Is It Time to Invest in the Houston Real Estate Market?

When thinking about starting real estate investing, it is only logical to consider one of the largest cities in the nation. Thus, in this article we look at the Houston real estate market and whether it’s a good idea to invest in it or not.

With its population of over 2.2 million people, Houston is not only the largest city in the State of Texas but also the fourth most populous city in the entire US. Houston is definitely the most diverse city in Texas and potentially also in the US. It is a global city with thriving business, international trade, entertainment, culture, media, fashion, science, sports, technology, education, medicine, and research. Houston has the fourth tallest skyline in North America (after New York City, Chicago, and Toronto) and the twelfth in the world. All these factors make Houston welcome millions of visitors and tourists annually and allow the Houston real estate sector to thrive.

Trade

Since ever, international trade has been one of the most important factors attracting people to migrate to a certain place or at least visit it on regular basis. If you are thinking about buying investment properties in Houston, then you will be happy to know that the Port of Houston is the largest US port in terms of waterborne tonnage handled and the second largest in terms of total cargo tonnage handled. It is also the busiest port in the US with regards to foreign tonnage and the thirteenth busiest in the world with regards to overall tonnage. The Port employs numerous workers, in addition to attracting thousands of business people, traders, and ship crew every year. All these people need both permanent and temporary places to stay while in the city, so buying an investment property in the Houston real estate market is a very good idea. You can rent it out through either traditional methods or Airbnb.

Medicine

Houston is home to the Texas Medical Center, the largest medical center in the world. It specializes in nearly any kind of patient care, science, teaching, and research. The Texas Medical Center comprises of 54 medicine-related institutions including hospitals, universities, research centers, and others. It takes 3,300 patient visits per day or over 8 million patient visits every year including 18,000 international patients. Such a compound requires a lot of housing for medical personnel, teaching staff, administrators, other professionals, students, patients, patient companions, and more. Thus, the Texas Medical Center is just another feature which makes the Houston real estate market an attractive place to invest. Once again, it could be for long- or short-term (Airbnb) rentals.

Business

In addition to being a trade and healthcare focal point, Houston is also an industrial and business hub. The city enjoys a broad industrial base with focus on the energy sector, manufacturing, aeronautics, and transportation. Houston maintains a leading position in the production of oilfield equipment in the US. This lively industrial scene contributes to making the Houston real estate market a vibrant one.

Johnson Space Center

Officially opened in 1963, the Johnson Space Center is NASA’s Manned Spacecraft Center. A complex of 100 buildings, Johnson Space Center offers human spaceflight training, research, and flight control. Both US and international partner astronauts are trained in this place. That’s what gained Houston the nickname the “Space City”. In addition to the work done there, the NASA center has a visitor center attracting a large number of guests. The presence of this center is another reason why Houston real estate investing is probably always a good idea.

Museum District

Houston does not attract only businesspeople and patients but also numerous tourists every year. One of the main tourist attractions in the city is the Museum District, an association of 20 museums, galleries, cultural centers, and community organizations gathered together with the aim of promoting art, science, history, and culture. More than 7 million visitors go to the Museum District for various exhibitions and events annually. The location of the Museum District is another positive feature for the Houston real estate market.

Theater District

In addition to the Museum District, Houston’s cultural scene enjoys another important asset – the Theater District. This is a 17-block area in the heart of Downtown Houston, hosting nine professional performing organizations, the Bayou Place entertainment complex, restaurants, movies, plazas, and parks. It gets visited by over 2 million people per year, both from inside and outside Houston. Again, this is something you have to keep in mind when deciding whether to buy investment properties in Houston or not.

Special Events

Houston’s calendar of events is filled throughout the year. The diverse ethnical and religious background of the population and the rich history and culture of the city make it so busy all year round. However, here is a list of a few special events which you should keep in mind if you consider buying investment properties in the Houston real estate market for Airbnb renting (Airbnb Houston):

Martin Luther King Jr. Grande Parade – taking place in January and attracting more than 300,000 supporters of the human rights activist from around the nation;
Chevron Houston Marathon – also happening in January with 20,000 US and foreign entrants and over 200,000 spectators from around the globe;
Art Car Parade – taking place in April and visited by 250,000 spectators.

These annual events among others are likely to attract numerous guests to your Airbnb Houston rental property, which will allow you to ask for higher than usual prices over their duration.

Related: How Much Can I Rent My House For?

Super Bowl

Super Bowl LI is the 51st Super Bowl event and is scheduled to take place on 5 February 2017 at NRG Stadium in Houston. The few days around this date are guaranteed to attract more Airbnb Houston guests than ever before. The previous two times when the Super Bowl was held in Houston – in 1974 and 2004, short-term rentals were not so popular yet. This single event should be a signal for anyone investing in the Houston real estate market.

Current Real Estate Market Conditions

Generally speaking, the Houston real estate market is doing well; actually, it’s doing quite well. In their speeches at the Greater Houston Builders Association meeting in May this year, experts on Houston real estate highlighted the surprising resilience of the Houston economy in general and real estate market in specific, even in recent times of nation-wide hardships. The single-family home market is definitely not overbuilt, and there is a healthy, balanced market. This is good for any potential investor.

One recent feature to keep in mind is that luxurious apartments are becoming highly competitive with single-family homes. The rising prices result in very luxurious Class A and Class B apartments in the Bayou City. Rents are also on the rise and likely to keep that trend. A report by Florida Atlantic University from June this year concludes that renting is still a better option than buying in the Houston real estate market. This is good news for those looking to buy investment properties in Houston. Because the authors of the report expect prices to go somewhat down in the upcoming period, they advise buyers to bargain very aggressively when purchasing a property in the Houston real estate market.

Another characteristic of Houston real estate you should consider is the effect of the baby boomers. As they are retiring, they are downsizing by selling their large suburban homes and buying smaller urban apartments and condos to increase their convenience.

Airbnb Houston

One thing about Houston is that even if you have the best Airbnb calculator on hand, Airbnb Houston is still not legally regulated. The Houston Code of Ordinances imposes a 7% tax on for any rental which costs more than $2 per night including “hotels, motels, tourist homes, houses, or courts, lodging houses, boarding houses, inns, rooming houses, or other buildings where rooms are furnished for a consideration, but shall not include hospitals, sanitariums, or nursing homes”. However, it is not clear whether this tax should be levied on Airbnb Houston rentals. Similar to other growing Airbnb markets, the Texas Hotel & Lodging Association and other interested parties have been lobbying for adopting specific short-rentals legislation and tax collection.

In terms of statistics, Airbnb Houston is doing OK with an average occupancy rate of 59%. The best performing neighborhood is Montrose with an Airbnb occupancy rate of 71%.

If you decide to invest in the Houston real estate market, don’t forget to check out Mashvisor for various analytics of listings in the city and its neighborhoods.

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