Houston’s multifamily real estate market has been through a lot in the past six months, but the Class A housing market is making a notable recovery, which is providing new impetus to invest in Class B properties as well as recovering Class A properties.
The Houston multifamily real estate market is not just making a comeback after the slowdown marked by the state of the oil industry and Hurricane Harvey damage, it is roaring. This is true in Houston proper and its suburbs. Now is a good time to consider investing in new properties or in Class B communities ready for repositioning.
Luxury Multifamily Apartments Making a Comeback
Today, renters in a few Houston areas can still spot the most luxurious apartments on the market by their incentives—rent now and get the first month free, for example. But those incentives are disappearing fast, as the market bounces back.
Houston had seen a market downturn as a result of the collapse of oil prices, which was badly timed for the city’s developers. The local real estate market was riding high in the third quarter of 2014; construction starts were at a peak when oil prices began to plummet. With a tremendous number of luxury units under construction, that market was inundated, just as the condition of the local oil industry strongly curtailed demand.
As of mid-2017, they were still down almost 2% from a year earlier, but they were already showing small growth increments in six of the seven prior months. By year end, Houston absorbed 17,491 units. This year, at least one expert estimates that one apartment will be needed for every 10-11 people in the city. However, according to Axiometrics research, it’s likely that only 6,422 new units will hit the market in 2018, with even less (1,497 units) expected in 2019. The supply and demand fundamentals will shift toward equilibrium as the supply delivered to the market in prior years is absorbed.
In spite of the hit the local economy took as a result of the oil industry downturn and the devastation from Hurricane Harvey, job growth in the Houston metropolitan area is continuing and the rental market is rising in tandem. Experts forecast 2.3 percent population growth in the metropolitan area in 2018. The strong presence of innovative technology companies there made it one of only eight U.S. cities in the world’s Top 25 “cities of the future,” according to a study published last June by global management consulting firm A.T. Kearney. Additionally, the Class A apartment market should receive a boost from the gradually reviving oil industry.
Multifamily Investment Opportunities in Houston
The Houston multifamily housing market offers a variety of investment opportunities in newer luxury properties and in older properties ripe for repositioning. Consider entering the market while it’s strong.
CWS Capital Partners has a strong presence in Houston, with 21 properties in the city proper and others scattered throughout its suburbs. Our experts know the market well and can guide you in selecting a Houston property that meets your investment goals. This might include making a 1031 exchange.
Contact us today to learn about all of our investment options.
The information provided here is for your general informational purposes only. It should not be considered a recommendation or personalized advisory advice. CWS has made this third party information available from authors it believes are knowledgeable and reliable resources. However, its accuracy or completeness cannot be guaranteed and sentiment may change due to legal or economic conditions.
All investments involve risk including the possible loss of principal. You should familiarize yourself with all risks associated with any investment product before investing.
Advisory services are provided by CWS Capital Partners LLC, a registered investment advisor.
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