The multifamily market in Houston and other Texas cities (Shutterstock image)
HOUSTON — Real estate is still a strong market in the Houston area, but the demand for more multifamily housing units is also still strong. According to Brad Dillman, chief economist with Cortland, the demand for multifamily homes in the form of condominiums and apartment was higher than average in 2018.
"The percentage growth in the multifamily stock in Houston has slowed down a lot," Dillman said.
However, Dillman said it slowed because the Houston market was ahead of other regions that are still building to their multifamily inventory.
Houston and the surrounding communities saw a surge in new construction for apartments and condominiums in 2014 and 2015, which were beginning to hit the market for leasing availability as late as early 2017.
As a result, the construction of multifamily units dropped, but Dillman said Houston remained ahead of the curve.
Dillman added that the slow recovery from the recession slowed home buying in 2013, which created a boom in the multifamily housing market in major cities throughout the U.S.
This has also been fueled by what Dillman called the "mortgage unaffordability" in 2018, which has also fueled demand in Houston and other communities for more multifamily housing units.
For Houston, Dillman anticipates the following:
Compared to other markets, Houston has a relatively low percentage of inventory under construction (2.5%, or about 14,700 units)Rent growth likely to pick up slightlySuburban submarkets will likely continue to outperform due to lower levels of inventory growth (2.2% compared to 6.4% in the cores), lower rent levels, and the offering of relatively lower density-style of productForesee a bit of lift in the Houston-area due to weakness in the last half of 2018
Dillman said as long as job growth in the Houston area remains strong, the Bayou City will continue to enjoy a robust demand for multifamily housing in Houston’s urban core, as well as suburbs in Greater Houston and surrounding counties.
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