While the Texas multifamily market remains robust, affordability is becoming a greater challenge, requiring renewed focus and innovative housing solutions

By James Graber, MAI, Senior Managing Director

Texas continues to stand out as one of the country’s most durable multifamily markets. Strong population growth, steady job creation, and sustained in-migration have reinforced demand across the Texas Triangle for years.

By mid-2026, however, the story has become more nuanced. Affordability is no longer a single , statewide narrative. It is increasingly shaped by local market dynamics, product type, and renter income.
After the disruption of the 2023 and 2024 capital markets reset, the market has moved into a more stable phase. Occupancy has found a floor, rent volatility has eased, and transaction activity is slowly returning, albeit with pockets of asset-level distress.

That stability, however, is not consistent across markets, and affordability remains one of the most important constraints on future performance.

A Market That Stabilized Through Consistency

Across Texas, the return to balance has come less from a surge in demand than from its steady persistence.

Dallas–Fort Worth is a good example. The region worked through a significant wave of new supply without needing a sharp acceleration in leasing activity. Rent growth flattened, occupancy stabilized, and the market has been gradually regaining equilibrium. Pricing reflects that shift. Sale prices per unit peaked near $199K in 2022 and have since settled in the $191K to $192K range, signaling that price discovery is largely underway.

Houston followed a different path. The market moved through the cycle more gradually, without the same level of volatility seen in faster-growth metros. Rent growth cooled, occupancy softened and transactions slowed, but those changes occurred over a longer period. Today, occupancy has moved back toward the 93% to 94% range, pointing to a market that feels more steady than transitional.

Austin and San Antonio experienced a sharper cycle. These markets led the surge in rent growth earlier in the decade and also absorbed some of the most aggressive supply. That combination drove a faster repricing. The scale of development illustrates the pressure. In Austin, deliveries rose from roughly 11,000 units in 2021 to more than 32,000 in 2024 before moderating. Fundamentals are now stabilizing, but recovery remains uneven across submarkets.

Affordability Is Creating Clear Separation Across the Market

Texas still offers a relative cost advantage compared to coastal markets, but the gap between rent growth and income growth has become more apparent within individual metros.

In Dallas–Fort Worth, median income increased from about $76K in 2021 to roughly $95K by 2025. That represents meaningful progress, but it has not fully kept pace with rent increases earlier in the cycle.

This mismatch is starting to shape demand. Leasing activity is becoming more closely tied to income levels rather than broad population growth alone. Workforce housing and more attainable product types are seeing more consistent demand, while higher-cost assets are facing longer lease-up periods and greater pricing pressure.

Houston remains better balanced from an affordability perspective. Rent levels are generally lower than in other major Texas markets, and the relationship between income and housing costs is more balanced. In higher-growth markets such as Austin, affordability challenges are more pronounced, particularly in newer developments with higher cost bases.

Repricing Has Created a More Disciplined Investment Environment

The reset that began in 2023 is now reflected in valuations across Texas.

Cap rates have expanded, and sale prices per unit have adjusted accordingly. In Austin, pricing declined from around $221K per unit in 2021 to the high $180K range by 2025, with early signs of stabilization emerging in 2026.

The gap between buyers and sellers has narrowed, allowing transactions to move forward again. Investors are underwriting to more grounded assumptions, placing less emphasis on rapid rent growth and more on in-place income and achievable performance.

At the same time, some assets financed under prior growth expectations are beginning to enter the market. These situations are creating targeted opportunities, particularly for buyers focused on basis and long-term positioning rather than short-term upside.

Another development likely to influence investment decisions is Texas' repeal of the "traveling HFC" property-tax structure. By requiring greater local oversight and limiting the ability of Housing Finance Corporations (HFC) to extend tax exemptions outside their home jurisdictions, the legislation changes how future tax-exempt multifamily transactions will be structured.

During the 2025 legislative session, approximately 236 multifamily communities with an estimated combined value of nearly $8 billion utilized the traveling HFC model, underscoring how widely the strategy had been adopted.

This is the start of a legal battle, but appears to have the potential of deeply impacting each of these communities and, as a result, we are likely to see an influx of these assets come to market under distressed conditions.

Looking Ahead: Growth Remains, but It Is More Measured

The long-term fundamentals that have supported Texas multifamily remain intact. Job growth continues to expand the renter base, and population inflows still exceed the national average. Dallas–Fort Worth alone grew from approximately 2.74 million jobs in 2021 to more than 3.10 million by 2025, reinforcing the region’s depth of demand.

The difference now is pace. Growth is no longer driven by rapid acceleration. Instead, it depends more on income, cost alignment, and the ability of each market to absorb supply at sustainable rent levels.

Markets such as Dallas–Fort Worth and Houston appear further along in this stabilization process, with more consistent occupancy and pricing trends. Austin and San Antonio are still working through supply-driven pressures, which may extend the timeline for a full recovery.

The broader outlook remains constructive but more selective. The markets that perform best will be those that can align rent levels with income growth while managing supply in a disciplined way. Texas is still affordable compared with the national landscape. Within the state, however, affordability is no longer uniform. Without continued income growth or more targeted housing solutions, that pressure is likely to remain a defining theme through the next phase of the cycle.