Ready to go big with your real estate investing business? Try Texas, where everything is bigger, including your opportunities for real estate. Take Houston, a city with a little bit of everything: diverse people, a thriving business climate, and sprawling suburbia. The Houston housing market provides a lot of choice for real estate investors. Here’s a few key things that make Houston an ideal rental property investment market.
Houston Population Growth
Some demographers estimate that the state’s population will more than double to 54 million people by 2050. A lot of that population growth will concentrate on Texas’ metropolitan areas, like Houston. Currently, this port city is the fourth largest city in the United States, with over 2.32 million people calling it home. For the greater metropolitan area, that figure swells to 7 million people, making the Houston MSA the fifth largest in the nation.
Data estimates from the US Census report Houston’s population grew 10.7% from April 2010 to July 2019. Growth is expected to continue. Real estate firm Cushman and Wakefield anticipates that from 2020 to 2029, Houston will add another 1.2 million residents, the second-highest number of new residents for any metro area. It’s a population growth of 17.2%.
Houston Job Market
When it comes to employment, Houston has a lot going for it. Traditionally, it’s been associated with the oil industry. While oil and energy represent a significant segment of Houston’s job market in total GDP, it is not the front-seat driver in Houston’s economy. In fact, no single industry dominates the Houston economy.
A few key components are:
· Houston has the largest US port in terms of total cargo tonnage handled. It’s one of the busiest ports in the nation for foreign trade. The ports and its associated businesses employ a lot of people, which is why trade, transportation, and utilities make up 19.9% of Houston’s employment.
· Professional and business services represent 16.5% of the Houston job market.
· Amazon selected Houston as one of its headquarters cities, bringing more employment into the region.
· The greater Houston Metro has one of the largest and most important industrial bases in the world. This manufacturing sector ranks second in GDP in the United States.
· The world’s largest medical complex, the Texas Medical Center, is in Houston. Numerous biotech companies and cutting-edge institutions support it.
This diversity, combined with Houston’s key role nationally in multiple industries, has helped shelter Houston moderately from pandemic-related job losses.
One study predicts that Houston will experience a moderate recession as a result of pandemic impacts. An analysis by Bauer College of Business projects that growth will begin again in the second half of 2021 before accelerating in 2022, driven in part by the return of higher oil prices.
The forecast expects that by 2024, Houston’s employment growth rate will return to 2.1%, which is the city’s average growth rate over the last 30 years.
Houston’s Housing Market
Unlike some of the other major metropolitan areas, Houston still has physical room to grow and develop. Its low-density sprawl is excellent for real estate investors looking for new construction options or fixing and holding properties.
Data from the Houston Association of Realtors® shows that in October 2020, the average price of a single-family home was $341,765, a historic high and a 15% year-over-year change. The median price was $270,000, the second-highest of all time. Even in the face of the pandemic, the market was experiencing a record pace of sales.
However, the US Census reports that only 42% of Houston’s housing units were owner-occupied. Real estate investors have ample room across the metro to find affordable investment properties to fix and hold and leverage substantial appreciation gains.
Houston Rental Market
Houston’s real estate association is unique because it tracks the residential lease property market. In October 2020, leases for single-family homes fell 11.1%. Rental rates also declined, with single-family homes averaging $1,882, a 5.5% year-over-year decline.
This is likely the result of the pandemic. That does not mean there aren’t opportunities for real estate investors to find properties below market value and occupy them with quality tenants.
Invest in Houston Real Estate
Houston’s biggest draw for the real estate investor is its economy. Houston is a vital economic engine to our entire country. The diversity in industry helps shelter Houston a bit from changes in one particular economic sector. This protection is good for real estate investors who need tenants who consistently pay their rent on time. The city’s also thriving, with significant population growth anticipated.
Don’t let a great opportunity pass you by. Let’s talk about how rental financing can get your real estate portfolio growing.