Houston Apartment Rents Rising

HOUSTON – (By Dale King, Realty News Report) – Apartment rents have increased in 2021. If you check out ApartmentData.com’s graph of price and occupancy rates for apartments in Houston for 2019, 2020 and the first four months of 2021, you’ll see a wiggly, jagged line running through the center.

But look a little closer and you’ll see a trend developing toward the right side of the graphic. From a low point in December, when rent was listed at about $1,040 a month and occupancy had nudged to just over 87%, the line moves upward.

As of May 2021, the report says, Houston’s apartment occupancy stands at 89.6% and prices for apartments of about 886 SF are hovering around the $1,073 per month mark.

With a net of nearly 5,400 apartment units filled, April was one of the strongest months ever for the Houston apartment market, said Bruce McClenny, president of Houston-based ApartmentData.com. In fact, the month ranks up there with the strongest three apartment absorption quarters since 2015, he added.

And he expects the trend to continue. “Traditionally, we are in the leasing season,” he said. And with recovery from the pandemic becoming more of a reality, “I would not be surprised if that number really jumps over the next two to three months.”

Another graph from McClenny’s report offers more good news about various types of apartment units in the Bayou City. After Class A, B, C and D properties all reported negative rent figures during 2020, three of the four are back in positive territory since 2021 began.

First Quarter: As of March 31, 2021, McClenny said, Class A rents increased $39 a month, Class B leasing cost is up $12 a month and Class C has recorded a $2 a month hike. Class D units dropped again, but only by $8 a month.

For the entire year of 2020, all four classes of property dropped $9 a month on the lease market.

During the past 12 months, McClenny said, rent growth in Houston has recovered, but has yet to soar. Last year, the cost of leasing an apartment rose just .6%. A total of 17,962 units were absorbed.

Houston: 17,000 Units Under Construction

Stats say 80 communities with 22,368 units were opened in Houston during the past 12 months. Another 64 communities with 16,954 units are under construction. Ninety-seven communities with 28,059 units are being proposed.

McClenny said five of Houston’s 42 neighborhoods were particularly hot during the past three months:

The Heights/Washington Avenue region grew 23.8% with 4.9% of units absorbed into the market
Katy/Cinco Ranch/Waterside jumped 18.5 %, with 3.5% of available apartments absorbed.
Coming in right behind, The Woodlands/Conroe South increased 18.4%. The absorption rate was an even 3%.
The Montrose/Museum/Midtown area, an accomplished, high-rolling section, grew 20.6% with an absorption rate of 2.5%.
Last among the top five “hottest” was Lake Houston/Kingwood, growing 14.9%. The rate of apartment absorption hit 3.6%.

McClenny’s apartment report says job growth in Houston fell from 1.7% (54,400) in 2019 to minus-6.5% in 2020 when more than 206,000 jobs were wiped out. So far this year, job numbers have increased 60,000 or 2.0%.

The ApartmentData.com report offers the following snapshots of other Texas metros:

Dallas/Fort Worth reported an occupancy rate of 91.4% as May 2021 began. The average rent rose to $1,216 for an 878 SF unit. During the past 12 months, the rental rate grew 3.1% and 25,232 rental residences were absorbed.
In San Antonio, the occupancy rate hit 90.4%, with apartments averaging 856 SF going for about $1,018 a month. The price of rent went up 2.8% during the past 12 months, with 8,461 units absorbed.
Austin came in with an occupancy rate at 90.0%. For a unit measuring about 875 SF, a renter would fork over $1,335 a month. During the past 12 months, Austin reported rental rate growth of 1.2%, with 10,171 units absorbed.

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 http://tiny.cc/4a2g6y