With the local economy and job creation growing at a ‘blistering’ pace, property in Houston is in seriously short supply. Latest figures point to one of the lowest inventory levels in a city where rentals are perhaps the only way of satisfying demand.
The latest ‘Houston Economic Indicators’ published by the Federal Reserve Bank of Dallas last month show a city enjoying a buoyant economy and employment. This is matched by a boom in property sales, boosted by the influx of new workers.
The Federal Reserve calls the 10.4 per cent rise in the Houston Business Cycle Index in September “blistering”. Job creation runs at similarly high levels with the energy and construction sectors producing thousands of new jobs – 3,100 posts were created in September in construction alone. As a result, the Houston unemployment rate sat at just 5 per cent, 0.2 per cent lower than the Texas figure and nearly 1 per cent below the national rate.
On the back of booming employment opportunities, commercial real estate in Houston is also thriving. CBRE report that both the office and industrial sectors are experiencing quarterly increases in the price per square foot. The Federal Reserve highlights the office sector where “more office space is on pace to be absorbed in 2014 than any year since 2006”.
New jobs equal new residents who all need homes in a city where property supply simply cannot keep up with demand. In September, 7,131 Houston properties were sold, the highest monthly figure since 2006. The median price of US$196,668 is also well ahead of the recession figures.
The Federal Reserve reports that the growth in new housing starts in Houston is “subdued due to the ongoing shortage of lots” and this deficit is clearly reflected in the September inventory figures. The number of properties on the market in Houston now stands at just 1.2 month’s supply.
The shortfall in supply plus rising house prices – the Federal Reserve claims that home affordability in Texas is now at its lowest level ever – means that the only property option for many new Houston residents is renting. The All Property Management Rental Ranking Quarter 2 Report ranks Houston in fourth position for rentals in the southwest. It estimates annual rental yields in Houston at a high 10 per cent with property appreciation at 2.95 per cent.
Source: Federal Reserve Bank of Dallas