Rental Competitivity in Texas in 2022: El Paso Hotter Than Dallas, Austin & Houston

• El Paso was Texas’ most competitive rental market in 2022, followed by McAllen and Dallas.
• Central Texas and Lubbock joined El Paso on the list of Texas markets with the most significant shifts in competitivity this year. All were hotter in the first part of the year.
• The fast pace of apartment construction was not enough to slow down demand in markets like Houston and San Antonio, which heated up in peak rental season.
• Houston was 60% more competitive in peak rental season than the first part of the year.

Cities in Texas continue to attract Californians and other out-of-state renters looking to enjoy a more affordable lifestyle compared to big coastal cities as well as better job opportunities in high-income sectors. Although the Lone Star state continues to be a very attractive place to live and do business, the competition for apartments in Texas was relatively reasonable compared to the national landscape. This was mainly due to the state’s strong pace of apartment construction during the last few years and all throughout 2022.

But, when — and why — did Texas’ main rental markets get hotter in 2022? To find out, RentCafe.com looked at five important factors based on Yardi Systems apartment data, including:

• the number of days rentals were vacant
• the percentage of apartments occupied by renters
• the number of prospective renters competing for an apartment
• the percentage of renters who renewed their leases
• the share of new apartments completed in 2022

Based on these metrics, each rental market in Texas was rated using a Rental Competitivity Index (RCI), during three different timeframes: the first part of the year (January to April), peak rental season (May to August) and the full year of 2022. The value of each RCI score shows if a market was highly competitive (90 points and above), competitive (between 45 and 90 points) or less competitive (less than 45 points).

El Paso led Texas’ hottest areas for renting an apartment in 2022

When it came to renting an apartment, Texas was less competitive in 2022 (with an RCI score below 45). In fact, it lagged behind the more competitive California as well as the red-hot state of Florida and even the national RCI score of 59.9.

More precisely, most Texas markets were more competitive in the first part of the year, including places such as El Paso, McAllen, Dallas, Fort Worth and Austin. At the same time, San Antonio and Houston got hotter during peak rental season.

In particular, El Paso was Texas’ hottest market in 2022 with an RCI of 77.2. More than 96% of apartments here were occupied this year and very few new rentals were built. As such, the area's supply of apartments increased by a mere 0.7% this year. In addition, more than 60% of renters decided to renew their leases, which only fueled competition in the area.

Similarly, McAllen emerged as the state's second hottest market, mirroring trends in El Paso. Although there were only nine renters competing for the same vacant apartment here (which is fewer than in most Texas areas), apartment occupancy averaged 96.2% this year. Moreover, nearly 68% of renters decided to stay put and renew their leases. This led to an RCI score of 70.2, almost double the state's 44.4 score.

Further north, more than 95% of apartments for rent in Dallas were occupied this year, which was partly due to the fact that nearly 63% of renters decided to renew their leases. As a result, Dallas' RCI score was 56.9.

Nearby, Fort Worth saw similar trends, reaching an RCI score of 52.8. Interestingly, El Paso, Dallas and Fort Worth saw the most interest from renters in all of Texas this year, with an average of 13 to 15 candidates competing for the same vacant apartment.

Central Texas saw the highest shift in competitivity in 2022

This year, competitivity fluctuated the most in Central Texas, but El Paso and Lubbock also saw significant shifts. Granted, all three markets became less competitive during the peak rental season, thereby making it easier for renters to secure an apartment. Here. fewer lease renewals and lower apartment occupancies compared to the first part of the year — as well as a higher share of new apartments built in 2022 — were the main factors that led to the change.

Specifically, Central Texas was 21.2% less competitive in the summer months when its RCI dropped 12.1 points to 50.6. The lease renewal rate for the area went from 62.1% in the first months of the year to 57.1% in peak rental season. At the same time, the occupancy rate declined from 95% to 93.4%, which helped slow things down.

Notably, El Paso — Texas’ most in-demand rental market in 2022 — was nearly 18% less competitive in peak rental season versus the first part of the year when its RCI was close to 90. The drop of 15.8 points in its RCI score can be attributed to fewer lease renewals (58.4% versus 61.4% in the first four months of the year); a lower occupancy rate (96% versus 96.7%); and new apartments added to the market (0.7% through August).

