Introduction:
Why is the Houston real estate market a great place to invest? Any wild guesses? Read on and find out why!
Unlike fully developed cities such as New York, San Francisco, and Washington, Houston has plenty of potentials to expand and flourish. Houston has great low-density sprawl, which implies that there are still locations within the city for residential home building. Many inner-city communities still have abandoned or unused land spaces that can be utilized to build residences.
Investing in Houston real estate is a wonderful option because there are many different investment properties. Houston has an excellent corporate infrastructure, and residential housing expenses provide prospective investors with an operating cost advantage.
There are many acres of land available, and there is a lot of activity in the real estate industry in Houston, making it an ideal real estate market where investors can readily find old and new properties. Whatever form of real estate investing you wish to do, many investment properties available give investors a great possibility to produce passive monthly income. This is another compelling argument to invest in the Houston real estate market.
The legendary Apollo 13 communiqué “Houston, we have a problem” returned to haunt “Bayou City” in mid-2014, when the oil market began a decline that didn’t end until early 2016, and again this year, when Hurricane Harvey caused more than $125 billion in damage. Both disasters have dampened the Houston real estate market and economy, prompting to ask the obvious question: why invest here?
Most people believe Houston is still in recovery mode. Thus the question is valid. Despite its difficulties, the city has demonstrated a strong labor market, gaining 48,000 jobs last year and closing 2017 with a 4.3 percent unemployment rate. This represents a big decrease from 2014 when Houston added 117,000 jobs. However, it is the metropolitan area’s best showing since then and is approaching its historical average of 60,000 jobs.
More importantly, last year’s job growth is merely one facet of Houston’s new beginning. According to a University of Houston prediction, the area might generate up to 70,000 jobs this year. Other forces at work point to the start of a massive resurgence in the nation’s fourth-largest metropolis.
Houston’s economy benefits from the oil market.
Houston’s oil market has recovered, with prices presently hovering around $60 per barrel, up from less than $30 per barrel in early 2016. Oil and natural gas companies have been more operationally effective in their oil exploration and drilling over the last several years.
They are employing blockchain and other technologies to revolutionize their trading procedures. They now earn more per barrel and are exactly as profitable as when oil prices were $90 per barrel. This has aided in the transformation of the Houston market: jobs are returning to the oilfields and factories producing high-tech drilling equipment for oil and gas rigs. Houston is likewise trying to become the global oil trading center and is projected to supplant Cushing, Oklahoma, the industry’s present “Pipeline Crossroads of the World.”
Houston’s Economy Is Diverse Beyond Oil
However, the energy industry is only a small part of Houston’s economy today. The city also boasts significant life-science and aerospace industries. The Texas Medical Center is the world’s largest medical complex, with approximately 50 million developed square feet, 106,000 employees, and $3 billion in construction projects. NASA’s Johnson Space Center is the cornerstone of a space-science sector that includes Boeing and Raytheon. The healthcare and energy businesses are working together to form a data science cooperative using the region’s research and engineering brainpower at Rice University and the University of Houston.
According to American Banker, banking and insurance hiring in the Houston real estate market has surpassed pre-recession levels, with Houston banks performing particularly well. Indeed, Houston banks are performing so well that four have consented to be sold in profitable mergers as community lenders grow their lending portfolios.
According to the Houston Association of Realtors, the Houston housing market had its best year last year thanks to these robust industry drivers, with more than 94,000 property sales despite Hurricane Harvey. Building in the Houston housing market has resulted in a construction worker scarcity, and Oldcastle Building Solutions expects a 14 percent increase in building for 2018, putting Houston third in construction spending after New York City and Dallas.
Real Estate Investment Possibilities
Because of the economic recovery, there are several chances for real estate investment across Houston’s numerous submarkets. JLL expects Houston to remain deal-friendly throughout 2018, with reduced asking prices and strength in office, multifamily, retail, and industrial properties.
Houston attracts institutional and overseas investors as a corporate gateway market, and its premier assets are drawing major core and core-plus portfolio purchases. A notable example is Brookfield Asset Management’s $875 million mega-deal for the downtown Houston Center complex, which concluded in December 2017.
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Come join us! Email me at mark@dolphinpi.us to find out more about our next real estate investment.