The Houston real estate market is one of the most robust and dynamic in the United States. With a diverse economy, a rapidly growing population, and a high demand for housing, Houston presents excellent investment opportunities for real estate developers, investors, and homebuyers. In this article, we will examine the current state of the Houston real estate market, including its key drivers, trends, and challenges.
Houston Economy
The Houston economy is one of the largest and most diverse in the United States. According to the Greater Houston Partnership, Houston has a gross domestic product of $490 billion, which ranks it as the fifth-largest metropolitan area in the country. The city’s economy is driven by several industries, including energy, healthcare, manufacturing, and technology. The energy sector, which includes oil and gas production and refining, is particularly important to the Houston economy, with many of the world’s leading energy companies having their headquarters or major operations in the city.
A Houston build services business owner told me Houston’s population has also been growing rapidly in recent years. According to the U.S. Census Bureau, the population of the Houston metropolitan area was estimated at 7.1 million people in 2020, making it the fourth-largest metropolitan area in the country. This population growth has led to a high demand for housing, particularly in the suburbs surrounding the city.
Houston Real Estate Market
The Houston real estate market has been performing well in recent years, with strong demand and rising home prices. According to the Houston Association of Realtors, the median home price in the Houston metropolitan area was $275,000 in March 2021, an increase of 11.1% from the previous year. The number of homes sold also increased by 18.7% over the same period, indicating a strong demand for housing in the area.
One of the key drivers of the Houston real estate market is the city’s job growth. According to the Greater Houston Partnership, the Houston metropolitan area added 32,900 jobs in February 2021, bringing the total number of jobs in the area to 3.1 million. This job growth has fueled demand for housing, particularly among millennials who are looking to buy their first homes.
Another driver of the Houston real estate market is the low cost of living in the area. According to NerdWallet, Houston ranks as one of the most affordable cities in the United States, with a cost of living that is 5% below the national average. This low cost of living makes Houston an attractive destination for people looking to relocate, particularly those who are looking to buy a home.
Houston Real Estate Market Trends
One of the key trends in the Houston real estate market is the high demand for new construction homes. According to Zonda, a real estate research firm, new home sales in the Houston area increased by 22% in 2020 compared to the previous year. This increase in demand for new construction homes is driven by several factors, including low inventory levels of existing homes and a desire among buyers for modern, energy-efficient homes.
Another trend in the Houston real estate market is the growing popularity of master-planned communities. These communities, which offer a range of amenities such as parks, pools, and community centers, are becoming increasingly popular among homebuyers, particularly families with children. According to the Houston Business Journal, several new master-planned communities are currently under development in the Houston area, including the 11,400-acre Grand Texas development in New Caney.
Challenges Facing the Houston Real Estate Market
Despite the strong demand for housing in the Houston area, there are several challenges facing the real estate market. One of the biggest challenges is the shortage of housing inventory.