Houston Apartment Market Proves Resilient After Hurricane Harvey

Houston was not long ago the site of a terrible natural disaster, Hurricane Harvey. We should not forget, though, that Houston is a city of more than two million people—the fourth-largest city in the United States—with tremendous human, cultural and financial potential. Along with being a center of the oil industry, it is home to 25 Fortune 500 companies, NASA’s Johnson Space Center, and the world’s largest medical center.

In fact, global business consulting firm AT Kearney ranked Houston No. 8 on its 2017 Global Cities Outlook list, which evaluates the potential of cities around the world on factors such as business and innovation.[1] Houston’s competitiveness is on display now more than ever, and savvy investors are looking for investment opportunities in the area.

Houston Real Estate Market Shows Resilience

In late August 2017, Houston was hit by Hurricane Harvey. It was one of the most extensive natural disasters in the country’s history. Estimates place the cost of damage from the hurricane at $75 billion.[2] Nevertheless, Houston Mayor Sylvester Turner declared Houston “open for business” September 1. People left the shelters, cars and buses were on the streets again, power was being restored, and businesses were open. The Houston Astros baseball team played a doubleheader at Minute Maid Park the next day.[3]

Houston has faced weather emergencies before, as well as economic adversity, and has proven its resilience every time. Many people are surprised at how fortunate they are after experiencing such a huge disaster. This is particularly true in the multifamily real estate market. “I’m amazed at the results. It just seems small," Bruce McClenny, president of Apartment Data Services, said of the damage to apartment properties. His company surveyed 80% of the city’s multifamily housing stock and found damage reported at less than 2% of units.[4]

With significant damage at only four of our 22 Houston-area properties (3% of our units), we at CWS Capital Partners feel very fortunate. Our properties suffered less than some neighboring complexes, and even when there was damage on the first floor of a complex, the upper levels remained safe for residents to live in. Thanks to our extensive insurance coverage across the board and diligent property management teams, recovery work began right away.

Houston’s Multifamily Market Outlook

Before the hurricane, the Houston multifamily market was oversupplied due to the downturn in the oil industry in 2014 and continued building of apartments. In late august, there were over 47,000 vacant apartments in Houston.[5] These units will ease the temporary surge in demand for apartments while displaced homeowners look for permanent residences.

Estimates of the number of homes damaged in the hurricane range from 80,000 to 100,000,[6] creating a seemingly large temporary demand for apartments. The CEO of one Houston-based multifamily developer and manager said his company rented 170 apartments between January and August and 500 in the 2½ weeks after the hurricane. [7]    Although this anecdote paints a picture of frantic demand for apartments from Houstonians, we believe the increase in demand for apartments has been a bit more subtle than this based on the activity at our 6,198 units in Houston.  

Many property management companies, like CWS, did not raise their rental prices, in spite of the spike in demand. Despite rent freezes across the city, the average rent in Houston rose $12 to $996 in the aftermath of Hurricane Harvey.[8]

Although we do not know what the ultimate impact of Hurricane Harvey will be on the Houston multifamily real estate market, we are seeing encouraging signs as rental increases are starting to emerge.

Real Estate Investment Management in Houston

Houston is a city with a bright future, and Hurricane Harvey won’t delay its progress for long. Demand on the multifamily real estate market in Houston will be high in the mid-term, and there will be opportunities for real estate investment and repositioning.

CWS Capital Partners has been a leading real estate investment and management company in Houston for decades, with 22 properties in the city and its suburbs. Our experts know the city and the market well, and have a depth of experience that is particularly valuable during a time of rebuild and recovery. Contact us today to learn more about acquisition, development, and 1031 exchange opportunities in Houston and in other top markets. 

To learn more about our properties in Houston, please visit our affiliated CWS Apartment Homes website.


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.

Securities offered by CWS Capital Partners LLC are through an affiliated entity, CWS Investments. CWS Investments is a registered Broker Dealer, member FINRA, SIPC.