HOUSTON – (By Dale King, Realty News Report) – Houston’s rental market closed out 2021 with one of its strongest years of rent growth on record, according to Bruce McClenny, president of ApartmentData.com. The firm’s Market Line report for December shows a 15.8 percent increase in apartment rents in the Houston region over the prior 12 months, a pace McClenny calls extraordinary compared with historical one-year gains.
McClenny, who has contributed data to ApartmentData.com for 26 years, can trace lease trends back to the 1980s. He notes cycles of ups and downs: 2006—after Hurricane Katrina—saw heavy turnover, 2014 produced notable rent growth driven by the fracking boom, and 2016 reflected declines following the oil-and-gas downturn.
Despite Houston’s large rent gain in 2021, other Texas metropolitan areas recorded even stronger increases. ApartmentData.com reports year-over-year rent growth of 21.2 percent in Dallas/Fort Worth, 17.9 percent in San Antonio, and an especially steep 30.5 percent in Austin, which has seen intense demand across rentals, home sales and industrial markets since the pandemic’s impact eased.
McClenny attributes much of the rental demand to job growth across the state, while noting Houston’s employment recovery has lagged other metros. “All other Texas markets have had more dynamic job growth,” he told Realty News Report. Houston’s civilian workforce began 2021 at about 3,099,000, compared with 3,192,000 in February 2020 before the pandemic—leaving roughly 92,000 jobs yet to be recovered. “A total of 206,600 jobs were lost in 2020 because of the pandemic,” he said. “We have never had a year that bad.”
Nationwide unemployment fell to 4.8 percent in September 2021 from 7.8 percent a year earlier, according to the U.S. Bureau of Labor Statistics. That decline has supported apartment demand and contributed to rising rents, McClenny added.
The ApartmentData.com December report includes charts showing rent and occupancy trends for 2020 and 2021. Houston’s average apartment rent hovered around $1,050 through much of 2020, then began a steady climb in early 2021, peaking near $1,180 before settling at $1,179 by the end of the year.
Absorption was strong: nearly 37,000 apartment units were absorbed in Houston during 2021, a substantial amount of leasing activity. “For every five to six jobs created, one unit of absorption is recorded,” McClenny explained. “Absorption is a measure of demand. When absorption goes up, it drives occupancy.” Houston’s overall occupancy for 2021 is listed at 91.7 percent in the report.
The report also provides comparative metrics for other Texas metros:
- Dallas/Fort Worth: Occupancy 93.5 percent; average rent $1,379 for an 879-square-foot unit; 21.2 percent rent growth year-over-year; 44,944 units absorbed. McClenny described D/FW as “a Mecca for people moving from California.”
- San Antonio: Occupancy 93.5 percent; average rent $1,137 for an 856-square-foot unit; 17.9 percent rent growth year-over-year; 11,562 units absorbed.
- Austin: Occupancy 92.5 percent; average rent $1,554 for an 875-square-foot unit; 30.5 percent rent growth year-over-year; 22,896 units absorbed.
Within the Houston region, McClenny identified the fastest-growing submarkets over the prior three months, all of which are suburban areas:
- Lake Houston/Kingwood – strongest real growth and absorption, annualized growth of 19.5 percent.
- Tomball/Spring – annualized growth of 12.8 percent.
- Dickinson/Galveston – annualized growth of 11.8 percent.
- Katy/Cinco Ranch/Waterside – annualized growth of 9.7 percent.
- Westchase – annualized growth of 10.3 percent.
Overall, 2021 represented a year of accelerated rent increases and robust leasing activity across Texas, with Houston showing significant gains even as it continues to recover jobs lost during the pandemic.
Dec. 11, 2021 Realty News Report Copyright 2021
For more about Texas real estate, check out the book Houston 2020: America’s Boom Town – An Extreme Close Up by Ralph Bivins. Available on Amazon
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File: Rents Soared 16 percent