Houston-area rents fall for first time since Harvey
Apartment hunters may see a glimmer of relief as asking rates for rentals decline for the first time since Hurricane Harvey.
“Ever since the beginning of July, prices have retracted slightly,” said Mike Cobb, a market analyst for CoStar Group, which tracks and analyzes multifamily real estate information. According to the company, average asking rent in the Houston area has fallen from $1,095 a unit at the end of June to $1,090 a unit.
While the quarter is not over, Cobb said the dip was noteworthy. If the trend continues, this will be the first quarter in which rents have dipped in the 90- day period since 2016.
Local experts in the rental industry say the increased demand for apartments caused by Harvey has largely passed. “I would say 90, 95 percent of people have already moved back,” said Swapnil Agarwal, whose company, Nitya Capital, owns Class B and C apartment buildings in the area.
But while the bubble in rental prices caused by Harvey has receded, many predict the dip will be short lived.
The Houston area added 101,800 jobs between July of 2017 and 2018, according to Bureau of Labor Statistics data. And while large numbers of people are moving to Houston, developers say not many new apartment units are coming to market this year and next.
“For the next couple of years, there’s going to be fairly limited new supply delivered,” said Luke Phillippi of Alliance Residential, which specializes in multifamily residential development. “The impact of Harvey from a leasing perspective is gone,” he said. “It’s the health of the Houston market we’re seeing now.”
Tim Dosch, principal of the Houston-based land brokerage Dosch Marshall Real Estate, agreed.
“Now you have real market forces, real demand,” he said. “You’re probably going to have a solid year and a half where there’s not a lot of supply, but there’s job growth.”
After the floodwaters receded and apartment occupancy rates rose, Dosch said he was surprised by how quickly investors began buying land in the Houston area. “All of a sudden, developers were clamoring for sites,” he said.
Fall of 2017, developers began closing on sites — a process that usually takes months — in a matter of weeks. Now Dosch says investors from Australia, Japan, Canada and Mexico are looking to build apartments in Houston. “Everybody’s bullish.”
Those units will likely hit the market in roughly a year and a half. In the meantime? “I think you’re going to see a lot of rent growth,” Dosch said.
R.A. Schuetz with Houston Chronicle
Monday, September 24, 2018
