HOUSTON – (By Dale King, Realty News Report) – Rising single-family home sales in Houston are lifting the rental market as well, according to Colliers’ report on the multifamily market for the second quarter of 2021.
“Houston’s single-family home sales increased 13.6% year-over-year, pushing home prices to record levels,” Colliers notes. “That trend has helped the multifamily market, with occupancy rising from 88.4% in Q2 2020 to 90.7% in Q2 2021.”
The average monthly rent for multifamily units climbed from $1,047 to $1,116, a 7% annual increase. Demand accelerated notably between quarters, with more than 15,800 units absorbed in Q2 compared with almost 4,800 in Q1. At the same time, more than 16,000 units are under construction and roughly 28,000 units are proposed.
Recent developments include a project by McNair Interests, affiliated with the ownership group of the NFL’s Houston Texans, which broke ground on a 330-unit apartment community in the Westchase District of west Houston. The 400,000-square-foot project, Remy on the Trails, is located at 400 West Sam Houston Parkway South at Deerwood Road.
The Colliers report covers the Houston-The Woodlands-Sugar Land metropolitan area, which has a population of about 7.2 million — a figure that has grown 7.5% over the past five years. Forecasts project population growth of roughly 7.6% between 2020 and 2025.
In-migration is a major driver of Houston’s housing expansion. Zonda ranks Houston alongside Dallas and Phoenix among the top markets for population gains driven by relocation.
Multifamily conditions are improving in many U.S. markets. Nationally, asking rents for multifamily units rose another 8.3% in July, producing a year-to-date increase that pushed average rents to $1,510, according to Yardi Matrix. These back-to-back record months indicate a faster-than-expected recovery across the multifamily sector, especially in gateway metros where lost ground is being reclaimed quickly. San Jose led growth with 3.6% month-over-month, followed by Boston at 3.2% and New York at 3.0%. Of the 140 metros Yardi Matrix tracks, 50 recorded double-digit year-over-year rent growth in July, and 129 showed positive year-over-year growth.
Rents for single-family rentals in build-to-rent communities are rising even faster, up 12.8% year-over-year nationally. Occupancy for those communities is also improving, up 1.2% year-over-year.
“Demand for multifamily has produced a remarkable recovery across the country,” Yardi Matrix analysts say. “The recovery is no longer limited to Southeast and Southwest metros that fared well during the pandemic — it’s nationwide.”
Houston remains one of the largest apartment markets in the nation. Colliers reports the market includes 180,126 Class A rental units, 241,890 Class B apartments, 210,062 Class C units and 61,722 residential rental spaces. Average monthly rents range from $1,581 for Class A to $691 for Class D.
Occupancy levels by class have improved across the board: Class A 86.4% (up from 83%); Class B 93.3% (up from 91.6%); Class C 91.5% (up from 90.3%); and Class D 90.3% (up from 89.6%).
Aug 12, 2021 Realty News Report Copyright 2021
Photo: By Ralph Bivins, Realty News Report Copyright 2021
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