"Long term real estate investors and experts are seeing first time Houston home buyers being unable to afford median priced homes," stated Raymond Campbell of Houston Home Buyers in Houston, Texas. "Houston renters have been squeezed with price hikes over the past few years. And many of the potential house buyers are finding monthly rental housing costs are not much lower than buying a house with a mortgage, taxes, and insurance. These people want to buy a house and start building equity but the home supply is limited and the prices keep trending up. The median price for a home in Houston in February 2022 was $348,988 - a new record. The February 2021 to February 2022 median priced home rose 19.3%. How's that for an eye-popping annual increase?", he commented.
Is Rent High In Houston Texas?
Indeed every measure of apartment rental prices is on the uptrend in Houston. A recent survey revealed that the average size 881 square foot apartment rents for an average price of $1233 in Houston. This is an average price including studio, 1 bedroom, 2 bedroom, and 3 bedroom apartments. Approximately 1/3 of Houston's apartments are in the $701 to $1000 per month range. Another 1/3 of Houston's apartments are in the $1001 to $1500 range. Obviously apartment rents will vary depending on the amenities, location, and quality. The higher priced apartments are generally located inside the 610 Loop which includes downtown, Fourth Ward, Montrose, Midtown, Greenway, and the Museum District. The average apartment price in these areas is approximately $2000 per month.
For comparison purposes Austin is the most expensive apartment rental market in Texas with $1690 per month. Dallas is at $1423 and Fort Worth at $1303. The only other major city cheaper than Houston ($1233) was San Antonio at $1192 per month.
The home rental market parallels the apartment rental market with price increases in 2021. The average single family home was renting for $2070 per month, which is a 9.7% increase over 2021. Condos and townhomes saw an annual rental increase of 11.9% from 2021 to 2022. A number of real estate consultants believe that many potential home buyers are waiting for prices to level-off or drop before buying. If that is true then it increases the demand for home rentals.
Why Is Rent In Houston So Expensive?
Apartment rents and home rental prices are expensive compared to recent years but they are still below most of the major cities in Texas and below many major cities in the USA. But costs have increased in 2020, 2021, and 2022. Big cost items such as property taxes and insurance have increased significantly. Other costs such as water and sewer fees, cleaning supplies, and experienced management have also gone up. Increases in demand tend to push up these costs.
Why Is Houston Real Estate So Expensive?
A number of factors have contributed to the large increase in home values in 2021 and early 2022. First, the COVID pandemic kept most people inside their homes in 2020. Buyers generally did not want to go home shopping and home sellers definitely did not want to put their houses on the market with multiple showings. It was a time to social distance. But that changed with the vaccine in 2021 and the demand for houses has overwhelmed the supply of houses for sale for the past year or more.
Factors Leading To Large Price Increase In Residential Housing In 2021 & Early 2022
- build-up of demand due to COVID pandemic
- persistently low inventory - the lowest in history
- bidding wars - low inventory and multiple buyers for every house leads to bidding wars
- historically low mortgage rates
- more disposable income available for higher priced homes
Will House Prices Go Down In Houston 2022?
"No! They are going up and up. It doesn't take a rocket scientist to see strong trends and predict that they will continue. Most of the factors that have fueled the recent residential housing price increases are still in play. People are still moving to Houston. The latest number I saw was 250 people per day. That is 7500 new Houston area residents per month. They have to live somewhere. I think 2022 will easily experience a 10% price growth in the median price of home sales. Rental prices for both homes and apartments should see similar price increases in 2022. Only a few things will stop this 'moving train' and they are so bad I don't want to talk about them," stated Mr. Campbell.
Mr. Campbell is the owner of Houston-Home-Buyers.com, a locally owned and operated home buyers company in the Houston, Texas metro area. They typically buy homes that need repair and remodeling and that are not desirable for listing on the realtors' MLS system. Investors who buy and refurbish homes usually sell them in the retail market or rent them out to area residents.
