Real estate experts said apartment complexes have taken advantage of this opportunity and increased rent prices, which is starting to impact the pocketbooks of renters.
Crystal Bledsoe, a multifamily asset manager with the Howard Hughes Corp., the developers behind the Cypress master-planned community Bridgeland, said her firm keeps a constant watch on the market for trends in development and demand.
“We’ve seen a very large increase in regards to multifamily not only in Bridgeland but also in The Woodlands,” Bledsoe said. “It hasn’t really been gradual because of the amount of products there so we saw a huge increase in demand.”
Single-family homes are being purchased as soon as they enter the market, forcing those who cannot make an offer fast enough to look for somewhere to live.
According to ApartmentData.com President Bruce McClenny, these people often turn to multifamily developments in the area to have a place to live in the meantime.
“The real estate market has reached an unprecedented demand for housing with multifamily options at the forefront,” said Neil Simon, vice president of development for Venterra Realty, which is building Highpark, a 336-unit complex in Cy-Fair. “Occupancy numbers are hitting an all-time high across the U.S. with 95% of apartment units spoken for. This increasing need for housing has led to a significant ramp-up in production and construction of multifamily communities by more than 25% nationally in 2021 with the Houston metroplex ranking in the top 10 of 2021.”
McClenny said the economy plays a part in the housing market as well. He said job growth in the energy sector has pulled people from all over the country to Houston, flooding the single-family and multifamily housing markets.
To combat this lack of supply, there are 14 new multifamily housing developments proposed or under construction in Cy-Fair to provide the area with more than 4,000 new units in the next few years, according to ApartmentData.com.
According to a report demographics firm Population and Survey Analysts released in April, multifamily units make up 47% of all new projected housing within Cy-Fair ISD boundaries with more than 18,000 new units projected to be completed between 2021-31. In its latest report, the group also predicts the number of new multifamily units added to the market each year will outpace single-family units by 2027.
While there is an increase in development, there is a gap in supply and demand, driving rent prices higher, McClenny said.
“All of a sudden it’s like, wow, we truly have a situation where there is a lack of housing—both single-family and multifamily housing—and that lack of supply is what drives these prices higher to levels like we’ve never seen,” McClenny said.
Rent increases
McClenny said the market is saturated with buyers, but the supply is still down due to lingering supply chain issues preventing construction. While production recovers, many are looking for homes, leading to the rapid filling of apartment complexes.
The imbalance of supply and demand has pushed rental prices up, data shows. ApartmentData.com reported Cy-Fair’s average rental rate rose 17% in two years from $1,070 in April 2020 to $1,253 this April.
McClenny said the trend of high interest rates on single-family homes and price increases in double-digit percentages make for an unsustainable market.
“This current trend is favoring renting, and I don’t know how long this is going to last,” McClenny said. “Unfortunately, there’s going to be some kind of shock. Nobody knows what it is, but this is a bubble of sorts that can’t continue.”
Price increases are hitting those who were already in low-income housing or on the verge of needing low-income housing, said Rene Martinez, the chief community and housing development officer at the Harris County Community Services Department.
There are 500,000 cost-burdened households in Harris County and a need for over 200,000 housing units for residents making up to 120% of the median income over the next 10 years, according to the Rice University Kinder Institute’s 10-year Housing Needs Assessment from 2021. According to this report, the number of renter-occupied units locally ranges from 12% in north Cypress to 47% in the area surrounding Jersey Village.
Martinez also noted the supply is not keeping up with the demand but specified this is largely the case in certain income bands. McClenny agreed, pointing out some large developers have shifted away from creating more luxury complexes to making housing for the working person.
Flooding the market
Harris County officials are not the only ones who have made note of the lack of supply. Multifamily housing developers and single-family housing developers have taken notice and are beginning to take action.
Venterra has Highpark in the works with a projected opening in the fall, and Alliance Residential has proposed a 350-unit development known as Prose on Huffmeister Road. While Highpark will feature amenities for those coming from the inner city, Prose is one McClenny said will be designed for the working population of Cy-Fair.
“Prose was designed to be what they started out marketing as a workforce housing model,” McClenny said. “It’s for the teachers; [it’s] for the firefighters; [it’s] for the middle America; [it’s] for those people that are probably making 80% of the area median income is what it’s turned out to be.”
There are also developments in the works for those in lower income brackets. The HCCSD has The Residences at Arbor Oaks under construction to bring 192 units to Cy-Fair and recently acquired land close to Jersey Village that has yet to be developed.
McClenny said he thinks this flooding of the market with new units could help rent prices go down in the long run after the market becomes fully saturated.
“In Houston, we know how to overbuild a market; we can do that really well,” McClenny said. “So I’m counting on the developers to do that again, so in those cases if we put more supply on the market and there’s also demand for it, that will also straighten [the rental pricing change] out.”
Changes in development
Another trend PASA reported is a rise in the development of rental homes. Officials said two build-to-rent communities have been proposed that will be completed in the coming years: one in Bridgeland with 263 homes and Avalon at Cypress with 240 homes.
Another innovation developers are implementing is telecommute amenities to allow renters to make the most of their space. Simon said Highpark will cater to remote workers.
“Coming out of COVID[-19] with greater work flexibility, renters are relocating more towards the suburbs and are interested in amenities that support remote work, such as coworking-style facilities, outdoor workspaces, built-in desks and studies in units, and outdoor living areas,” Simon said.
Bledsoe said the Howard Hughes Corp.’s Starling at Bridgeland features workspaces equipped with Wi-Fi as well as smart home technology to meet the demands of their prospective tenants. Bledsoe said the rental rates for this development are expected to start around $1,500, a price she believes reflects the amenities and stylings renters prefer.
“They’re looking for very modern-style amenities because we’re dropping in migrators that’s at a younger age and younger professionals,” Bledsoe said.
