Houston neighborhoods come with an urban charm and a family-friendly vibe. Houston alternately makes the news for massive traffic jams, hurricanes that periodically hit the city, falling oil prices, and its rampant rate of growth. For example, Hurricane Harvey flooded more than a hundred thousand homes in August 2017 which kind of froze the Houston real estate market.
However, the Houston housing market recovered from that bust and is booming. Factors like affordable housing and good-paying jobs are still drawing people to the area. If you're looking for real estate investment, read this article to find some of the best neighborhoods in Houston to purchase a house or investment property. But before that let's discuss current trends and forecasts of the Houston real estate market.
Houston Real Estate Investment Forecast 2022
Houston housing market was in the news after Hurricane Harvey. After the hurricane hit, the nation learned how many homes, especially in west Houston, had suffered repeated “100-year floods”. But this didn’t stop the real estate market from remaining strong. The sheer demand for housing led many investors to snap up flooded properties for remediation and renovation.
By the time 2017 drew to a close, buyers closed on 3.5% more homes than they bought in 2016. Median home prices, too, were up 3.8% year over year. However, that doesn’t mean that there aren’t better or worse locations in which you could buy rental real estate. The best Houston neighborhoods are those close to major job centers and are considered livable, while newly constructed homes tend to be too expensive for potential landlords.
We recommend that you should invest in Houston real estate as it is one of the fastest-growing cities both in terms of population and jobs. This is driving up property values while guaranteeing a large population of renters. The city provides several opportunities for investing in up-and-coming neighborhoods, communities whose demographics guarantee a large supply of renters, and fast-appreciating areas that are a good way to generate both capital gains and rental income.
Houston is a diverse city with lots to offer that will cater to the tastes of a variety of potential buyers and tenants. Many of Houston’s neighborhoods are some of the most attractive places to live in the whole of Texas, and it’s not hard to see why. With a great balance of urban regions and open spaces in the suburbs, the potential for development is clear to see, and the natural features of the land are some of the most attractive features you could hope for in an investment district.
Looking at the current statistics, what is the Houston real estate market forecast for 2022? Let us examine the price trends recorded by Zillow over the past few years. Since Mar 2012, the Greater Houston home values have appreciated by nearly 99.97% — Zillow Home Value Index.
ZHVI represents the whole housing stock and not just the homes that list or sell in a given month. The typical home value of homes in Greater Houston is currently $287,957. It indicates that 50 percent of all housing stock in the area is worth more than $287,957 and 50 percent is worth less (adjusting for seasonal fluctuations). In Feb 2021, the typical value of homes in Greater Houston was around $239,000. Houston home values have gone up 20% over the last twelve months.
NeighborhoodScout.com's data also shows that Houston real estate appreciated by nearly 75.49% over the last ten years. Its annual appreciation rate has been averaging 5.79%. This figure puts it in the top 30% nationally for real estate appreciation. During the last twelve months, the Houston appreciation rate was nearly 9.51%, and in the latest quarter, the appreciation rate was 4.61%. If it remains steady, it annualizes to a rate of 19.76%.
The forecast by Zillow also points in the same direction — a rise in home values over the next 12-months. This indicates that the prices will rise in 2022. Hence, it is a good time to buy a house in Houston.
This shows that Houston is currently a seller's real estate market. There exists a limited supply of homes in Houston, and buyers are forced to compete often resulting in higher prices and/or quicker sales that tend to benefit sellers. In other words, based on the last latest key housing market indicators, the demand is exceeding the supply, giving sellers an advantage over buyers in price negotiations. There are fewer homes for sale than there are active buyers in the marketplace.
Clearly, for the long-term investment, you cannot ignore underestimating Houston. Investing in a rental property for the long term would build your equity and also generate cash flow through rental income. If you want to increase your cash flow in 2022, you will find great deals in the Houston real estate market.
Here is Zillow's home price forecast for Houston, Harris County, and Houston – The Woodlands-Sugar Land. You can expect to see very strong home price gains in this region.
- Houston home values have gone up 19.6% over the past year and they will continue to rise over the next twelve months.
- Harris County home values have gone up 20.3% over the past year and they will continue to rise over the next twelve months.
- Houston-The Woodlands-Sugar Land Metro home values have gone up 21.3% over the past year and they will continue to rise over the next twelve months.
10 Best Houston Neighborhoods For Investing in Real Estate
You won’t feel limited when it comes to choosing the best neighborhoods in Houston to buy investment properties. There’s something for every age and stage in life. Best of all, Houston enjoys some of the lowest housing costs in the nation. When compared to the 20 most populous metros, housing costs in Houston are 36.6 percent below average. Here is the list of 10 neighborhoods in Houston where you can buy a house or invest in a rental property.
