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Writer's pictureRealFacts Editorial Team

Best Markets for Apartment Demand in 2nd Quarter


Apartments under construction

In the second quarter of 2024, the U.S. apartment market witnessed a remarkable surge in demand, driven by standout performances in several key markets. According to RealPage Market Analytics, the nation absorbed over 161,700 units from April to June, marking the best quarterly performance since the pandemic-era demand swell of 2021. This surge is particularly noteworthy as all of the country's 50 largest apartment markets recorded positive demand, but a few markets stood out for their exceptional absorption rates.


Chart of top demand performances

Top Performers: Dallas Leads the Charge


Dallas-Plano-Irving, TX, emerged as the hottest market, absorbing over 9,700 units in the second quarter alone. This figure surpasses the annual demand volumes for 38 of the top 50 markets, underscoring Dallas's dominant position in the national apartment market. The city's annual absorption also led the nation, highlighting its sustained demand for rental units.


Two other Texas markets, Austin-Round Rock and Houston-The Woodlands-Sugar Land, also recorded impressive demand. Austin absorbed 8,164 units, while Houston followed closely with 6,835 units. These markets have benefited from significant new apartment deliveries, fueling their strong demand.


Other Key Markets: Phoenix and New York


Outside of Texas, Phoenix-Mesa-Scottsdale, AZ, and New York-White Plains, NY, rounded out the top five markets. Phoenix absorbed 7,125 units, driven by a robust influx of new residents and a thriving local economy. Meanwhile, New York saw a demand for 6,761 units, reflecting its ongoing recovery and attractiveness as a residential hub despite high living costs.


Implications for Investors


1. Increased Rental Income: The high absorption rates in these top markets suggest strong rental income potential. Investors can capitalize on the demand by setting competitive rents that reflect the market dynamics.


2. New Developments: With the noted increase in new apartment deliveries in high-demand areas like Dallas, Austin, and Houston, there is a clear indication that development opportunities remain lucrative. Investors can explore new construction projects to meet the growing housing needs.


3. Property Value Appreciation: As demand continues to outpace supply in these markets, property values are likely to appreciate. This trend offers investors the potential for significant capital gains over time.


4. Diversification Benefits: Investing in multiple high-demand markets can provide diversification benefits. Markets like Phoenix and New York offer different economic drivers and demographic trends, helping to mitigate risks associated with concentrating investments in a single area.


5. Renovation and Upgrading Opportunities: In markets with older housing stock, the strong demand creates an opportunity for investors to acquire and renovate properties, thereby increasing their value and rental appeal.

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