Dallas Apartments: When Supply Can't Keep Up, Investors Win Big

The Dallas-Fort Worth metro area is undergoing a quiet revolution in its apartment market: demand is surging, but new construction can't keep pace. This imbalance is creating a rare opportunity for investors seeking stable rental yields and long-term growth. Let's dive into the numbers behind this shift—and why now is the time to pay attention.

A Construction Slowdown, Not a Collapse
The data is clear: apartment construction in Dallas has hit the brakes. In 2024, construction starts fell by nearly 50% to 18,400 units, a full 10,000 units below the 10-year average. By early 2025, units under construction had dropped to 36,000—a 45% decline from the 65,000 units in development just two years prior. This slowdown isn't due to a lack of interest but rather rising construction financing costs and a cooling rental market in 2023–2024, which made developers cautious.

Even with reduced activity, the pipeline remains robust. Approximately 18,000 units are slated for delivery in 2025, but this is still half the 41,650 units completed in 2024. The key takeaway? Supply growth is now out of sync with population trends—and that's where the opportunity lies.

Why Demand Keeps Rising
Dallas-Fort Worth is a magnet for people and jobs. The metro added 153,000 residents between 2022 and 2023, leading the nation in population growth. Key drivers:
- Corporate relocations: Companies like Goldman Sachs and AT&T are expanding regional offices, boosting employment.
- Suburban sprawl: Northern suburbs like Frisco/Prosper, Plano, and McKinney are booming, with Collin and Denton counties growing by 50% since 2010.
- Workforce housing demand: Affordable units (renting for ~$1,169/month) are 91.6% occupied, outperforming luxury properties.

These trends are fueling a 30,024-unit net absorption in 2024—far exceeding pre-pandemic levels. By mid-2025, 13,500 units were leased despite only 12,000 new deliveries, proving demand is outpacing supply even as construction slows.

Rental Markets: Bottoming Out, Then Rising
After six straight quarters of declines, rents are poised for a comeback. Here's the breakdown:
- 2024: Rents fell 1.5% year-over-year, dragged down by oversupply and concessions (e.g., 6–8 weeks of free rent at 58% of Class A properties).
- 2025 Outlook: A 1.5% rent growth is projected by year-end, with high-end rents rebounding first as vacancies ease. Workforce housing, already up 1.1% in late 2024, remains a safe bet.

Where to Invest: Submarkets to Watch
Not all neighborhoods are equal. Focus on areas with strong population growth, job ties, and transit access:
1. Frisco/Prosper: A tech and corporate hub with 50% population growth since 2010. Absorption here outpaces supply by 10% annually.
2. McKinney/Allen: A commuter-friendly market where 2,100 units were filled by mid-2025—more than any other submarket.
3. Workforce Housing in Plano: Rent-resistant and 91% occupied, these units offer steady cash flows.

Avoid areas like Denton and southern Fort Worth, where absorption lags (e.g., 836 units vs. 2,000+ in top submarkets).

Risks to Monitor
- Concessions: Over 40% of properties still offer free rent, which could delay full rent recovery until 2026.
- Economic headwinds: A recession could curb demand, though Dallas's diversified economy (finance, tech, healthcare) buffers it better than single-sector markets like Austin.
- Grid constraints: Power shortages for data centers and warehouses could indirectly impact housing demand.

Investment Playbook for 2025–2026
1. Buy into workforce housing: Steady occupancy and low competition make these units a “bond proxy” for income seekers.
2. Target northern suburbs: Frisco/Prosper and McKinney offer both rental growth and equity upside as populations expand.
3. Avoid overbuilt luxury markets: High-end vacancies hit 11.2% in late 2024—wait until rents stabilize before diving in.

The Dallas-Fort Worth apartment market is at an inflection point. With supply constrained and demand firing on all cylinders, this is a buyer's moment—if you pick the right spots.

Final thought: In real estate, timing is everything. Dallas's supply-demand imbalance isn't a blip—it's a trend. Investors who act now could reap rewards for years.