1. Greater Heights, Houston, TX
Greater Heights is a suburb north of Highway 10 and west of I-45, and it is a short hop to Hardy Toll Road. This community is within commuting distance of jobs in downtown Houston and all of the northern suburbs. Public schools in the area range from 4 to 6 on a 1-10 scale. One of the highlights of this community is being close to the Northline Commons. It is one of the best neighborhoods in Houston to purchase a house or investment property.
Greater Heights Real Estate Market Trends
Greater Heights is a seller's market. A seller's market arises when demand exceeds supply. In other words, there are many interested buyers in this neighborhood, but the real estate inventory is low. According to Realtor.com, the median list price of homes in Greater Heights was $619K in March 2022, trending up 17.9% year-over-year, and the median listing price per square foot was $288.
As we write this, there are 355 active rental listings (houses and apartments) on Realtor.com with a median rent of $2,390. On average, homes in Greater Heights sell after 42 days on the market. The trend for median days on market in Greater Heights has gone down since last month, and slightly down since last year.
2. River Oaks, Houston, TX
River Oaks is so hot that Trulia reports average rents of $2500-$3000 per bedroom. St. John’s upper and lower schools are located in the heart of this community. The public River Oak’s elementary school received a 10 out of 10 from Greatschools.com. Nearby Lanier Middle School was rated 10/10, as well. Lamar High School was an average 5 out of 10. This community is a short hop from I-69 and Highway 610 without leaving residents to live with the noise.
River Oaks Real Estate Market Trends
River Oaks is a balanced real estate market, which means that the supply and demand of homes are about the same. Housing prices in a balanced market are stable, perhaps rising slightly, and influenced more by inflation than by an increase in demand. You can expect sellers to accept reasonable, close-to-list-price offers.
Data released by Realtor.com shows that the median list price of homes in River Oaks was $2M in March 2022, trending down by 7.7% year-over-year. The median listing price per square foot was $468. As we write this, there are 86 active rental listings (houses and apartments) on Realtor.com with a median rent of $3,900.
In a balanced market while homes generally sit on the market for an average or typical length of time (this can vary from market to market). On average, homes in River Oaks sell after 62 days on the market. The trend for median days on market in River Oaks has gone down since last month, and slightly down since last year. It is one of the best neighborhoods in Houston to purchase a house or investment property.
3. Uptown-Galleria, Houston, TX
Uptown puts residents right next to Highway 610. St. Michael Catholic School and Fusion Academy are located in this neighborhood. There are several other private schools in the area. Public schools in this community are average. It is a major shopping area. It's also known as The Galleria, for the vast retail complex of that name, with its mix of designer boutiques, chains, and department stores, plus a year-round ice rink.
One of the reasons why people pay such high rent here is the incredibly short commutes given the fact that you’re living in Houston. It is a great place to buy an investment property in Houston, Texas. Uptown is one of the best neighborhoods in Houston to purchase a house or investment property.
Uptown Real Estate Market Trends
Current housing trends show that Uptown-Galleria is a buyer's market, which means that the supply of homes is greater than the demand for homes. Most experts agree that if six months or more of inventory is on the market, it is a buyer's market. There is no better timing to get a new home or buy an investment property. Buyers have the upper hand and enjoy more choices in properties, as well as more negotiating power when making a purchase. If you’re looking to buy a property, Uptown-Galleria is the ideal market to do it in.
Data by Realtor.com shows that the median list price of homes in Uptown-Galleria was $365K in March 2022, trending down -1.3% year-over-year. The median listing price per square foot was $261. As we write this, there are 652 active rental listings (houses and apartments) on Realtor.com with a median rent of $1,820. On average, homes in Uptown-Galleria sell after 66 days on the market. The trend for median days on market in Uptown-Galleria has gone down since last month, and slightly down since last year.
4. EaDo, Houston, TX
EaDo or East Downtown sits due north of Gulf Freeway and east of South Freeway. The community costs a little more to live in than downtown but is safer than downtown. Past trends show us that property has been appreciating here much faster than downtown, making it one of the “best Houston neighborhoods” to invest in rental properties.
East Downtown Real Estate Market Trends
Currently, East Downtown Houston is a balanced market. As a buyer, you would be on even ground with sellers. The number of homes for sale is on-par with the level of demand, so there is usually a sufficient number of homes to compare and choose from. Data by Realtor.com shows that the median list price of homes in East Downtown Houston was $389K in March 2022, trending up 1.1% year-over-year. The median listing price per square foot was $202.
