Pros and Cons of Investing in Houston, Texas

Most Real Estate Investors are aware that the major Texas metroplex is one of the strongest markets for real estate investment properties nationwide. If you are currently looking to invest in Houston, it needs to be understood that it is a fast-moving and competitive market.

Having an expert firm that has exact knowledge of the local markets and their behavior is a must when choosing properties to invest in.

The real estate market is extremely dynamic and active, with the housing market is booming and considered by many as the center of the nationwide real estate investing frenzy.

With its diversity, business climate, numerous universities, strong presence in the medical industry, as well as positioning in manufacturing, shipping, and oil and energy, Houston’s diverse job market continues to drive new residents to the area.

So what are the pros and cons of investing in the Bayou City?

Pros of Investing in Houston

Houston is rapidly and continuously growing as a metropolitan in the U.S., with population migration vastly contributing to its diversity and growth. Housing a population of more than 7 million people, the Houston metroplex is the fourth most populous city in the United States.

Since 2010, Houston has provided homes to around 1.1 million new residents, and is thriving due to its growth in medicine, education, sporting and technology sectors.

Prices of real estate are on a steady rise on a yearly basis, with the growth of a city’s population being one of the biggest contributors. Real estate appreciation and rent increases are directly correlated to population and job growth, both of which have been prevalent in the Houston real estate market. The population growth itself has added a greater demand for housing, and the average home value has seen increases yearly.

Despite renters everywhere being hit with the effects of the pandemic, Houston rental vacancies are at their lowest point in the last five years. The current rental vacancy rate is at 7.4%, which is above the national average and better than the 8.59% rate posted in 2019. Another current trend is that rents among properties across the city are holding steady. The median rent sits at $1,464, which is an increase over the last five years.

Houston’s housing supply has improved over the last few months, with numbers sitting above the national average. In December, the city had a 1.66-month supply of for-sale homes, according to demands. While prior to the pandemic, Houston had a 5-month supply and currently. Inventory for sale is back on the rise at 2.5-months last month. In the past year, the Houston area has gained over 77,000 new homes, and demand indicators present a more affordable housing market overall, in comparison to many of the national averages and other housing markets. This offers more choice and more opportunities for real estate investing.

Due to strong appreciation, the highest and best use of land changes throughout the city spurring growth in the real estate investment and commercial development markets.Unlike fully developed cities in the US (e.g., San Francisco, New York City, Washington D.C.), Houston has room to grow. Its low-density sprawl means that there are various areas within the city where residential housing can continue to be constructed. There are many inner-city neighborhoods, which have vacant or abandoned spaces. Real estate investing in this city has grown popular due to the sheer variety of investment opportunities available for any and all investors.

The exemplary business infrastructure, along with reasonable residential housing costs, ensures an operating cost advantage to those looking to invest. There are several acres of land available, leading to substantial movement. This makes Houston an ideal real estate market for investors to find new and old properties.

When job and wage growth is on an upwards trajectory, the local economy sees the benefits and in turn the real estate market is directly correlated to these trends. The Houston metroplex is an important industrial basin being the Energy Capital of the world but is also home to the Texas Medical Center – the largest medical complex in the world and is at the forefront of advancing life sciences. It boasts biotechnology companies, research institutions and is home to the U.S. energy headquarters. All these factors come together to make this city great for real estate investing.

Cons of Investing in Houston

Most residents living in Houston have their own personal vehicles. This is because the public transportation options are limited, as compared to other large metropolitan cities. Therefore, residents have to endure heavy commute times on the city streets and freeways. As a real estate investor, you need to understand what asset will attract which type of resident and understand the intricacies of each location.

Texas has no state income tax rates and as a result the main source of revenue to the city lies in the real estate tax. The tax rates is nearly twice that of California, for example. That being said, the asset prices are often half or less than other large metropolitan areas and taxes are an expense that is deductible from your rental income.

Houston does have a hurricane and flood season even though it is located away from the Atlantic and Caribbean seas. This does drive insurance rates up and you can expect to pay $1500-2000 per year of insurance cost.

Bottom Line

The Houston real estate market is a great place to invest yielding solid returns. The city offers entertainment, educational, employment choices, and outdoor activities, which translates in appreciation and rent growth 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 act as your partners and help you grow your wealth by choosing the right income producing asset that suits your goals.

Why Choose HNB Realty

The experts at HNB are fully committed to ensuring that your personal wealth is protected through investments in residential real estate. We take pride in providing seamless service to our clients and follow a thorough process to help them achieve their housing goals.

At HNB Realty, we believe in dedicating our time, energy, and resources to our valuable clients. We strive to assist you with overcoming your investment challenges, no matter how insignificant they may seem.

Pros and Cons of Investing in Houston, Texas

Pros of Investing in Houston

Rapid Population Growth

The Rental Market is Steady

The Real Estate Market is Developing