parsons said. " Now that demand has cooled off, rents are following. When we're uncertain about the state of the world and our financial situation, human nature is to wait it out. And I think people have hit the pause button on housing searches right now in general.”
Parsons said there might even be some rent cuts this winter, depending on the property manager. So if your lease is up in the next six months, you will most likely not need to worry about your rent going up by hundreds of dollars. It could even stay the same or just slightly increase.
"Over the next three or four months, I think we'll see some discount on rents. I don't think it'd be a dramatic rent cut but I do think there'll be better deals out there that you'll see,” Parsons said.
Typically, winter months are the best time of year to find or renew a lease, with low demand for housing during holidays.
“Just as a general consumer tip, you're always going to get a better deal if you're looking at times that other people are not. The winter is a period of slow demand, so you can use that in your favor,” said Parsons. “One of the things I think a lot of renters don't understand is to be willing to be flexible on your move-in and move-out dates. Property managers worry about something they call exploration management, where they want to make sure they don't have too many leases expiring at the same time that causes too much vacancy. So they're usually going to offer you a lower monthly rent in exchange for a lease term length that may not be ideal. Maybe it's an 11-month lease, or maybe it's a 14-month lease. You can find a better deal if you're willing to be more flexible.”
The calm in the market is a far cry from earlier this year and last year. But even though rent increases have slowed, they stopped at a high point.
According to a new study by Rent.com, the average rent for a one-bedroom in Dallas is still sitting at more than $1,500, an 11% increase over last year. Three-bedroom rent has increased the most over last year at 51%, averaging nearly $2,600 a month in the area.
Certain neighborhoods like Lake Highlands, Oak Cliff, Knox Henderson, and Las Colinas have seen rent costs explode in the past year and a half.
Click here to read the rest of the report.
Due to the high prices, many families are still struggling to pay the rent. In August, the city of Dallas announced another round of funding to help families receive rent assistance.
Despite rents going up, Parsons clarified that rent is still relatively affordable in DFW compared to other parts of the country.
“If you look at some of the other major markets across the country, particularly the coastal markets like New York, D.C., Boston, Los Angeles, San Francisco, or Seattle – the average rent in Dallas is about half of what you would pay to live in those type of cities,” he said. “So it definitely feels like a lot, there's definitely some been some significant growth. It's flattening. But DFW is still a much more affordable market.”
RealPage also shared some more good news for the DFW rental market.
"Over the next year or so, we're going to see a lot of new apartments being built. I think anybody in DFW can drive around and see apartments being built. There's more apartments under construction in Dallas-Fort Worth in any other part of the country,” said Parsons. “And that additional supply will definitely give renters more options. It should be a positive for rents as well, because there'll be more competition and more supply availability."
