The Houston real estate market could be holding some hidden gems. Read on to learn more about real estate investing in Houston.
Investing in real estate in Houston could be considered a no-brainer for some. Its vast population and fascinating history are quite attractive to the real estate investor. However, some people may still be a bit worried to invest in the Houston real estate market because of the economy’s hit from Hurricane Harvey. But you shouldn’t allow your fear to stop you. You might be missing out on the best real estate investments. Finding them is all about the quality of research and resources you use when it comes to real estate investing. Before we get into that though, let’s give you the Houston real estate market forecast according to our investment property calculator.
Houston Real Estate Market- Best Neighborhoods
Midtown
- Median House Price: $371,125
- Monthly Airbnb Rental Income: $2,304
- Monthly Traditional Rental Income: $2,540
- Airbnb Cash on Cash Return: 0.59%
- Traditional Cash on Cash Return: 2.02%
- Airbnb Cap Rate: 0.59%
- Traditional Cap Rate: 2.02%
- Airbnb Occupancy Rate: 51.78%
Fourth Ward
- Median House Price: $507,568
- Monthly Airbnb Rental Income: $2,603
- Monthly Traditional Rental Income: $2,640
- Airbnb Cash on Cash Return: 0.83%
- Traditional Cash on Cash Return: 1.44%
- Airbnb Cap Rate: 0.83%
- Traditional Cap Rate: 1.44%
- Airbnb Occupancy Rate: 51.63%
Downtown
- Median House Price: $412,457
- Monthly Airbnb Rental Income: $2,213
- Monthly Traditional Rental Income: $2,396
- Airbnb Cash on Cash Return: 1.04%
- Traditional Cash on Cash Return: 2.66%
- Airbnb Cap Rate: 1.04%
- Traditional Cap Rate: 2.66%
- Airbnb Occupancy Rate: 54.66%
Note: All numbers are provided by Mashvisor’s investment property calculator. To learn more about how it works, click here.
What This Means for Investors in the Houston Real Estate Market
You might be a bit on the rocks after taking a look at the cap rate and cash on cash return for the best neighborhoods. If it’s that low for the best, how low is it for the worst? But that’s not what you should be thinking. Think about the correlation of return with risk. Sure, you’re not getting the best return on investment immediately, but that also means you’re not making a risky investment. A Houston real estate investment is expected to grow in value. This means a property with low returns now could prove to be quite profitable in the future.
Related: What’s a Good Cap Rate for Investment Properties?
When it comes to buying an investment property, you don’t look at only one factor- you look at the overall picture. The Houston real estate market has already shown signs of growth and a booming economy. It’s been in a fast-paced recovery mode since last year. Yes, we’re not crazy. It obviously isn’t the market for you if you’re looking for the highest returns right now. But, seeing how fast the housing market has clapped back, we’d say invest while property prices are still low because their market value is only increasing as time passes. Houston’s rate of appreciation still continues to be slightly above that of the national average.
The Texas real estate market hasn’t been that highlighted recently, but we can’t say the same for Houston. The Houston metro area offers great opportunities for investors who are looking for a stable, landlord friendly market that offers both cash flow and equity growth at a price that is still well below their replacement value. Read on for more reasons on why investing in the Houston real estate market is a good move for you.
Why You Should Invest in the Houston Real Estate Market
#1. High Population: Houston holds the highest population in Texas and the fourth highest in the country. Houston is a popular city in the US with thriving business, culture, fashion, sport, research, technology, education and many other things. All these things increase tourism and the likelihood of visitors. The accommodation of these visitors is what will allow the Houston real estate market to thrive.
#2. Job Growth: Big companies are heading to Houston to have their centers set up there. These companies are going to provide many new jobs. Houston currently has an unemployment rate of 5.30%. Companies, like Amazon, building these new centers will increase job growth and employment. This, in turn, leads to a busier housing market. With more job growth, comes more income, and more buyers and sellers in the housing market.
#3. Variety of Investment Properties: Houston has many types of property available in its housing market. In addition to its vast acres of land, it’s just waiting for investors. Whatever type of property you’re looking for, you’re bound to find in Houston. Whether it’s traditional rentals or Airbnb rentals, long term rentals or short term rentals, Houston’s got it all. To start your investment property search, check out our property finder tool! Do you have a free Mashvisor account? Click here to use our Property Finder and find properties in a matter of minutes!
We’ve already found a couple of potential investments from our tool for each neighborhood mentioned. Check them out:
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DOWNTOWN:
This top-performing property is listed for $299,000 with 1,541 sq/ft. It has 3 beds and 2 baths. A traditional cap rate of 5.60% and an Airbnb cap rate of 6.35%.
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MIDTOWN:
This property is a townhouse with a listed price of $315,000 and 2438 sq/ft. It has 3 beds and 4 baths. A traditional cap rate of 3.07% and an Airbnb cap rate of 2.49%
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FOURTH WARD:
The listed property price is $375,000 with 2,031 sq/ft. It has 3 beds and 4 baths. A traditional cap rate of 2.89% and an Airbnb cap rate of 3.54%
To see the details of these properties and other top-performing Houston investment properties, click here.
To get a better idea of what customers are looking for in an Airbnb property, check out Airbnb Houston. There are over 130,000 guest reviews in Houston averaging at a 4.8 out of 5 stars. Investing in an Airbnb rental property in Houston could be the best decision you make. Just make sure you know what’s in demand.
Houston Real Estate Trends
- Increasing home sales: according to the latest monthly report from the Houston Association of REALTORS® (HAR), 8,157 single-family homes sold in May versus 8,078 last year. That represents a 1.0 percent increase and marks the second greatest one-month sales volume in history.
- May sales of all property types totaled 9,721, which is an increase of 0.6% from the same month last year. Total dollar volume is $2.8 billion, which is a 2.0% rise.
- High home prices: The single-family home median price increased 3.4% to $243,000. This is great news for both buyers and sellers. By buying a rental property at a higher price level, you’re investing in a higher value property.
Related: What Real Estate Market Trends to Look for Before Making an Investment
Bottom Line: Investing in the Houston Real Estate Market
It seems like things are only looking up from here on out for the Houston real estate market. It might not hit no. 1 on the best place to invest in real estate, but it’s definitely a housing market to look out for. With Mashvisor, you’ll always be guaranteed to make the best investment decisions. Our vast set of tools and the insight we provide is invaluable. We’re with you every step of the way. From real estate analytics, to finding the right property, to conducting a real estate market analysis and everything in between. To start your 14-day free trial with Mashvisor and subscribe to our services with a 20% discount after, click here.