The rental market in Greater Houston is seeing gains amid uncertainty in the home buying market.
Would-be buyers, hesitant due to interest rates and inflation, are showing strong interest in single-family rentals, townhomes and condos garnered equal interest from renters throughout the start of summer, according to the Houston Association of Realtors.
Leasing activity for single-family homes surged by 16 percent year-over-year, marking a significant increase in demand.
About 4,200 single-family leases were signed in June, compared to 3,630 in the same period last year.
The townhome and condominium rental market also experienced positive growth last month. Leases for these properties increased by 15 percent, with 767 units leased, compared to 665 the previous year.
The average lease price for townhomes and condos reached a record high of $2,050, climbing nearly eight percent year-over-year.
Single-family rental listings saw an uptick of 18 percent in June, providing a sufficient supply of homes to meet the strong demand. Likewise, townhomes and condos also showed an uptick in listings, rising by more than 6 percent, with days on the market also increasing.
“We have sellers who are deciding right now if they should hold on to the property…and they’re holding on because rental rates are higher. They’re deciding, let me go ahead and keep it as another rental instead of trying to sell it, because they understand it’s a little tougher for buyers,” said HAR chairwoman Cathy Trevino. “Developers are also coming in and actually building whole rental communities, which is another reason for the increasing inventory.”
Built-to-rent communities have seen a boom in the Bayou City post-pandemic as the city and suburbs have increasingly become less affordable for buyers. The city completed nearly 2,000 build-to-rent single-family homes, the fourth most completions over the past five years, according to RentCafe.That comes as median single-family home prices have skyrocketed, increasing by over 40 percent from $240,000 in 2019 to $345,000 as of last month.
Houston also ranked third in the nation in upcoming built-to-rent communities with roughly 2,600 single-family units under construction.
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Clay Residential recently began construction on a rental community in Cypress expected to span some 370 homes as part of the Marvida master-planned community, which ranked within the nation’s top 20 best-selling master-planned communities according to RCLCO Real Estate Consulting. Meanwhile, Dinerstein Companies, Balcara Group and Ascendant Development are building three built-to-rent complexes, totaling over 800 units, in the southwestern submarket.
“A lot of economists are predicting that towards the end of the year, maybe the first quarter of next year, we will start seeing more consumer confidence,” Trevino said. “And then buyers will start making those decisions to start purchasing homes again like they did pre-pandemic.”