It's no more an unknown thing for a savvy real estate investor to know that Houston, Texas is a beautiful place to live and raise a family. Houston, with a fascinating history, is considered to be one of the most desirable locations to invest in real estate in the country and the whole world at large. The Houston real estate market is becoming one of the favorite destinations for those looking for a beautiful home. In case you are thinking about investing in Houston real estate, as an investor, it is only logical to consider the booming cities in the country.
As someone who is looking to invest in real estate in 2021, I will advise you to consider investing in the Houston real estate market because this city is one of the good examples of a booming housing market. It provides a healthy and secured real estate profile for local and even foreign investors.
Houston has everything: the people, the diversity, the business climate, being world-renowned in energy, medicine, space, and manufacturing. So, if you are of one the investors looking to invest in the Houston housing market, then you are on the right track as a savvy investor. The Houston housing market offers plenty of choices and also amazing prices for properties and it is a good time to invest in Houston.
Why Should You Invest In Houston Real Estate?
Top Reasons To Invest In The Houston Real Estate Market
In this article, we will look at the top reasons that make Houston a great place for real estate investment.
1. Rapid Population Growth
Greater Houston is the most diverse, rapidly growing major U.S. metropolitan area, and immigration has contributed greatly to its growth and diversity. It has a population of over 7 million people. Houston is the largest city in the state of Texas, and also it is the 4th most populous city in America.
Since 2010, the Houston area has added nearly 1.1 million residents. Houston’s population should exceed 7.1 million by the end of the decade. Major population growth is seen in Brazoria, Fort Bend, Harris, and Montgomery counties. State demographers estimate that Texas’ population will double to more than 54 million people by 2050 and a lot of it will be concentrated in the big metropolises including Houston.
Underpinning this growth is the economic strength of the area. Immigrants make up approximately one-third of workers in Greater Houston. It is a popular city in the US with thriving business culture, fashion, sport, research, technology, education, and many other things. Houston is also the city with the fourth-tallest skyline in the US.
All these amazing factors make Houston accommodate millions of tourists and visitors every year and which simultaneously allow Houston's real estate market to boom. Real estate prices fluctuate due to a number of factors, but none more so than population growth. Net population creates demand for housing and without a new supply of properties, it pushes up the prices for both renting and purchasing.
In Houston, there is approximately 24% less inventory now versus last year. Houston home values have been rising at a steady rate. With homes in short supply, it has driven up home prices, even amidst a pandemic and the subsequent economic slowdown. This is the first reason to invest in the Houston real estate market.
2. Houston Real Estate Market Is Still Developing
Houston has a lot of room to grow and develop unlike the fully built city like New York, San Francisco, Washington, etc. Houston has a low-density sprawl which is fantastic, and this means that there are still spaces within the city for the construction of residential housing. Many inner-city neighborhoods still have spaces either abandoned or vacant, and these land spaces can be used for building houses.
Investing in Houston real estate is a perfect idea because there is a lot of variety of investment properties available to investors. Houston has an extremely good business infrastructure and residential housing costs provide an operating cost advantage to prospective investors.
There are many acres of land available, and there is a lot of movement going on in the real estate sector in Houston which makes it an ideal real estate market where investors can easily find old and new properties in the market. Whatever type of real estate investing you want to do, you can easily find a lot of investment properties that offer investors a strong opportunity to generate passive monthly income. This is another good reason to invest in the Houston housing market.
3. Strong Economy and Job Growth
When the economy and job growth is strong, the real estate market does well. So weak job growth means a lousy housing market, and vice versa, right? The Houston region is one of the most important industrial bases in the world and ranks No. 2 in manufacturing GDP in the U.S. It has the largest medical complex in the world, the Texas Medical Center, which provides clinical health care, research, and education at its 58 institutions.
Houston has more than 1,760 life sciences and biotechnology companies, cutting-edge hospitals, health facilities, and research institutions. Houston is the U.S. energy headquarters and a world center for virtually every segment of the oil and gas industry from exploration and production to marketing and technology.
Houston is home to 6,400 manufacturers who employ more than 240,000 skilled workers and produce $80 billion in goods annually. You can visit Houston.org for more info information on Houston's top industries. Big companies want to have their centers set up in Houston. Recently Amazon chose Houston to call home. This decision has the potential to bring an entirely new industry to Space City.
A one-million-square-foot distribution center has been built near the intersection of Highway 90 and Woods Road, just off I-10 West. The center is said to eventually provide 1,000 new jobs in the area. This will give a great boost to Houston's economy and real estate sector as well. According to Greater Houston Partnership, Greater Houston shed more than 350,000 jobs in March and April this year due to the pandemic. So far, it has recouped about half of those.
It needs another 174,000 to return to its pre-pandemic employment level. In its newly released 2021 employment forecast, the GHP predicted the region will add 35,000 to 52,000 jobs in 2021. Every sector in Houston will register job growth except energy and retail. Other factors possibly lifting Houston’s job growth above what’s forecasted: an additional $2 trillion U.S. stimulus package, several local multi-billion infrastructure projects, a significant expansion of health care coverage, and OPEC pulling another two to three million barrels per day of production off the market.
