Texas Apartment Market Skyrocketing

HOUSTON – (By Dale King, Realty News Report) – The market for multifamily property in Texas is still looking up. Prices, occupancy levels and absorption rates in Houston alone have been soaring, says the Colliers Multifamily Quarter 4 report for 2021 in the Space City.

While there’s speculation the market may cool later in 2022, the year is pretty much beginning where 2021 left off.

Key takeaways for Houston’s rental sector from the Colliers Q4 2021 report are:

  • Occupancy is up quarter over quarter and annually;
  • Absorption more than doubled in 2021 when compared to 2020;
  • Average rents rose over the year and over the quarter, and median and average sales prices rose and cap rates compressed.

Massive Absorption of 37,308 Units in Houston

Looking at the numbers, demand for multifamily housing in Houston continued to be high in Q4 of 2021 with the absorption of 3,548 units, pushing the year-end total absorption to 37,308 units.

The average monthly rent for multifamily units (two-bedroom) in Houston increased from $1,165 per month in Q3 2021 to $1,184 per month in Q4 2021 and from $1,043 per month in Q4 2020. The figures are for Class A properties, says the report.

With demand way up, more than 15,000 units are under construction and another 31,260 units are proposed. Occupancy increased over the quarter from 88.4 percent in Q4 2020 to 91.8 percent in Q4 2021.

A chart in the Colliers report going back to Q4 of 2018 shows that both monthly rent and occupancy are at their highest levels right now compared to the past four years. Asking rent remained largely in the area of $1,030 to $1,060 until the rent per unit skyrocketed in the last quarter of 2021.

Fort Worth and Dallas Multifamily

Information from real estate solutions firm RealPage notes the multifamily market in north Texas is even more intense.

Houston apartments are a bargain compared to rental residences in Dallas and Fort Worth as well as the national average, according to a report from RealPage

That firm says Dallas area apartment rents increased an average of 18.2 percent in January 2022 compared to last January. That brought the average price tag for a Dallas rental dwelling to $1,454 last month.

In the Fort Worth area, says Real Page, average rents hit $1,306 in January – up 15.8 percent over a year ago.

Dallas, Fort Worth and Houston all remain below the national average rent of $1,654 a month for an apartment dwelling.

Apartment Investment Sales Up 735 Percent

Folks looking to purchase an apartment for investment purposes may have hit the Mother Lode in Houston. Colliers said investment sales volume increased 735 percent from Q4 2020 to Q4 2021 and 386 percent between Q3 2021 and Q4 2021, according to Colliers’ data provider, Real Capital Analytics.

The numbers show Houston way ahead of the United States in general for those seeking to add Texas multifamily to their asset holdings. The national annual and quarterly volume increases of 126 percent and 132 percent, respectively, paled by comparison to Houston’s sales volume.

While Houston saw more growth for potential investment, the U.S. still promises a bigger return. “Houston’s median sales price per unit increased by 18 percent over the quarter, from $137,171 to $161,859. The U.S median price per unit increased by 7 percent over the quarter, from $181,147 in Q3 to $194,453 in Q4 2021.”

Feb. 24, 2022 Realty News Report Copyright 2022.

File: Texas Apartment Market Skyrocketing

Photo: Courtesy Trammell Crow Residential   (Allora)

Check out the book Houston 2020: America’s Boom Town – An Extreme Close Up  by Ralph Bivins. Available on Amazon  http://tiny.cc/4a2g6y  

Realty News Report Archive: Trammell Crow Residential says it will spend $1.5 billion to build more than 8,000 units that are affordably priced at levels that attainable for middle class families.Branded as “Allora” apartments, the rental buildings will constructed with a “simplified building design”

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