Key Takeaways
- Occupancy remained at 91.5%
- Absorption dropped by more than half over the quarter
- Average rents rose over the year and over the quarter
- The quarterly median sales price and cap rates dropped
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Houston Highlights
Demand for multifamily housing slowed between quarters recording only 1,708 units of net absorption compared to 4,098 the previous quarter. The average monthly rent for multifamily units increased 2.0% over the quarter from $1,188 per month in Q4 2021 to $1,212 per month in Q1 2022. There are over 13,000 units under construction and another 32,800 units are proposed. Occupancy remained steady over the quarter at 91.5% and increased over the year from 88.8% in Q1 2021 to 91.5% in Q1 2022.
Market Indicators
Historic Comparison
Market Fundamentals
Houston’s overall occupancy rate increased 270 basis points over the year. The average monthly rent rose 14.6% from $1,058 in Q1 2021 to $1,212 in Q1 2022.
Recent Transactions
Pricing & Sales Volume
HAfter reaching a historical high in Q4 2021, Houston’s multifamily investment sales volume dropped dramatically over the quarter from 8.6 billion to $1.2 billion. Further, sales volume decreased 17% year-over-year between Q1 2021 to Q1 2022 according to our data provider, Real Capital Analytics.
Houston Sales Volume ($)
Houston’s median sales price per unit decreased by 5% over the quarter from $155,720 to $147,897. The U.S. median price per unit fell 0.4% over the quarter from $191,406 in Q4 2021 to $190,614 in Q1 2022. Texas recorded the largest quarterly decrease of 22.5%.
Median Price per Unit
Cap Rates
Houston’s multifamily median cap rate decreased on a quarterly basis to 4.6% from 4.8% and the U.S. median cap rate remained steady at 4.7%. Houston’s median cap rate decreased 40 basis points from 5.3% over the year. In comparison, the median U.S. cap rate dropped 30 basis points from 5.0% over the year.
Median Cap Rate
Houston | # of Units | Avg Monthly Rent per Unit | Absorption # of Units | Apsorption # of Units (Previous) | Occupancy Rate (%) | Occupancy Rate (%) (Previous) | |
Class A | 192,013 | $1,710 | 2,473 | 2,949 | 87.4% | 86.9% | |
Class B | 236,888 | $1,221 | (948) | 573 | 93.7% | 94.1% | |
Class C | 204,668 | $913 | (118) | 454 | 92.8% | 92.7% | |
Class D | 76,086 | $730 | 301 | 122 | 91.4% | 91.0% | |
Total Market | 709,655 | $1,212 | 1,708 | 4,098 | 91.5% | 91.5% |
Class B apartment complex sold in an off-market transaction
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