As we look ahead to 2025, the multifamily market in DFW presents a promising landscape. Key factors such as rent and expense growth, capital inflows, and interest rate trends will play pivotal roles in shaping property pricing.  

Rent growth in the region is expected to remain modest but positive, with CoStar projections indicating an increase of asking rents around 2.9 percent annually in 2025. This growth is primarily driven by continued high demand for rentals, particularly in suburban submarkets like Frisco, Prosper, and Allen/McKinney. 

New multifamily deliveries surged through 2023, but new starts plummeted. This suppressed rent growth, but we’re already experiencing a rebound as new supply is absorbed.  

On the expense side, property taxes and insurance costs have been significant challenges in recent years. However, there are signs of moderation. Property tax increases, which surged in previous years due to higher assessed values and tax rates, are expected to stabilize. The state has implemented measures to return budget surpluses to property owners, resulting in a notable reduction in tax rates in 2023. This trend is likely to continue, leading to more manageable increases, or even decreases, in property taxes in 2024. 


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Regarding insurance, multifamily rates in most areas are expected to ease, with even the traditionally increase-prone regions seeing significant improvements compared to historical trends. The core factors driving the multifamily insurance market are changing for the better, providing greater clarity and predictability for all stakeholders. 

In 2024 DFW has experienced average insurance premium growth in the high single digits, where in 2021 and 2022 we saw increases well north of 30 percent on renewals. The coming year is projected to bring substantial improvement and stabilization in insurance costs, as some operators are starting to renew with lower premiums than in 2023. 

Given these factors, net operating income is likely to remain stable in 2025, with potential for growth in 2026 as the market continues to benefit from these favorable changes. 

Most Sought-After Texas Market

Several factors are contributing to increased capital inflows into the DFW multifamily market. The local economy continues to demonstrate robust job and population growth, making it an attractive destination for both domestic and international investors. The region’s strong economic fundamentals support sustained demand for multifamily housing. 

State and local government policies, including tax incentives for affordable housing and infrastructure investments, are further enhancing the market’s appeal. In addition, Texas is a landlord-friendly state attracting capital from states like New York and California where laws tend to favor the tenant. These measures are expected to continue attracting significant investment into the sector. 

Institutional investment can draw private capital to invest in multifamily real estate by enhancing market credibility, providing stability, and increasing perceived security. Their involvement signals confidence in the market, attracting private investors who seek to benefit from the expertise and stability that institutional players provide. That being said, institutional investors are actively seeking stable returns, and the multifamily market in Dallas offers a reliable income stream with current growth projections. The anticipated reduction in interest rates later in 2024 will likely boost investment activities, making it easier and more stable for investors to finance acquisitions and developments. 

Based on transaction volume and investor sentiment, Dallas is the most sought-after Texas metro area. 

Finally, global uncertainty can drive investment into less volatile assets. With global geopolitical tensions, U.S. real estate remains a haven for international investors. This trend is expected to continue, driving more foreign capital into stable growth markets like Dallas. 

Interest Rate Trends

As of August, many are now predicting 1 percent of rate cuts by the Federal Reserve by year-end. With the recent slowing economic data and Fed speak, investors have been piling into treasury notes. We’ve experienced a full 1 percent decline on the 10-year treasury yield since April of this year. 

Lower interest rates will reduce borrowing costs, making it more feasible for investors and developers to finance new projects and acquisitions at higher valuations. All in all, the monetary easing is likely to support higher property prices as financing becomes more accessible and affordable. 

DFW’s multifamily market is poised for moderate rent growth, robust capital inflow, and beneficial interest rate trends, all of which will support higher property pricing in the future. Capital market volatility over the last two years has sidelined many investors, and the number of sellers willing to meet the market has declined by more than 80 percent since 2022. Those who have been bold enough to take risk and purchase assets at a discount will likely be rewarded in the future as asset prices grow. Only time will tell.

This CRE opinion piece was written by Mark Allen, executive managing director and co-founder of Global Real Estate Advisors.





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