Real estate experts recently analysed the property market in Houston and reached a number of key conclusions. Their findings confirm the investment value of apartment accommodation in the city and the tremendous potential behind Houston’s rental market.
The trends outlined by the experts are currently impacting construction in the city and likely to affect market patterns over the next few months. They include:
High Demand for Apartments
The experts sitting on the National Association of Real Estate Editors panel who met in Houston earlier this month pointed out that the city is currently experiencing a multi-family housing boom. They found that this surge in demand for apartments is particularly apparent in three areas of the city – the Energy Corridor, The Woodlands and the Inner Loop, all three highly sought-after locations because of their proximity to amenities.
The panel reported that the high demand for apartments is coming from two key sectors of the population. Firstly, young people attracted to Houston’s growing economy and employment market. Many are first-time buyers or prefer to rent a property because their sizeable student debt means they cannot afford to buy. Secondly, demand for apartments comes from the so-called baby-boomers who are looking to downsize.
In current market conditions, these buyers are faced with two alternatives: purchase a brand-new apartment or to source a property within the more affordable price bracket. Panelists pointed out that Houston has shortages in both these options.
High Cost of New Builds
The experts also stated that new construction in Houston is experiencing two obstacles, namely the high price of land (at a premium in many parts of the city) and rising labour costs. Expensive land and labour plus the low rate of new construction during the recession mean that Houston currently has an acute shortage of new builds.
Panelists found that one sector within the property market that is expanding within Houston are Class A luxury apartments and there are several high-end complexes under construction. Some of these are being built on sites that previously held Class B and Class C apartments.
Developers are choosing to demolish these blocks and build Class A in their place, particularly in prime locations. This trend is exerting further pressure on the affordable housing sector.
Rental Prices Rising
The shortage of property in Houston plus the growing population is driving the rental market upwards and rates have increased considerably over the last few months. Experts believe that this situation will to continue for the foreseeable future since the housing market is unable to keep up with demand, particularly outside the high-end sector.
Source: Chron Prime Property