What Market Always Adds Lots of Supply, Yet Maintains Core-Worthy Stability & Outperformance?

Here’s some trivia: There’s only one U.S. market that has, from prior to COVID-19 in February 2020 through July 2022, expanded its job base at least 8% and saw market-rate renter incomes grow at least 22%, according to data from RealPage Market Analytics. This market has also added more apartment renters than anywhere else in the country since the start of 2020. This market has outperformed the U.S. average on occupancy growth, rent growth, revenue growth and on resident retention. During the Great Financial Crisis, this apartment market held up better than “core” metros like New York and San Francisco – and also significantly better than hot Sun Belt metros like Austin and Phoenix. In the 2010s decade, this market added more new apartments than anywhere else in the country and yet still outperformed U.S. averages in revenue growth, trade-out and resident retention. And in 2021, this market recorded 21% more in apartment sales than any other metro in the U.S. If you haven’t already figured it out: It’s Dallas. I’ll put this up for debate: If you’re an investor targeting the textbook definition of a “core” market, how is Dallas not in the top five of that list, if not #1? The skeptics out there will undoubtedly respond: “Too much supply!” While Dallas/Fort Worth does lead the nation in the total number of units under way (as it does almost every year), DFW ranks 29th (29th!) for supply expansion rate… meaning that relative to size, Dallas is adding lesser supply than places like Denver, Seattle, Miami, Austin and Raleigh/Durham (among many others). Few, if any markets, offer the robust combination of liquidity and demand fundamentals. Few, if any, offer as much relative stability in down times combined with the upside of good times.