- Occupancy up quarter over quarter and annually
- Absorption increased annually
- 35,544 units absorbed during first three quarters of 2021
- Average rents rose over the year and over the quarter
- Supply increased over the quarter
The Houston-The Woodlands-Sugar Land, TX MSA population is 7.2 million which has grown 7.3% over the last five years. The population is forecasted to grow 8.3% between 2020 and 2025. Job growth is positive increasing by 4.8% between September 2020 and September 2021. The unemployment rate is low at 5.5%. Houston’s single family home sales increased 18% year over year, pushing home prices to record levels. This in turn has boosted demand for multifamily housing, raising occupancy from 88.7% in Q3 2020 to 91.6% in Q3 2021. The average monthly rent for multifamily units increased from $1,045 to $1,165 per month, an 11.5% annual increase. Demand more than doubled over the year, with 11,814 units absorbed in Q3 2021 compared to 5,387 in Q3 2020. There are over 13,000 units under construction and another 28,600 units are proposed.
Houston’s overall occupancy rate increased 90 basis points over the quarter. The average monthly rent rose from $1,117 to $1,165.
Pricing & Sales Volume
Houston’s multifamily investment sales volume increased 116.9% year-over-year and 35.4% over the quarter between Q2 2021 and Q3 2021 according to our data provider, Real Capital Analytics. When comparing Houston to the U.S., the national annual volume increase of 76.2% was significantly less than Houston’s annual sales volume.
Houston’s median sales price per unit increased by 37.1% over the quarter from $100,087 to $137,171. The U.S. median price per unit increased by 7.7% over the quarter from $157,044 in Q2 2021 to $181,747 in Q3 2021.
Median Price per Unit
Houston Sales Volume ($)
Houston’s and the U.S. multifamily median cap rate decreased to 4.7% from 5.0% over the quarter. Houston’s median cap rate decreased 30 basis points from 5.0% over the year. In comparison, the median U.S. cap rate dropped 40 basis points from 5.1% over the year. Houston’s average cap rate remained at 5.1% over the quarter.
Median Cap Rate
Dallas investor acquires luxury multifamily communities
On behalf of Sueba USA and it’s affiliated companies, Colliers has negotiated the sale of a three property luxury multifamily portfolio in the Houston metropolitan area.
The Sueba 3 Portfolio represented a rare opportunity for an investor to acquire three high-end, Class A+ multifamily communities in the dynamic Houston market,” says J. Todd Stewart, Senior Vice President with Colliers in Houston. “These assets reflect the high caliber development standards that Sueba is known for. As one of the premier developers in the Greater Houston area, Sueba is recognized for creating outstanding residential and commercial properties in key submarkets.