Check out this article I found… Strong Rental Market Continues in Houston I found this article in the Chronicle very interesting . Several factors are contributing to the tightening market: Fewer new units have been added to the market. Employers adding new jobs. Influx of folks from other cities for jobs.
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Last fall, Chester Brown Jr.’s rent went up by $150 a month. He’s about to get hit again.
Brown’s landlord just told him his 950-square-foot, townhouse-style apartment is going for even more in today’s frenzied rental market.
“They say the market price for that unit is $1,100,” said Brown, who lives with his wife and two young children in a complex near T.C. Jester and the North Loop.
Brown’s situation is not unique. Rising rents have put landlords in the catbird seat.
Rents in the Houston area are at an all-time high and tenants are facing steep increases as demand for apartments shows no signs of slowing.
“We’re seeing strong rent growth,” said Josh Landry, development director of Atlanta-based Gables Residential, which owns more than 1,900 units in Houston. “It’s been better than we’d probably expected.”
Several factors are contributing to the tightening market.
Though new development is under way, few new units have been added to this area in recent years. Employers have been adding new jobs, too, and folks are starting to come here from other cities looking for work.
On top of it all, some are still finding it hard to qualify for a home mortgage, while others have stopped even considering the idea. That means landlords “have an upper hand because so many things are in their favor,” said Bruce McClenny, president of Apartment Data Services in Houston.
Over the past year, rents across the area have grown 5.3 percent to an average of $785 a month, the research firm reports. Annual rent growth is typically 2.5 to 3 percent.
The high-end market is even stronger.
Rents in upscale properties have grown 9.4 percent over the past year as the occupancy rate has risen. It’s now 95 percent.
An encouragement to move?
Earlier this summer, Denis Feldman found a note on his door notifying him that the rent on his one-bedroom apartment in a nice complex near Highland Village was about to jump to $1,510.
That’s 11 percent higher than he had been paying and the biggest increase he’d ever seen in the seven years he’s lived there.
He’s considering moving somewhere cheaper.
“I had no intention of looking,” Feldman said, “but they’re kind of encouraging me to do so with that kind of increase.”
In today’s market, an empty apartment is an opportunity for the landlord to boost the rent.
Joel Michalak and his wife sold their house last year and moved into a two-bedroom unit in a large complex in Spring.
In July, just before their one-year lease was set to expire, they were told their $1,115 rent was going to go up by more than $250.
“Our rent was almost as much as our mortgage when we sold our house,” Michalak said.
Last month, the couple moved into a one-bedroom unit in the same complex. Now they’re paying $975, but they lost about 400 square feet in the process.
Their old unit already has a new tenant.
The hot multifamily market is boosting the land market, too.
Prices for urban apartment sites have doubled in the past two years, as developers have rushed to build new projects, according to a report from Deal, Sikes & Associates, a real estate consulting firm.
With vacant land hard to come by in close-in locations, developers have been buying and bulldozing small office buildings, rundown apartment buildings or warehouses.
“New projects lease up quickly with rents that often exceed (financial) expectations,” said Matthew Deal, a principal in the firm.
The highest rents in town are inside the 610 Loop, where much of the new construction is concentrated.
Urban living trend
A growing trend toward urban living has driven the growth.
At West Ave, a recent development at the corner of Kirby and Westheimer where apartments sit above high-end shops, a one-bedroom unit can rent for as high as $2,500. Two bedrooms can be as much as $4,200.
New supply could help ease the escalation in rents.
Next year, around 11,000 new apartments will be added to the supply. That’s still a smaller number than the recent annual average of around 12,000 units. This year, about 7,000 are expected to open.