RENT Magazine Q4 '21

details, a portion of the polar vortex spread over southern Canada while something called the Arctic Oscillation pushed the jet stream as far south as the Gulf of Mexico, drawing a pool of very cold air over Texas. The result was snow and ice in a region not equipped for snow and ice. In a state known for producing energy, the power grid failed in some locations and fuel prices temporarily went atmospheric. Over 200 deaths were attributed to the winter storm. As a result, long-term reliability of the Texas power grid came into question. Further, the state’s lower- than-average vaccination rate likely is responsible for its higher-than-average hospitalization rate— many of Texas’ counties are now hot spots based on state data. 22 And Hurricane Ida just brushed the southeastern edge of the state, reminding everyone of the risk of wind and flood damage in the Houston-Galveston corridor. These headlines may distract investors from key demographic and economic data, including the fact that four of the 15 fastest growing U.S. cities are in Texas: San Antonio, Austin, Fort Worth and Frisco. 23 Austin has been at or near the top of that list for a decade, attracting tech employers and new workers every day from around the country. These sunbelt cities benefit from relatively good weather and highly diverse economies. Texas also offers a very pro-business environment and no income tax. Like Arizona, Texas state law preempts mandatory inclusionary zoning and rent control, in sharp contrast to the West Coast. 24 According to Marcus & Millichap, the urban core in Dallas recently posted its strongest absorption of apartment units in more than 20 years. 25 Rents are up nearly 10% (YOY) in downtown Austin. 26 Vacancy is dropping across multiple submarkets in San Antonio. 27 The major markets along Interstate 35 are exhibiting positive signals for rental housing. Of course, competition from new construction is always a concern in Texas, especially in communities on the edge of development. COVID resurgence may hinder household development and job growth. Finally, the current political environment, while attracting many Americans, may give pause for other would- be Texans (or socially-conscious businesses considering expansion into the Lone Star State).


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