Texas housing trend turns on its head
There was a moment, not too long ago, when more permits for apartment buildings were issued in Texas than for single-family homes. From 2010 to 2015, those two classes of housing approached parity, as big cities like Houston and Dallas encouraged denser development rather than sprawling into suburban neighborhoods.
Well, that trend has ended. The number of multifamily buildings starting construction has fallen over the past couple of years, as single-family units continued marching upward.
Have cities stopped building dense urban neighborhoods, and returned instead to white picket fences?
The downturn in multifamily projects is probably temporary as housing markets work off the excess supply that’s built up over the past few years, according to Jim Gaines, chief economist at the real estate center at Texas A&M.
“The multifamily market is showing some signs of slowdown/weakness as more landlords report concessions and inability to increase rents along with slightly higher vacancies,” Gaines wrote in an email. “The impact of the energy downturn is finally hitting the multifamily market.”
This is easy to see in Houston, where Marcus & Millichap reports that rental vacancy rates averaged about 10 percent in the second quarter of 2017, while single-family home sales set new records.
The composition of housing supply is not just an indicator of how the economy is doing — it’s also information about how we can expect cities to look and function.
The factors that would push the pace of multifamily construction rate faster than single-family construction are varied and complex, ranging from the availability of financing to decisions made by local planners to the demographics and preferences of people moving to a certain place.
That may just be a matter of time. Or Texas may revert to its longerterm habit of preferring single-family homes over apartments and condos. Urbanization isn’t a given.