In April, the Houston property market registered the highest median price ever and demand for single family home rental properties soared. The latest figures highlight how resilient the market is despite a bigger background of falling oil prices. As this latest BRIC Group news article explains, real estate analysts are forecasting a sturdy future for Houston property.
A healthy April for Houston property
Although sales in April fell slightly (0.6 per cent) on those for the same month last year, the Houston property market generally showed excellent results, particularly taking into account that 2015 was a record year. The median price for single family homes in Houston reached US$217,000 in April, a rise of 3.3 per cent and the highest price on record for the month of April. Properties within the US$150,000 to US$250,000 price bracket experienced especially big increases with a 7.8 per cent rise.
Houston rental properties in April performed particularly well, indicating that demand for rentals remains strong among new and existing Houston residents. The demand for single family homes rose by a giant 18.1 per cent while monthly rental rates for this type of property in the city rose by 2.6 per cent to US$1,811.
Commenting on the April figures, Mario Arriaga Chairman of the Houston Association of Realtors said, “Indicators continue to point to more sustainable market conditions, as mid-range homes sell well and consumers find they have better choice”. This wider range of properties on the market is reflected in April’s inventory levels – up to 3.6 months from 2.9 months.
Sturdy and diversified economy
The consistently low inventory levels are one of the reasons that real estate analysts believe the Houston property market is showing such resilience against a background of low oil prices. One of the speakers at the recent Greater Houston Builders Association 2016 midyear economic forecast event Mark Dotzour said that the main factor behind the market’s sturdiness is because it was not overbuilt when the economic slowdown started.
“There are not enough homes for sale,” Dotzour told attendees, “and there’s no massive overbuilding so we’re poised to come out of this really strong.” He pointed out that a typical economic cycle in Texas sees the residential property market mirroring oil prices – when the price of oil falls so does the property. However, this is not the case in the current scenario where the “low inventory is proving a blessing,” he said.
Other experts believe that the diversification of the Houston economy will mean that lower oil prices have less impact on the city’s economy in the short and medium-term. An economic consultant quoted in the Houston Chronicle said that the city’s expanding shipping industry and a booming healthcare industry will “keep it going strong… and these sectors will assure that Houston is a major economic force for decades to come”.
A look at the breakdown of the main employment sectors in Houston confirms this. When the oil and gas industries (both of which have experienced massive job losses in Houston over the last year) are not taken into account the rest of the private sector makes up a huge percentage of the local economy. The biggest sectors are the trade, transportation and utilities with a 20.5 per cent share, professional and business services accounting for 15.5 per cent and the education and healthcare sectors providing 12.7 per cent of employment.
“The diversification of the Houston economy beyond its traditional reliance on the oil industry has proved to be the key to its resilience,” says Dies Poppeliers, Managing Director of BRIC Group. “This plus the strength of the property market continues to give Houston excellent investment potential.”
BRIC Group, an investment company specialising in global real estate opportunities, offers US real estate investments including turnkey properties in Florida and Houston, and land plots in Florida. BRIC Group is also developing The Coral resort, in Northeast Brazil, a luxury beachfront resort with land and villa investment opportunities. BRIC Group has been creating wealth for its clients since 1996 and has offices in Brazil, Dubai (consulting office), Hungary, Spain and the US.
(Sources: Houston Association of Realtors, Houston Chronicle)