But all recovery scenarios assume a successful rollout of the vaccine, with enough of the population getting inoculated to reach herd immunity by summer. All these factors make a good reason to invest in the Houston housing market in 2021. Demand for all types of real estate increases with the number of local jobs. Additions to the local labor force tend to drive rents and prices upon rental properties in the vicinity and results in local construction of homes and apartments.
4. Booming International Trade
Another reason why investors need to invest in the Houston housing market is that of the booming and expanding trade. The economy of Houston is based primarily on the energy industry, particularly oil. However, health care, biomedical research, and aerospace also constitute large sectors. One of the reasons why people migrate to a certain place is international trade and ease of business, and Houston has the largest US port regarding total cargo tonnage handled.
Even for the waterborne tonnage, makes it the busiest port in the US when it comes to foreign trade. The port in Houston employs lots of workers, and this port also attracts numerous business people, travelers from around the world every year and all these people need a place to stay in either temporary or permanent housing. This is where real estate investors come in! You can easily rent out a property or even sell to foreigners who are always in Houston for business. What more you need to think of before deciding to invest in Houston?
5. Education & Quality of Life
Quality of life and employment opportunities are the economic motivation leading household heads to migrate from one region to another. It is important to assess the quality of life by evaluating the economic, social, and environmental indicators related to the quality of life. Houston, Texas is considered among the top cities with a free business environment. According to Teleport.org's city rankings, Houston is a good place to live with high ratings in startups, healthcare, and leisure & culture. It's economy and education also gets a high-quality score.
Safety is still an issue. Safety.com named Houston, Texas, among the top five “surprisingly dangerous big cities in America,” noting that although more than half of Americans perceive Houston as being safe, Houston’s rates of both assault and vehicle theft are actually quite high, while reported rape rates are considered “middle of the line.
It’s worth noting, however, that most of Houston’s dangers are confined to the bad areas of Houston, so it’s important to know which Houston neighborhoods to avoid when considering investing in real estate. Some of the city’s safest neighborhoods, include Far Northeast, Pasadena, and Midtown, as well as the suburbs of Sugar Land, Spring Valley Village, and Friendswood.
Education is one of the major elements of quality of life. Many economists and educators favor public support for education on the premise that education improves the overall quality of life of citizens. Educational opportunities play a key role in Houston's quality of life. Houston is a city that is rich in distinguished schools, universities, and colleges. The Houston Independent School District, the biggest in the Houston region, serves 213 square miles with 288 schools, 13,000 educators, and over 210,000 students. It is one of Houston's biggest business ventures.
Houston boasts more than 40 colleges, universities, and institutions – offering higher education options to suit all interests. The Greater Houston area has 14 major institutions of higher learning. For the fifth straight year, Baylor College of Medicine has been recognized by Healthiest Employers LLC and the American Heart Association for its outstanding health and well-being initiative, BCM BeWell.
Baylor St. Luke’s has been recognized as a Best Hospital for 2019-2020 according to U.S. News & World Report, including second in Houston and third in Texas. The University of Houston has been ranked among the best in the United States in a number of categories, according to the U.S. News and World Report Best Colleges 2021 rankings. UH earned a top 50 ranking as a “Top Performer for Social Mobility,” and also landed on the lists for “Top Public Schools” and “Best Value Schools.
Where To Invest in The Houston Real Estate Market?
If you are looking to buy real estate in Houston, you should know the best places to invest in. The three most important factors when buying real estate anywhere are location, location, and location. The location creates desirability. Here are some of the neighborhoods in the Greater Houston Area which are good for investing in real estate.
1. Kingwood Area, Houston, TX
The top pick is a suburb called Kingwood Area in Harris County. Niche.com ranks it as #1 in the best suburbs to buy a house in Texas. Home prices and rent in the Kingwood area are both above average here, and the shores are a definite crowd-pleaser. The links to the city center are convenient, but Kingwood has plenty to offer in itself. A good place to consider with its potential for growth and development.
2. El Lago, Houston, TX
This suburb is just outside Taylor Lake Village. Niche.com ranks it as #3 in the best suburbs to buy a house in Texas. Home prices and rent in El Lago fall slightly below the national average here, so the growth potential is rather exciting. It’s a quiet neighborhood with a good jobs market, so very appealing for potential buyers or tenants.
According to Realtor.com, the median list price of homes in El Lago, TX was $285K in December 2020, trending up 10.9% year-over-year. The median listing price per square foot was $125. It is a seller's market, which means that there are more people looking to buy than there are homes available. On average, homes in El Lago, TX sell after 74 days on the market. The trend for median days on market in El Lago, TX has gone up since last month, and slightly up since last year.
3. Clear Lake, Houston, TX
Clear Lake City is a master-planned community located in southeast Harris County, Texas, within the Bay Area of Greater Houston. It is the second-largest master-planned community in Houston — behind Kingwood. Clear Lake enjoys all the amenities you’d expect from a larger city, but is actually quite small and inviting. And the large lake is a definite selling point.
