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6%
year returns average on par with those for Class B complexes.
3% Some investors with long-term hold strategies are using the
opportunity to trade into a higher-quality asset now offering a
0% similar initial yield.
8* 00 02 04 06 08 10 12 14 16 18*
• Sales of properties priced between $1 million and $10 million
made up 43 percent of sales over the past 12 months. The
Sales Trends average first-year returns for these properties was 6.1 percent.
Sales Price Growth
rice per Unit (000s)
* Cap rate trailing 12-month average through 3Q; Treasury rate as 16%
$125 of Sept. 28
Sources: CoStar Group, Inc.; Real Capital Analytics
Year-over-Year G
$100 12%
$75 8%
Dallas/Fort Worth
3Q18 – 12-MONTH PERIOD
Employment Trends EMPLOYMENT:
Local Apartment Yield Trends
Metro United States 3.3%
Apartment Cap Rate
increase 10-Year
in total Treasury Rate
employment Y-O-Y
6.0%
Year-over-Year Change
• Roughly
12% 117,600 positions were added in the Metroplex
4.5% over the past 12 months. Job additions were heavily con-
9%
centrated in professional and business services, as well
3.0%
as leisure and hospitality.
Rate
6%
1.5% • The market’s unemployment rate remained tight during
3%
the third quarter at 3.5 percent, approximately 20 basis
0% points below the national rate.
0%
14 15 16 17 18* 00 02 04 06 08 10 12 14 16 18*
Year-over-Year Growth
demand continues to encourage apartment
$100 12% developers.
Units (000s)
24
Quarterly completions have averaged more than 6,000
16 units since mid 2016.
$75 8%
• $50
More than 50,000 apartments are underway
4% across the
8
Metroplex with completion dates scheduled through
0 early 2021.
$25 0%
14 15 16 17 18* 14 15 16 17 18*
8%
Metro United States 30 basis point decrease in vacancy Y-O-Y
7%
• Quarterly net absorption reached over 8,000 units for the
Vacancy Rate
* Forecast
Multifamily Research | Market Report
DEMOGRAPHIC HIGHLIGHTS
3Q18 MEDIAN HOUSEHOLD INCOME 3Q18 AFFORDABILITY GAP MULTIFAMILY (5+ Units) PERMITS
*Mortgage payments based on quarterly median home price with a 30-year fixed-rate conventional mortgage, 90% LTV, taxes, insurance and PMI. **2017-2022 Annualized Rate
for the
12%first time.
Ellis County 4.5% 2.3% -10 $1,011 2.5%
SUBMARKET TRENDS
• Heightened
9% competition continued to compress cap
Hunt County 3.0% 2.6% -80 $794 6.9% rates, evidenced by the 50-basis-point decline during
Rate
SALES TRENDS
the past
6% year to an average of 5.9 percent.
Southwest Dallas 1.5% 3.0% -230 $876 8.0%
Outlook:3%Increased interest rates could begin to place
Burleson/Johnson County
0% 3.1% 10 $976 6.3% upward pressure on cap rates in the near future and
widen pricing
0% expectations between buyers and sellers.
14 15 16 17 18* 00 02 04 06 08 10 12 14 16 18*
Northwest Dallas 3.2% -120 $928 5.1%
$100 12%
Units (000s)
0 $25 0%
14 15 16 17 18* 14 15 16 17 18*
7%
e
Multifamily Research | Market Report
CAPITAL MARKETS
Fed meeting. After the Federal Reserve lifted overnight rates and
Apartment Mortgage Originations maintained a positive economic outlook, long-term interest rates have
By Lender
pushed higher. The 10-Year Treasury yield has quickly traded toward
100% the 3.25 percent range, which is prompting lenders to pass on the
Percent of Dollar Volume