As we write this, there are 12 active rental listings (houses and apartments) on Realtor.com with a median rent of $2,470. On average, homes in East Downtown Houston sell after 45 days on the market. The trend for median days on market in East Downtown Houston has gone up since last month, and slightly down since last year.
5. The Museum District, Houston, TX
The Museum District is due west of the Medical Center, putting residents in easy reach of both major medical employers and downtown Houston jobs. You do have to earn two to three times as much to afford to live here. This area is attractive to both young adults and empty nesters who want to live near the 19 museums in the area. Others appreciate the proximity to Rice University, whether they work there or attend the school.
This makes the Museum District one of the best neighborhoods in Houston for buying investment properties. Rental rates are falling in most inner loop neighborhoods because of the high supply relative to demand. The rental rates would look even worse if it were not for the influx of new, high-rent properties coming onto the market, pulling the average up. Rents here are stable and rival those of the Medical Center district making it one of the “best Houston neighborhoods” to invest in rental properties.
The Museum District Real Estate Market Trends
Current market indicators show that the Museum District is a buyer's real estate market, which means that the supply of homes is greater than the demand for homes. If you’re looking to invest in real estate, the Museum District is another ideal market for it. Buyers will have more negotiating power when making a purchase.
6. Downtown Houston, TX
Downtown Houston is still attracting many new residents because of its proximity to major employers and excellent public transit. It is considered one of the most up-and-coming areas of the city. Real estate developers have been building condos for both the middle and top of the real estate market. The majority of Downtown’s residential options are Historic Houston Lofts and Downtown Houston Condos which offer great “lock and leave” benefits.
Downtown Houston’s residential market has doubled in the last few years. Property values have remained strong in the area. There are no single-family homes in the Downtown area, however, there are plenty available in surrounding neighborhoods including Midtown, the Heights, Montrose, Northside Village, and EaDo. Several new developments are under construction in the area, with others still in the planning stages.
Downtown is a great part of Houston for homebuyers who enjoy both indoor and outdoor activities. Even though the ambiance is not the liveliest in this neighborhood places to go out at night are well-spread throughout the area. Renters occupy roughly 70% of the units in the neighborhood whereas the rest are occupied by owners. Large apartment buildings are the most common housing type, representing the majority of dwellings in this area, while single detached homes are also present in the housing stock.
Downtown Houston Real Estate Market Trends
An average Downtown Houston condo for sale can feature 2 to 3 bedrooms, though bigger units with 4-bedroom floor plans are also available. Prices typically start at around $150,000 and can go as high as $3,500,000. Downtown Houston has enough homes on the market to fuel a year of sales. According to ZILLOW Home Value Index, the typical value of homes in Downtown Houston is $355,059. This value is seasonally adjusted and only includes the middle price tier of homes. Downtown Houston's home values have gone up 8.2% over the past year. Downtown is one of the best neighborhoods in Houston to purchase a house or investment property.
7. West University Place, TX
West University and the Southside Area has been one of the highest appreciating inner ring neighborhoods in Houston. West U is a city located within the Houston–The Woodlands-Sugar Land metropolitan area and southwestern Harris County. It is one of the best places to live in Texas. West University Elementary School was given 10 out of 10 points by Great Schools.
According to Zillow, the typical value of homes in West University Place is $1,538,233. West University Place's home values have gone up 14% over the past year. Real estate investing in this Houston suburb will lead to a good rental income as well as a property appreciation. The average household income in West University Place is $359,834 with a poverty rate of 1.67%.
The median rental costs in recent years come to $2,260 per month, and the median house value is $1.11 Mn. The median age in West University Place is 42.1 years, 44 years for males, and 40.4 years for females. This is one of the best neighborhoods in Houston for buying an investment property.
West University Real Estate Market Trends
West University Place, TX is a seller's market, which means that more people are looking to buy than there are homes available. Hence, sellers have an upper hand when it comes to price negotiations. Buyers can expect to pay over and above the asking price. Data by Realtor.com shows that the median list price of homes in West University Place, TX was $1.6M in March 2022. The median listing price per square foot was $448.
As we write this, there are 22 active rental listings (houses and apartments) on Realtor.com with a median rent of $4,950. On average, homes in West University Place, TX sell after 46 days on the market. The trend for median days on market in West University Place, TX has gone up since last month, and slightly down since last year.
8. Rice Military, Houston, TX
The Rice Military neighborhood is just southwest of Washington Avenue/Memorial Park. Rice Military is an excellent real estate investment opportunity. You can rent to students attending Rice University or those that can’t afford to live in more desirable communities. This community is far more affordable than nearby upscale Memorial Park. There are many quality private schools in the area, while public schools in the area are average.
