Key Takeaways
- Occupancy up quarter over quarter and annually
- Absorption more than doubled in 2021 when compared to 2020
- Average rents rose over the year and over the quarter
- Median and average sales price rose and cap rates compressed
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Houston Highlights
Demand for multifamily housing continued in Q4 absorbing 3,548 units, pushing the year-end 2021 total absorption to 37,308 units. The average monthly rent for multifamily units increased from $1,165 per month in Q3 2021 to $1,184 per month in Q4 2021 and from $1,043 per month in Q4 2020. There are over 15,000 units under construction and another 31,260 units are proposed. Occupancy increased over the quarter by 20 basis points and over the year by 340 basis points, from 88.4% in Q4 2020 to 91.8% in Q4 2021.
Market Indicators
Historic Comparison
Market Fundamentals
Houston’s overall occupancy rate increased 20 basis points over the quarter. The average monthly rent rose 1.6% from $1,165 in Q3 2021 to $1,184 in Q4 2021.
Pricing & Sales Volume
Houston’s multifamily investment sales volume increased 735% year-over-year Q4 2020 TO Q4 2021 and 386% over the quarter between Q3 2021 and Q4 2021 according to our data provider, Real Capital Analytics. When comparing Houston to the U.S., the national annual and quarterly volume increases of 126% and 132%, respectively, was significantly less than Houston’s annual sales volume.
Houston Sales Volume ($)
Houston’s median sales price per unit increased by 18% over the quarter from $137,171 to $161,859. The U.S. median price per unit increased by 7% over the quarter from $181,147 in Q3 2021 to $194,453 in Q4 2021.
Median Price per Unit
Cap Rates
Houston’s multifamily median cap rate decreased to 5.3% from 4.8% and the U.S. median cap rate decreased from 4.9% to 4.7% over the quarter. Houston’s median cap rate decreased 40 basis points from 5.2% over the year. In comparison, the median U.S. cap rate dropped 20 basis points from 4.9% over the year. Houston’s average cap rate dropped from 5.1% to 5.0% over the quarter.
Median Cap Rate
Houston investor purchases Cranbrook Forest*Houston investor, Hazel Equity, has purchased Cranbrook Forest, a northwest Houston apartment community, located at 13875 Ella Boulevard in Houston, Texas. Cranbrook Forest was built in 1983 and contains 261 apartment units. The five different one and two bedroom floorplans average 829 square feet and the property was approximately 92% occupied at the time of the sale. During the past three-to-five years, the seller, Cranbrook Forest, invested in excess of $3 million for capital improvements, primarily focused on the exterior of the community. Cranbrook Forest features desirable community amenities, including an upgraded leasing center, technology room with computer stations, fitness center, coffee bar, resort-style pool and children’s playground. Located just west of Interstate 45, Cranbrook Forest is within convenient access to the entire Houston metropolitan area. *Colliers transaction in cooperation with Cindy Cooke, Brad Cooke, Teresa Lowery and Ron Cameron |