Most real estate investors know that the large Texas metropolitan complex is one of the strongest markets for real estate investment property in the entire country. If you are looking to invest in Houston, understand that it is a competitive and rapidly changing market.
Having a firm of experts who have an exact knowledge of the local markets and their behavior is essential to choose the properties in which to invest.
The real estate market is extremely vibrant and active, with a booming housing market and considered by many to be the center of the nationwide real estate investment frenzy.
With its diversity, business climate, numerous universities, strong presence in the medical industry, as well as its positioning in manufacturing, shipping, oil and energy, Houston's diverse job market continues to attract new residents to the area.
So what are the pros and cons of investing in the
Bayou City?
Benefits of Investing in Houston
Rapid population growth
Houston is a rapidly and continuously growing metropolis in the United States, with population migration contributing greatly to its diversity and growth. With a population of over 7 million, the Houston metropolitan complex is the fourth most populous city in the United States.
Since 2010, Houston has housed approximately 1,1 million new residents. The city thrives on its growth in medicine, education, sports, and technology.
Real estate prices are constantly on the rise every year, with the growth of a city's population being one of the main driving factors. Real estate appreciation and rising rents are directly tied to population and employment growth, two factors that have been prominent in Houston's real estate market. Population growth itself has led to greater demand for housing, and the average home value has increased every year.
The rental market is stable
Although renters everywhere are being hit by the effects of the pandemic, rental vacancies in Houston are at their lowest point in five years. The current rental vacancy rate is 7,4%, which is higher than the national average and better than the 8,59% rate posted in 2019. Another current trend is that property rents across the city are falling. maintain. The median rent is $1, which is an increase over the past five years.
The real estate market is growing
Housing supply in Houston has improved in recent months, with numbers above the national average. In December, the city had a 1,66 month supply of homes for sale, according to requests. Whereas before the pandemic Houston had a 5 month supply and currently. The inventory of homes for sale is up again, at 2,5 months last month. Over the past year, the Houston area gained more than 77 new homes, and demand indicators show a more affordable housing market overall, compared to many national averages and others. other housing markets. This provides more choices and more opportunities for real estate investing.
Due to the high appreciation, the optimal use of land is changing across the city, which is driving the growth of the real estate investment and commercial development markets. Unlike fully developed US cities (eg San Francisco, New York City, Washington DC), Houston has room to grow. Its low-density sprawl means that there are several areas in the city where residential housing can continue to be built. There are many neighborhoods downtown, which have vacant or derelict spaces. Real estate investment in this city has become popular due to the wide variety of investment opportunities available to all investors.
Exemplary commercial infrastructure, along with reasonable residential housing costs, provide an operating cost advantage to those seeking to invest. There are several acres of land available resulting in substantial movement. This makes Houston an ideal real estate market for investors looking to find new and old properties.
Job growth and strong economy
When employment and wage growth follow an upward trajectory, the local economy feels the benefits and, in turn, the real estate market is directly correlated to these trends. The Houston Metroplex is a major industrial hub, being the energy capital of the world, but it's also home to the Texas Medical Center – the world's largest medical complex – and is at the forefront of advancing life sciences. . It is home to biotechnology companies, research institutions, and is home to the United States Energy Headquarters. All these factors combine to make this city an ideal location for real estate investment.
Disadvantages of investing in HOUSTON
Inefficient public transport
Most Houston residents own their own vehicle. This is due to the fact that public transport options are limited, compared to other major metropolitan cities. As a result, residents must endure significant travel times on city streets and highways. As a real estate investor, you need to understand which asset will attract which type of resident and understand the intricacies of each location.
Taxes
Texas does not have a state income tax rate, and therefore the city's primary source of revenue is property tax. The tax rate is almost twice as high as in California, for example. That said, property prices are often half or more lower than in other major cities, and taxes are a deductible expense against your rental income.
Insurance rates
Houston has a hurricane and flood season, even though the city is located far from the Atlantic and Caribbean seas. This drives up insurance rates and you can expect to pay $1500-2000 per year for insurance.
Conclusion
The Houston real estate market is a great place to invest and earn solid returns. The city provides opportunities for entertainment, education, employment, and outdoor activities, which translates into appreciation and growth in rents for investors.
In order to ensure that you make the right decision when it comes to real estate investing in Houston, you need expert advice. The professionals at HNB Realty will be your partners and help you grow your wealth by choosing the income-producing asset that suits your goals.