Houston, Texas: Market of the Month
Houston, Texas, is one of the hottest real estate markets in the country right now, luring droves of newcomers from California, the northeast, and other pricier real estate markets. From 2017 to 2018, the Houston area saw an average of 250 people moving to the region every day, a trend that has stayed mostly on track since then. There is no shortage of reasons to move to Houston. The city boasts major league sports, popular theater and museum districts, world class dining, and is located fifty miles from the Gulf of Mexico, offering plenty of outdoor recreation. On top of all that, Houston has a thriving job market. If Houston were its own country, it would rank as the world’s 27th largest economy. The city has more Fortune 500 headquarters than anywhere in the United States, second only to New York City. Houston is known as the energy capital of the world, with 4600 energy-related companies in the city. Other major employers include Texas Medical Center, the port of Houston, and NASA. In fact, NASA is such an important presence that Houston has been nicknamed “Space City.” Houston is a magnet for younger professionals especially, with the average age of Houstonians being 33 years old, making it one of the youngest cities in the US.
Along with its booming population, Houston has seen a booming real estate market. The Houston Association of Realtors reported a 24.4 percent jump in single-family sales last month, compared to the same time in 2020. As Houston real estate agent Tiffany LaRose told Houston’s ABC 13, “We’re seeing things we’ve never seen before, multiple offers within an hour or two of properties being listed. People are waiving their rights to appraisals. They’re going 30, 40, $50,000 over asking price and still losing out on those houses. It’s really competitive out there.”
While that level of demand might dim prospective homeowners’ hopes, there’s an important silver lining: compared to the 20 most populous metro areas in the country, housing costs in Houston are 36.6 percent below average. So while you’ll be competing with a lot of other potential buyers, the cost of buying in is far less than you’d see in other big cities.
From an investment standpoint, buying in Houston offers an opportunity to reap the rewards of rapid appreciation. Since 2012, the middle-priced tier of Houston’s homes has appreciated on average from $117,000 to $199,976, an increase of 71 percent, according to Zillow’s Home Value Index. Last year saw the eighth consecutive year of home price gains, and over the past year alone, prices rose by 5.2%. Zillow also projects a similar rise in home values over the next twelve months for Houston.
There are a couple of caveats to this robust market. Houston can be brutally hot in the summer, and the region is vulnerable to hurricanes and flooding. Of course, these drawbacks are offset by the opportunities Houston offers. In addition to the job market, affordability, and area attractions, Texans do not pay any state income tax. On top of that, the percentage of homeowners in Houston is only 42 percent, so investors will be able to tap into a huge market of renters. So, if you can brave the hot summers and the hot competition, Houston is one of the best markets in the country to invest in right now.
