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By Omar Mohammed
Reporter, Economy & Finance
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The slowdown in migration into certain Texas cities and an increase in supply of new properties in these markets has contributed to a fall in rental prices, experts say.
Austin—down 9 percent—and San Antonio—a decline of 8 percent—were two of the three cities with the highest drop in rent prices along with Nashville, Tennessee, according to Realtor.com data.
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Texas was a part of the country that saw substantial inbound migration as residents in other parts of the U.S. flocked to its cities as COVID-related lockdowns gave them flexibility to work anywhere and they went in search of better weather and a relatively cheaper quality of living. That dynamic helped push demand for homes higher which in turn led to prices for rental properties shooting up.
"What's going on in Texas and Austin and San Antonio is during the pandemic, there's this boom in demand and so building activity spun up really quickly and it's spun up quite a lot," Hannah Jones, Realtor.com's senior economic research analyst, told Newsweek. We're talking about multifamily units. We're talking about large apartment buildings. You know, those take a while to finish. So a lot of those are coming online and have been coming online this year."
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That increase in the supply of available rental homes has pushed prices down, she said.
"That increase in inventory has been continuing even though demand in some of these markets has pulled back because of how high the cost of living has gotten, high prices have gotten," Jones told *Newsweek. "*It's the classic big boom in supply, demand has kind of fallen off relative to supply and so that has led to a softening rent prices."
That dynamic is expected to continue in Texas, along with much of the southern parts of the country, which are seeing a drop in demand for homes, particularly in expensive metro areas of the state. As a result, rent prices, which soared during COVID are coming down to earth.
"Rents are coming down from those peaks," Jones told *Newsweek. "*They aren't necessarily going to return to pre-pandemic [levels] but kind of finding more balance, softening back to that place where rent levels are feasible and attractive to renters."
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The trend in Texas is different from the national level where rent prices are barely coming down, partly due to how expensive buying a home has become.
"Rents came up to this high level and pretty much hung out around there as the labor market has continued to be relatively strong," Jones told Newsweek. "Demand for rentals has remained relatively strong because buying a home is so unaffordable that keeps some demand in the rental market."
With the supply of multifamily homes expected to slow, the availability of affordable rental homes is likely to stay tight.
"We've seen multifamily construction pull back, so likely not going to see a massive increase in rental supply or you know more affordable housing conditions in general," Jones said.
More multifamily homes coming into the market could help move rental prices down.
"But I think for the time being we don't expect that to happen in a significant way," Jones said.
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