Real Estate Market Information

 Multifamily Industry:

• As vacancy climbs and demand lessens, apartment rents nationally dropped in the third quarter 2022 for the first time in decades.  The summer months are typically very strong, so this was a surprise.  The forecast through the end of the year is showing a continued slide in occupancy and pricing.
• None of the country’s 40 largest markets saw increases year over year in their 3^rd quarter.
• Rent growth was at its peak in March of this year with an almost 16% year over year and by this last month in September the price increases slowed to 9%.  In Houston, it was 9.8% year over year-September and actually 1.5% above August rents…so a little better than other cities.  Other sources state the rent growth was 8.3%...nevertheless it was still strong considering pre pandemic we always looked at around a 4% increase.  Economist thinks next year it will continue to come down to around 5.4% annual growth in rents.
• Year over year rent growth in Houston Metro Cities was highest in Sugarland, Pearland and League City, respectively.
• Houston is still more affordable than Austin, Dallas and San Antonio overall.
• Comparatively speaking, San Francisco is the highest rental market in the nation with a 2 bedroom rent being $2670 followed by Los Angeles and New York City at $2200 and Houston at $1290.
• Houston has absorbed 33,000 apartment units in the last 12 months.
• None of the country’s 40 largest markets saw increases year over year in their 3^rd quarter.
• Some of the most noticeable declines in rents declining were where the had increased the most/fastest over the last two years…primarily the sunbelt states with Florida leading the way, followed by Phoenix and Dallas.
• Speculation on the reasons for the sudden change is obviously tied to rent pricing causing people to double up with roommates, possibly stay put and not move and younger adults moving in with or staying longer at home with their parents and those renters that may have lost jobs and could be in alternative housing.  As inflation goes up and the price of ALL goods/services/food people are having to manage their expenses more than in recent years.
• Where is the distress going to be?  In the multifamily loans recently financed at higher rent numbers than may be achievable.  Nino’s client’s may then see the wars of “special discounts/rent abatements” being given to clients and higher commissions to agents!
• Will the multifamily starts/new construction slowdown in Texas?  From what research shows, there is a massive shortage of housing and the only thing precluding new starts is city governance/permitting times.  It isn’t happening fast enough to entice multi-family investors/developers to deal with the extenuating time frame for approvals.  As long as people keep moving to Texas from California, New York and other high tax or weather issue related states, the industry of housing will be strong in the sun belt states…..especially Texas.  Those new out of state residents think Texas is a gold mine of savings which will continue to push prices up for native Texans.
• Alternative Housing? – Montrose will be a new home for the first Co-Living concept at 701 Richmond Ave, a 238 unit community, 9 story, targeting incomes of $40-$100k individuals, leasing 381 bedrooms comprised of 3 and 4 bdrm micro units comprised of 320-420 sq ft.…..roommate style living.

Home Sales:

• Economist expect a shift toward Buyers next year
• DOM in Houston is 28 Days
• Home Inventory nationally is still low….42% of what it was in 2019.  Houston inventory is 23.5% lower than 2019.
• More New Construction is entering the markets this year, a sign of weakness compared to the beginning of the year.
• NAR expects overall sales to be down 15% by year end 2022
• Pending homes sales continue to decline….25% year over year nationally.    In Houston, it is an 11% decline year over year
• Median home prices will only increase 1% next year