Surrounding subdivisions and neighborhoods are often lumped together with Rice Military. The bigger area commonly referred to as Rice Military/Washington Avenue or Washington Corridor stretches south of I-10 (Katy Freeway), east of Washington and Westcott, north of the Buffalo Bayou, and west of Sawyer Street. It is one of the best neighborhoods in Houston for investing in rental properties due to guaranteed demand, accessibility, and appreciation.
Rice Military Real Estate Market Trends
According to Redfin, the Rice Military / Washington Corridor housing market is somewhat competitive. The average homes sell for about 1% below the list price and go pending in around 22 days. Hot properties can sell for about 1% above the list price and go pending in around 6 days. The average sale price of a home in Rice Military / Washington Corridor was $497K last month, up 17.0% since last year. The average sale price per square foot in Rice Military / Washington Corridor is $214, up 9.4% since last year.
9. Humble, Texas
Several Houston suburbs have appreciated significantly as many Houston residents settle there. For example, the suburb of Humble has gone up in value along I-69. Humble’s public schools have average scores of 4 to 6 according to Greatschools.com. There are several private schools in Humble, as well. Humble is one of the most popular suburbs in Houston, demonstrated by the fact nearby Kingswood has declined. Humble is a good neighborhood in Houston to buy investment properties for rental income.
Humble Real Estate Market Trends
Current market indicators show that Humble, TX is a seller's market, which means that more people are looking to buy than there are homes available. Because of a shortage of inventory, homebuyers may encounter bidding wars or their home search might take longer than expected. Realtor.com's data shows that the median list price of homes in Humble, TX was $297K in March 2022, trending up 11.7% year-over-year. The median listing price per square foot was $137.
As we write this, there are 340 active rental listings (houses and apartments) on Realtor.com with a median rent of $1,790. On average, homes in Humble, TX sell after 42 days on the market. The trend for median days on market in Humble, TX has gone down since last month, and slightly down since last year.
10. Webster, Texas
Webster, Texas real estate has gone up more than Nassau Bay and Friendswood. This is interesting since Nassau Bay sits on the shore, perched between Space Center Houston and the namesake bay. Webster is directly southwest of the NASA Johnson Space Center, while residents on the east side are close to Clear Lake. Homes here are in demand because the community is a short trip up I-45 to Houston for those who don’t work for NASA or local oil and gas companies. This is one of the “Best Houston neighborhoods” for buying investment properties in 2022.
Webster Real Estate Market Trends
Currently, Webster, TX is a seller's market, which means that more people are looking to buy than there are homes available. According to Redfin, the Webster housing market is most competitive. In March 2022, Webster's home prices were up 16.4% compared to last year, selling for a median price of $326K. On average, homes in Webster sell after 7 days on the market compared to 7 days last year. There were 27 homes sold in March this year, up from 25 last year. Most homes get multiple offers, often with waived contingencies. The average homes sell for about 12% above the list price and go pending in around 7 days.
On Realtor.com, the median list price of homes in Webster, TX was $230K in March 2022, trending up 4% year-over-year. The median listing price per square foot was $154. As we write this, there are 136 active rental listings (houses and apartments) on Realtor.com with a median rent of $1,250. On average, homes in Webster, TX sell after 42 days on the market. The trend for median days on market in Webster, TX has gone up since last month, and slightly down since last year.
Disclaimer: When referencing the median rents of the local neighborhoods, please keep in mind that the data provided was taken from different credible sources. While deemed reliable, it may not accurately depict the current reality of the local real estate market. The pandemic may have impacted rent rates in a way that is not yet reflected in this blog.
How To Find Best Investment Properties In Houston?
Buying an investment property is different from buying an owner-occupied home. Whether you are a beginner or a seasoned pro you probably realize the most important factor that will determine your success as a Real Estate Investor is your ability to find great real estate investments.
Maybe you have done a bit of real estate investing in Houston, TX but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. If you invest wisely, you could secure your future. If you are a beginner in the business of cash flow real estate investing, it is very important to read good books on real estate.
At Norada Real Estate investments, we offer “Investment Properties” which are located in some of the best neighborhoods of Houston, TX. Our properties in Houston are designed to make money as rentals, which means you must look at it solely as an income-producing entity just like any other business.
Norada Real Estate investments strive to set the standard for their industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in various growth markets. We can help you succeed by minimizing risk and maximizing profitability. You can contact us for a “Free Strategy Session” by clicking here.
Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.