Job, Population Growth Bolsters Demand in Houston
After a prolonged dry spell, multifamily rent growth is once again outpacing the U.S. average, reaching 3.9 percent for the 12 months ending in June.
Recovering after the oil crisis and Hurricane Harvey, Houston’s economy is once again in full swing. While causing more damage than any other natural disaster in U.S. history except for Hurricane Katrina, Harvey has also contributed to moderating the supply imbalance of the past couple of years. After a prolonged dry spell, Houston rent growth is once again outpacing the U.S. average, having reached 3.9 percent year-over-year through June.
Oil prices have risen nearly $40 per barrel above the trough of early 2016, boosting employment across sectors and bringing the metro back on track. Job creation in professional and business services acted as the backbone of Houston’s recent recovery, with the metro adding roughly 30,000 jobs in the sector during the 12 months ending in April. The positive momentum is boosting investment once more—generating demographic growth that, in turn, helped the metro absorb its recent oversupply.
The metro added roughly 5,200 units in the first half of 2018, with an additional 13,000 units underway. After struggling with overbuilding and contracting rents over the better part of the past two years, Houston’s supply-and-demand balance is back to its sweet spot. We expect rents to advance 1.8 percent for the whole of 2018.