6 Reasons to Invest in Houston Real Estate Now

6 Reasons to Invest in Houston Real Estate Now | by David Young

6 Reasons to Invest in Houston Real Estate Now

Considering Houston’s well-known moniker as the so-called “Oil Capital” of the nation, it may come as a surprise to some investors that despite sliding oil prices, demand for new homes hasn’t taken a commensurate hit. Demand has slackened for high-end luxury properties (more on this in a moment), but with overall housing inventory at 3.7 months, it could be considered a seller’s market. The luxury real estate market, or homes priced well above the average Houston home price of $300,000hasn’t fared as well. Of course, price disruptions vary extraordinarily from one location to another.

Another thing going for Houston-area housing is the latent demand from all the workers who have moved here in the last five years and are now getting into the housing market. The Bayou City’s market resilience, strong population growth, and migration patterns, and Texas’ robust economic performance are but a few of the factors that make Houston THE PLACE to invest in luxury real estate.

1. Demonstrated market resilience

Houston today is a far cry from the old rough-and-tumble, blue-collar oil town of the 1980’s. While oil still drives a significant part of the local economy, the city of Houston has certainly surprised a few economic forecasters with its relatively resilient economic performance this year. And this shows in the housing market. Home sales volume has been unchanged year-over-year so far this summer. In fact, overall sales rose 2.7 percent in June. For long-time Houston real estate watchers, this is no surprise. Passive demand and a considerably diversified economy have softened the blow of the layoffs plaguing the oil and gas sector today.

2. High in-migration patterns

Despite the oil slump, people just keep coming in search of jobs in non-oil related sectors, housing, and a place to call home. According to an announcement by U-Haul, Houston still ranked first in one-way moving truck rentals. But it’s not just people moving in from abroad or out of state. It’s also people moving into the city limits from Houston’s many sprawling suburbs.

3. Strong overall population growth

State demographers estimate that Texas’ population will double to more than 54 million people by 2050, driven by in-migration and immigration. A lot of the growth statewide will be concentrated in the big metropolises including Houston.

4. Texas’ dominant economy

While $100 per barrel oil prices certainly played a vital role in the state’s rapid post-recession rebound and subsequent jobs boom, the overall state economy continues to put up strong marks. The state added 10,700 jobs in the private sector alone in the month of June. In fact, job gains in the professional services industry offset job losses in the natural resources and mining, which encompasses the oil and gas sector.

5. Weak oil tames a hot market

While soft oil prices have been somewhat of a setback for the housing market, a little cooling isn’t necessarily bad. Investors looking to buy and hold will find that the economic slowdown will give them room to breathe, particularly in the luxury real estate market. As Houston continues to grow and diversify, demand for housing will continue to rise as well.

6. Space to grow

Unlike fully built-out cities like New York, Boston, and San Francisco, Houston has plenty of room to grow. This growth doesn’t necessarily imply outwards expansion towards the suburbs (although Houston’s suburbs continue to grow at a breakneck pace). Houston’s low-density sprawl is legendary. What that means for the residential housing market, is that there is currently plenty of space within the city’s core for new construction. This transformation of inner city neighborhoods is well underway with land that was once vacant, abandoned, or zoned for industrial purposes being developed into new housing.

Houston is the 4th largest metropolis in the United States, a world economic powerhouse, the energy capital of the world, and the most diverse city in America. In addition to all of these glowing superlatives, it still has room to grow which is what makes it such an attractive city for luxury real estate investors across the globe. 

David Young

David Young

President and CEO | Nationally renowned luxury real estate specialist.

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