Rents are dropping in Texas, and the reason is surprisingly straightforward: an aggressive surge in housing supply. In a recent discussion, Derek Thompson, a contributing writer at The Atlantic, explained to Opinion columnist Ezra Klein how cities like Dallas and Austin have defied the national trend of skyrocketing housing costs.
Austin saw average rents decline over the past 18 to 24 months after building an enormous number of homes in the 2010s and early 2020s. But Thompson finds Dallas even more impressive. Between 2019 and the early 2020s, the Dallas metro area added a population equivalent to urban Boston—hundreds of thousands of new residents. If Dallas had followed the patterns of Los Angeles or San Francisco, home prices would have soared to astronomical levels. Instead, housing prices in Dallas actually fell over the last three and a half years.
Dallas builds more housing today than any other metro in the country. Construction increased per capita throughout the period, allowing the housing market to work as it should. Housing is not a special kind of good; it responds to supply and demand like any other. Restrict supply, and prices go up. Add supply, and prices stabilize. Add enough supply, and prices can go down.
Thompson emphasizes that the explanation isn't about billionaires or corporate interests—Texas has plenty of both. What sets Texas apart is its different set of rules, customs, and permitting regulations that make it easier for supply to meet demand. The result is something even better than a promised rent freeze: actual rent reductions. By making it easier to build, Texas has shown that the only real cure for a housing crisis is a relentless focus on increasing supply.