Nation’s Apartment Rents Sluggish

HOUSTON – (By Dale King, Realty News Report) – Apartment List, a major source of research and information on the rental community, has issued its mid-year analysis of the apartment market – and it’s not an uplifting assessment.

“Despite this being the peak season for the rental market, rent growth remained sluggish in May,” says the recently released document.

“Prices inched up another 0.5 percent month-over-month, similar to April and slightly lower than March,” it says. “Rents are up just 1.9 percent so far in 2023, and in nearly half of all big cities, prices today are lower than they were one year ago.”

“Of course, regional variation exists, and a handful of markets continue to boom, but the national numbers speak to a continued, broad cooldown of the rental market.”

The Apartment List analysis includes the June 2023 Rent Report for Houston as part of the overall report. And the figures for Space City are on par with the national numbers.

“Currently, the overall median rent in the city stands at $1,235, roughly the same as last month,” the document says.

Other local highlights include:

Rents in Houston increased 0.3 percent in May compared to a 0.5 percent increase nationwide.
Year-over-year rent growth in Houston now stands at +1.7 percent, down from +9.9 percent one year ago. Since the start of the COVID-19 pandemic in March 2020, citywide rents have risen a total of 11.6 percent.
Today the median rent in Houston is $1,078 for a one-bedroom unit and $1,293 for a two-bedroom unit. And the citywide apartment vacancy rate stands at 8.5 percent, up 2.2 percentage points from this time last year.

The median rent in Houston is 9.4 percent lower than the national rate and is similar to the prices you would find in Corpus Christi ($1,238) and San Antonio ($1,235).

The month-over-month and year-over-year median rent numbers for Houston were not spectacular, but the city outdid both the state of Texas (average monthly median increase of 1.1 percent) and the national average monthly hike of .9 percent.

The report says Houston’s increase in rental prices so far in 2023 is pacing below last year. Five months into the year, rents in Houston had risen 1.4 percent. The report says this is a slower rate of growth compared to what the city was experiencing at this point last year. From January to May 2022, rents had increased 2.8 percent.

Houston rent growth of 0.3 percent in the past month compared to the national rate of 0.5 percent puts the city in 66^th place in the nation on a scale of rent unit cost. Similar monthly rent growth took place in Fort Worth (0.3 percent) and New Orleans (0.2 percent).

Houston is the 72nd most expensive large city among the 100 largest cities in the U.S., says the Apartment List report, with a median rent of $1,235. Citywide, the median rent currently stands at $1,078 for a one-bedroom apartment and $1,293 for a two-bedroom. Across all bedroom sizes (ie, the entire rental market), the median rent is $1,235.

For comparison, the median rent across the nation as a whole is $1,169 for a one-bedroom, $1,340 for a two-bedroom, and $1,363 overall. The median rent in Houston is 9.4 percent lower than the national – and Houston’s rents are 5.4 percent lower than the metro-wide median.

“If we expand our view to the wider Houston metro area, the median rent is $1,305 meaning that the median price in Houston proper ($1,235) is 5.4 percent lower than the price across the metro as a whole. Metro-wide annual rent growth stands at 1.9 percent above the rate of rent growth within just the city.”

A list of rent statistics for 17 cities in the Houston metro area is included in the Apartment List database. Among them, Sugar Land is currently the most expensive area with a median rent of $2,186. Baytown is the metro’s most affordable city, with a median rent of $1,076. The metro’s fastest annual rent growth is occurring in Galveston (9.5 percent) while the slowest is in The Woodlands (-5.6 percent).

But the rental numbers are pretty much scattered around the financial map. The media rent price in Conroe for a one-bedroom unit is $1,224; $1,315 for a two-bedroom apartment. Pearland is a tad more costly with a one-bedroom unit going for a median price of $1,610 and a two-sleeper costing $1,900 a month.

You can find a good deal in Rosenberg where the media cost of a single-bedroom unit is $1,080 a month while a two-bedroom unit will cost $1,276, says the rental report.

Houston has seen multifamily construction. Recently Austin-based OHT Partners has broken ground in the 359-unit Lenox Heights, a five-story project in The Heights. Also, Sueba USA started the 269-unit Imperial Oaks Square in Spring, near the Grand Parkway.

On a national basis, multifamily starts have been predicted to decline in 2023, following an unsustainable high level of production in 2022, according to the National Association of Home Builders (NAHB).

National vacancy rate

On the supply side, the Apartment List report says the vacancy index nationally currently stands at 7 percent, surpassing the average pre-pandemic rate and continuing to trend upward. With a record number of multi-family apartment units currently under construction, some property owners may start struggling to fill vacancies for the first time since the early stages of the pandemic.

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