With job creation at one of the highest rates ever, Houston is currently riding a wave of economic prosperity. Along with buoyant employment, Houston’s property market is also enjoying record activity levels with short supply and a rise in rental prices.
The February The Economy at a Glance report issued by the Greater Houston Partnership examines key areas of the Houston economy, particularly employment, property and air passenger traffic. All three show positive figures with an excellent outlook for 2015 and beyond to 2019.
Houston Job Creation
Job creation in the metro area of Houston was 5.3 per cent in 2014, one of the highest rates on record and in the country – the city ranked third in US metro areas. Some sectors of the Houston job market had even higher rates of new employment such as the construction section with 19.6 per cent more jobs and oil field services with 15.8 per cent.
Some analysts from the Greater Houston Partnership predict that the recent drop in oil prices (50.8 per cent since June 2014) will lead to job losses in the energy sector in the city. However, they also believe there is enough momentum in other employment sectors to sustain Houston’s growth.
Backing this belief are forecasts from the economist, Ray Perryman, who states that over the short term, output (real gross product) in Houston is projected to increase at 4.47 per cent annually from 2015 to 2019. Perryman predicts an annual job creation rate of between 60,000 and 70,000 over the next five years.
Houston Property Market
In the commercial sector, CBRE reports that the office vacancy rate in Houston in 2014 was 11.6 per cent and that 5.5 million square feet of office square was absorbed, the second highest for the last two decades. Industrial space also had a record breaking year in 2014, both for absorption and vacancy rate.
Regarding residential property, both sale volumes and prices in Houston hit their highest ever last year. Median prices for single family homes increased by 8.7 per cent with sales up by 2.8 per cent – December was a particularly busy month with sales up 11.6 per cent.
On the supply side, levels reached rock bottom with just 2.5 months’ supply on the inventory books in December, less than half the national average. An increase in residential construction may help shift the balance – 17,600 new units entered the Houston property market last year and CBRE calculates 20,000 will be delivered this year. Despite this influx of new property, rental properties continue as a favoured option for many people in Houston and the Greater Houston Partnership reports that rental prices are continuing to rise.
Houston Air Travel
Reflecting the city’s increased employment are the record levels of air passenger traffic at Houston’s two airports. 2013 was itself a record year, but figures for 2014 soared even higher. The 53.2 million passengers in 2014 represent 4.5 per cent more than the previous year. Domestic traffic had the lion’s share with 41.9 million passengers, an increase of 3.5 per cent and international traffic grew by 9.2 per cent.
Source: Greater Houston Partnership