In one of our recent posts, we highlighted Harvey’s impact on the Houston apartment market. Today, we are diving deeper into Greater Houston’s rapid monthly rent increases, which it turns out are driven by the recent expansion we’ve seen in our city’s energy industry.
Significant economic factors affect costs of living in Houston, the 4th largest city in the U.S. and more densely packed than Portland, Dallas, Austin, Denver, and New Orleans. In January 2018, the median one-bedroom rent price sat at $1000. Now, the same median price has reached $1,295, nearly a 1 percent increase. Looking at two-bedroom units, the median price has drastically increased from $1,300 to $1,580 in the same time frame, or more than 3 percent.
Energy prices, from natural gas to oil, have been on their way up, which means more energy jobs in Houston. More jobs mean more people are attracted to the city, and they need housing. This increased demand will help drive apartment prices even higher.
Rising interest rates also reduce the availability of affordable housing. As the Fed adjusts interest rates upward with the hope of improving the economy, many potential homeowners will be frozen out of the housing market as mortgage rates break 5 percent. This will encourage apartment living, which increases demand even further and will drive up monthly rent going into late 2018.
Overall, rent prices are on the rise. And as interest rates rise and the booming energy industry drives a need for local accommodation, Houston-area residents can expect to see the rates continue to grow into 2019.