Dallas-Fort Worth just hit an inflection point.
After years of record deliveries, the worst of the oversupply wave is passing. In 2024 and 2025, DFW delivered record apartment units. Vacancy hit 12%, a 20-year high. But construction is collapsing. The pipeline has shrunk for 11 straight quarters. In 2025, DFW delivered about 32,000 units. In 2026, completions are projected to drop to around 25,000. That's a 50% decline from peak. Q1 2026 data shows occupancy at 93.2%. Rents averaging $1,483. By late 2026, occupancy is hitting 93.5% and rents recovering to around $1,517. DFW is moving from an oversupplied market to an operator's market. Now let's talk about policy risk.
Los Angeles passed Measure ULA in 2022. It's called the mansion tax. 4% on real estate sales over $5.3 million. 5.5% over $10.6 million. But it applies to all high-value properties. Not just mansions. Multifamily apartments. Commercial buildings. Mixed-use sites. Everything over the threshold gets hit. Sales of multifamily-zoned properties over $5.3 million fell by nearly two-thirds after the tax passed. UCLA research shows the tax caused a causal reduction of at least 1,910 multifamily units per year. That's an 18% decline relative to pre-tax averages. Multifamily permits fell 27% post-tax.
Federal data shows only 7,363 multifamily units permitted in one recent year. That's a 46% drop from 2022. The lowest since 2013. Developers are leaving. They're shifting to suburbs like Burbank. They're going to other states. The tax raised about $1.19 billion. But revenue is falling short of projections. Fewer sales mean fewer transactions. And because of Prop 13, fewer sales also reduce ongoing property tax revenue. The net effect is a housing deficit, including fewer affordable units. The policy backfired. You try to tax the rich, but you end up destroying the supply you're trying to create. Here's what's really happening. You have two markets moving in opposite directions.
DFW is healing because supply is normalizing. LA is getting worse because policy is destroying supply. Capital is flowing to markets where supply is rational and policy doesn't punish you for building. DFW is getting capital. LA is losing capital. Operators in DFW are about to see rent growth. Operators in LA are about to see continued pressure. This is the moment where the market separates the winners from the losers. DFW operators who understand the supply inflection are positioning now. LA operators who don't understand policy risk are getting left behind. Supply cycles are predictable if you pay attention. Policy risk is avoidable if you're smart about where you deploy capital. DFW gets it. LA doesn't. This is the conversation happening in the rooms that matter.
Episode Sponsor: Rise 48 EquityRise 48 helps you protect and grow your wealth by investing in large multifamily apartment buildings. Vertically integrated property management. Vertically integrated construction. They do all the work.
rise48.com