Meanwhile, renters in Lubbock faced a market that was 15.3% less competitive in peak rental season. The area recorded similar shifts in occupancy and lease renewal rates as Central Texas, plus the lowest number of renters competing for an apartment in all of Texas — eight applicants in the first part of the year and just five in peak rental season. Surprisingly, apartments in Lubbock filled faster during the rental season than in any other market in the state — just 23 days, to be more precise.

San Antonio, Houston were the major Texas markets that got hotter in peak rental season

Houston was 60.3% more competitive in peak rental season than the first part of the year. The extra heat came from the high lease renewal rate — 58.6% in peak season compared to only 49.6% in the first part of the year. Renter interest here was similar to that in Austin, with 12 prospective renters competing for one vacant apartment in peak season.

And, although the number of new apartments that opened in Houston during its hottest months was higher than the first part of the year (1.8% through August versus 1% through April) this did not affect competitivity.

Next up, San Antonio ranks seventh, right after Austin as far as rental competitivity in Texas in 2022. The market was one of four Texas areas that got hotter during rental season after a 7% increase in its RCI score. This, despite its increased share of new apartments that were added to the market through August (1.7% compared to 1% through April).

That said, a vacant apartment in San Antonio was snatched up faster in rental season — after 29 days versus 33 days in the first part of the year. However, the number of renters competing for an apartment stayed the same throughout the year — 12, the same as in Austin.

Conversely, Dallas was hotter in the first part of the year when its RCI reached 55.7. A higher apartment occupancy rate and more lease renewals than in its rental season kept competition high in the first four months of 2022. Later, the fast pace of apartment construction (Dallas' total supply of rentals increased by 2.1% through August) helped slow things down during peak season, when the metro was 2.2% less competitive.

Even so, Dallas — or its suburbs, to be more specific — continued to be the top destination for out-of-state renters coming from coastal areas, especially California. In fact, Irving was named the number one magnet for relocating renters in the U.S. in a report by StorageCafe.

Likewise, Austin (the Texas mecca for tech businesses) also heated up in the first four months of the year. This was mainly due to the higher lease renewal rate during that period (58.2%, compared to 55.4% in rental season). Nevertheless, the soaring share of new apartments added to the market through August — a 2.9% increase, the highest among Texas’ major markets — helped ease competitivity by 9.1% in peak rental season.

Meanwhile, the Midland-Odessa area was the Texas market where it was easiest to find a place during the rental season: Its RCI increased by 23.4% compared to the first part of 2022 to reach 16.4. Here, the high share of new apartments that opened up in the area through August (3.5%, the highest share in all of Texas in 2022) was enough to keep the apartment-hunting process less intense compared to other cities in the region.

Methodology

RentCafe is a nationwide apartment search website that enables renters to easily find apartments and houses for rent throughout the U.S.

To compile this report, RentCafe.com’s research team analyzed Yardi Systems apartment data across 135 rental markets in the U.S. The data comes directly from market-rate large-scale multifamily properties of 50 units and more. Fully affordable multifamily properties were excluded.

The markets were ranked based on a market competitivity score. To calculate each market’s score, we used five metrics and their averages for January through August 2022: apartment occupancy rate, average total days vacant, prospective renters per vacant unit, the renewal lease rate, and the share of new apartments completed in the first eight months of 2022 compared to the overall supply as of December 31, 2021.

We then compiled an average ranking by assigning a percentage weight for each metric: 30% for apartment occupancy rate, 15% for average vacant days, 15% for prospective renters per vacant unit, 30% for renewal lease rate, and 10% for the share of new apartments.

"First part of the year" refers to the timeframe between January and April 2022 and "peak rental season" refers to the timeframe between May and August 2022.

In this study, the terms "market," "metro," "area" and "location" are used interchangeably and are defined as Yardi Matrix markets.

The Central Texas market encompasses Bryan-College Station, Corsicana, Killeen, Temple and Waco.

The McAllen market includes Brownsville, Harlingen, and McAllen.

The Fort Worth market includes Fort Worth, Arlington, Euless, Bedford, Grand Prairie, North Richland Hills, Grapevine, Haltom City, Hurst and Keller.

The Austin market is made up of Austin, Round Rock, San Marcos, Cedar Park, Pflugerville, Georgetown, Buda, Leander and Hutto.

The San Antonio market consists of San Antonio, New Braunfels, Universal City, Leon Valley, Schertz, Live Oak, Converse and Seguin.

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