If you’re thinking of renting in Houston, be prepared to deal with a very hot market. So hot that Abodo's data shows that Houston was among the 10 cities with the biggest rent increases in 2018.
Houston’s one-bedroom 2018 rent increased by an average 1.63 percent to $1,241, the eighth highest in the U.S. Two-bedroom units gained 1.84 percent on average to $1,487, and Houston ranked No. 9 on the two-bedroom gainer list.
No other Texas cities made the top 10, and Houston's one-bedroom rent ended the year at a pricier point than Austin's ($1,165). Note: Desired areas like Montrose, Midtown and The Heights will be more expensive than the average prices shown.
Rents in Texas as a whole were relatively flat in 2018, with the state reporting an increase of just 0.11 percent. Nothing exciting happened in Austin, where the city is still recovering from almost 20,000 apartment units that have recently come online. And while Dallas is rapidly growing, new apartment stock has more than kept up with the demand, keeping prices in check.
With Houston’s continued recovery from Hurricane Harvey, we expect to see an unabated rise in rent prices if the general economy does not soften significantly.
That said, there are a couple of concerns. Interest rates have been a hot topic in the financial sector, as rising rates don’t bode well for the stock market. Since the recent stock market decline in December, however, the Fed seems to be taking a wait-and-see attitude about rate increases, and when the fear of consistent interest rate hikes is removed, the market can rebound.
Texas has an oil-driven economy, and the Houston area is instantly affected by price changes. Oil at $42 per barrel put a lot of pressure on oil supplies, but the recent rebound to over the $50 level provided some relief. As the spring season usually means higher oil prices, we think this will translate into a stronger Houston economy — and steadily upward rent prices.
We are also watching mortgage interest rates. With another Fed increase, the standard 30-year mortgage rate will cross the psychological 5 percent barrier, and that may turn potential homebuyers into renters, which could put upward pressure on the Houston rental market.