With tremendous job growth and surprisingly moderate apartment construction (by Texas standards, at least), Houston’s apartment market continues to put up impressive numbers. In fact, Houston notched long-term highs in both occupancy and in rent growth during 2014’s 2nd quarter.
Houston Performance Highlights for Q2 2014
Occupancy in the Houston apartment market hit a 13-year high during Q2 2014, jumping 80 basis points to 94.4%. More impressively, year over year rents reaccelerated in the second quarter, rising to 5.6%, a number not seen in the 20 years MPF Research has been tracking the metro.
One of the drivers of this impressive apartment market performance is the metro’s tremendous job growth. Houston added 93,300 jobs in the past year, putting it behind only the Dallas/Fort Worth market for growth over the last 12 months. But more remarkable is that since 2008, Houston has added 300,000 jobs on net, growing the employment base by 12%.
The one headwind facing the metro is apartment construction, which is at the highest level seen in five years with more than 21,000 units under way. These construction numbers are sure to cool down apartment fundamentals going forward, but not by much. MPF Research expects that occupancy and rent growth will continue at unusually strong levels relative to historical norms for the rest of the year and gradually cool during 2015 and 2016 as supply levels continue to climb.
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