In the last decade, millions of people moved from other states to make their home in Texas. More than 250,000 of them chose San Antonio, keeping apartment developers here busy.
A total of 2,000 new apartment buildings have gone up in the state between 2010 and 2020, according to a study by apartment search site RENTCafé, with the highest number of units, over 177,000, in the Dallas metropolitan area.
Those buildings increased the state’s inventory of apartment units by more than half a million. And they keep coming.
Even with apartment construction down by 12% in 2020 compared to the previous year, another 126,900 apartments are under construction across the state.
San Antonio has kept pace. Between 2010 and 2020, developers built 55,100 apartment units in the metropolitan area, a boom that has helped supply housing for the net migration of 259,857 people to the San Antonio-New Braunfels area between 2010 and 2019.
Most of the new units are located within the San Antonio city limits, and more are on the way. A total of 9,300 apartment buildings are now in various stages of development.
The purpose of the RENTCafé study was to compare the existing and future supply of rental units with the growing demand in a state where job growth and corporate relocations are driven by the lower cost of living and a business-friendly climate.
The average monthly rent in San Antonio is $1,040, compared to the national average of $1,463. While San Antonio’s average rent dropped by 0.2% from a year ago, the national average increased by 3%.
In December, the occupancy rate for apartments in the San Antonio metropolitan area was 93%.
But of the rental units in the San Antonio metropolitan area, 93,600 are considered high-end – featuring fast Wi-Fi, energy-efficient appliances, spacious floorplans, modern finishes, and community amenities. RENTCafé showed those apartments rent for about $1,600 a month for a two-bedroom and $1,800 for a three-bedroom.
Houston has the highest number of high-end apartments in the state, with 186,300, and the city of San Antonio ranks fourth, with 83,300, behind Dallas and Austin.
Multifamily development has remained strong, all things considered, with commercial real estate feeling the pain of the pandemic most acutely in its retail and office sectors, said Maria Sicola, a founding partner in consulting firm CityStream Solutions, in a report for NAIOP, a commercial real estate development association. Recovery in those sectors will be slow.
However, data centers, research and development labs, disaster recovery operations, and the industrial sectors will emerge strongly, she said. And apartments will bounce back fast.
“Multifamily [housing] will hold its own as the need for shelter remains inelastic much the same as the need for food, but we may see decreases in rents initially as renters struggle to make payments,” Sicola said.
In December, an estimated 11.4 million households owed back rent averaging $6,000 per household, or around three-and-a-half months’ rent, according to Moody’s Analytics.
Though almost 88.6% of those households made a full or partial payment by Jan. 20, according to a survey by the National Multifamily Housing Council, this is a 2.5% decrease from the share who paid rent through January 2020, and compares to almost 89.8% that had paid by December 2020.
With rent unpaid and mortgage loan payments due, apartment owners are being squeezed in this current economic landscape.
In December, delinquency rates for mortgages backed by commercial and multifamily properties increased for the second month in a row, according to the most recent monthly loan performance survey by the Mortgage Bankers Association (MBA).
The survey found 1.7% of multifamily loan balances were not current in December, up from 1.6% a month earlier.
“For several months, delinquency rates declined as the economy stabilized,” said Jamie Woodwell, vice president of commercial real estate research for the MBA. “But more recently, the added stress from a winter wave of the virus has weakened the economy and challenged some owners, as property income has been disrupted.”