HOUSTON – (By Dale King, Realty News Report) – Apartment rents in Houston showed clear improvement in early 2021. ApartmentData.com’s chart of rental prices and occupancy for 2019, 2020 and the first four months of 2021 reveals fluctuations, but a noticeable upward trend emerges as the data advances into 2021.
After a low point in December—when average rent hovered around $1,040 per month and occupancy was just above 87%—the trend line moves upward. By May 2021, ApartmentData.com reported Houston apartment occupancy at 89.6%, with rents for units averaging about 886 square feet near $1,073 per month.
April proved especially strong, with nearly 5,400 apartment units absorbed. “April was one of the strongest months ever for the Houston apartment market,” said Bruce McClenny, president of ApartmentData.com. He noted that April ranks among the top three apartment absorption quarters since 2015.
McClenny expects the momentum to continue. “Traditionally, we are in the leasing season,” he said. With pandemic recovery progressing, “I would not be surprised if that number really jumps over the next two to three months.”
Another chart in McClenny’s report shows rent movement across property classes. After Class A, B, C and D properties all recorded negative rent changes during 2020, three of the four classes returned to positive territory in early 2021.
First Quarter: As of March 31, 2021, Class A rents increased by $39 per month, Class B rose $12 per month, and Class C edged up $2 per month. Class D rents declined by $8 per month.
For the entire year of 2020, all four classes combined saw average rents fall by $9 per month on the lease market.
Over the past 12 months, McClenny said rent growth in Houston has recovered modestly but has not accelerated dramatically. Last year overall lease costs rose by just 0.6%, and a total of 17,962 units were absorbed during that period.
Houston: 17,000 Units Under Construction
In the past 12 months, 80 communities with 22,368 units opened in Houston. Another 64 communities with 16,954 units are currently under construction, and 97 communities totaling 28,059 units are proposed.
McClenny identified five Houston neighborhoods that were particularly active over the previous three months:
- The Heights/Washington Avenue region expanded 23.8%, with 4.9% of units absorbed into the market.
- Katy/Cinco Ranch/Waterside rose 18.5%, with 3.5% of available apartments absorbed.
- The Woodlands/Conroe South increased 18.4%, with an absorption rate of 3.0%.
- The Montrose/Museum/Midtown area grew 20.6%, with an absorption rate of 2.5%.
- Lake Houston/Kingwood grew 14.9%, with a 3.6% apartment absorption rate.
McClenny’s report also highlights employment trends. Job growth in Houston declined from 1.7% (54,400 jobs) in 2019 to -6.5% in 2020, when more than 206,000 jobs were lost. So far in 2021, employment has improved by about 60,000 jobs, an increase of roughly 2.0%.
The ApartmentData.com report provides snapshots for other major Texas metros as well:
- Dallas/Fort Worth: Occupancy stood at 91.4% in early May 2021. The average rent for an 878-square-foot unit rose to $1,216. Over the past 12 months, rental rates in the region grew 3.1%, with 25,232 rental units absorbed.
- San Antonio: Occupancy reached 90.4%, with average unit size around 856 square feet and rents near $1,018 per month. Rents increased 2.8% year over year, and 8,461 units were absorbed in the past 12 months.
- Austin: Occupancy was 90.0%. For an average 875-square-foot unit, rent averaged $1,335 per month. Austin reported 1.2% rental rate growth over the past year, with 10,171 units absorbed.
May 12, 2021 Realty News Report Copyright 2021
For additional context about Texas real estate, see the book Houston 2020: America’s Boom Town – An Extreme Close Up by Ralph Bivins.