The population is quite high, topping 83,000, and home prices in this Houston area are a little above the national average. The open spaces here are worth noting because they are attractive for buyers and they show potential for development, so a little research could unveil a good investment opportunity in Clear Lake.
According to Realtor.com, the median list price of homes in Clear Lake was $267K in December 2020, trending up 1.3% year-over-year. The median listing price per square foot was $123. Clear Lake is a seller's market, which means that there are more people looking to buy than there are homes available.
On average, homes in Clear Lake sell after 49 days on the market. The trend for median days on market in Clear Lake is flat since last month, and slightly down since last year. Clear Lake hosts 24 public schools rated good and higher by GreatSchools. You can find dozens of grocery stores and hundreds of cafes and restaurants in Clear Lake.
4. Addicks Park Ten, Houston, TX
Addicks Park Ten is located in the westernmost part of the City, north of Interstate 10. Most of the area is made up of the Addicks Reservoir, a large flood control dam. One of the more affordable suburban neighborhoods, Addicks Park Ten ticks a lot of boxes for potential buyers or tenants. It has good connections to the city center, and plenty of things within its own boundaries to attract new residents.
Home prices fall pretty close to the national average here, but the Houston magic of price growth could make an investment here profitable. And average rent is higher than the national average here. Currently, Addicks Park Ten is a Hot Market, according to Realtor.com Market Hotness Index. In a hot market, homes sell 22.5 days faster and are 12% more popular than the typical home in the U.S.
The median list price of homes in Addicks – Park Ten was $249.9K in December 2020, trending up 15% year-over-year. The median listing price per square foot was $95. On average, homes in Addicks – Park Ten sell after 59 days on the market. The trend for median days on market in Addicks – Park Ten has gone down since last month. Addicks – Park Ten hosts 14 public schools rated good and higher by GreatSchools such as Jean & Betty Schmalz Elementary School.
5. Taylor Lake Village, Houston, TX
Taylor Lake Village is a city in Harris County, Texas, United States. Taylor Lake Village is another area where the median home value is only a little above the national average, but rental values are sky-high. Another beautiful suburban neighborhood, Taylor Lake Village is something of a tourist attraction because of its proximity to NASA and the Johnson Space Center. Purchasing a property here could be a real money-spinner if placed on the tiny rental market, but home price growth is likely to net you a tidy profit as well.
On Realtor.com, the median list price of homes in Taylor Lake Village, TX was $320K in December 2020, trending up 12.3% year-over-year. The median listing price per square foot was $128. It is a seller's market, which means that there are more people looking to buy than there are homes available. On average, homes in Taylor Lake Village, TX sell after 70 days on the market. The trend for median days on market in Taylor Lake Village, TX has gone down since last month, and slightly down since last year.
6. Greatwood, Sugar Land, TX
Greatwood is a census-designated place and master-planned community located in the extraterritorial jurisdiction of Sugar Land within Fort Bend County, Texas, United States. For its mix of city location and rural surroundings, Greatwood will tick a lot of boxes for many buyers. Property values are above average here, but rent prices are extremely high due to the shortage of rental properties available.
Neighborhood Facts for Greatwood (Source: HAR.com)
|Average Price/Square Ft.||$128|
|Average Year Built||1996|
|Average Square Ft.||3,163|
The median list price of homes in Greatwood Crossing Subdivision was $289.9K in December 2020, trending up 5.6% year-over-year on Realtor.com. The median listing price per square foot was $131. It is a seller's market, which means that there are more people looking to buy than there are homes available. On average, homes in Greatwood sell after 62 days on the market. The trend for median days on market in Greatwood has gone up since last month, and slightly down since last year.
7. Memorial, Houston, TX
The Memorial area of Houston, Texas is located west of Downtown, northwest of Uptown, and south of Spring Branch. The first of the more distinctly urban areas on our list for Houston, Memorial has a population of 52,000 with real estate values way above the national average. For those that can afford it, Memorial is a great place to live and it wins the niche.com award for the best place to raise a family.
Memorial homes enjoy easy access to schools, stores, restaurants, entertainment centers, and parks. Investors looking to rent out properties might find Memorial most alluring. According to Houston’s Best Public Schools, the area is zoned to some of the top-ranked schools in Texas including Memorial Drive Elementary, Frostwood Elementary, Wilchester Elementary, Bunker Hill Elementary, Memorial Middle, and Memorial High.
Neighborhood Facts for Memorial (Source: HAR.com)
|Average Square Ft.||3,004|
|Average Price/Square Ft.||$235|
|Price Range||$117,500 – $3,395,000|
|Homes for Lease||141|
According to Realtor.com, the median list price of homes in Memorial was $545K in December 2020, trending up 11.2% year-over-year. The median listing price per square foot was $197. Memorial is a seller's market, which means that there are more people looking to buy than there are homes available. On average, homes in Memorial sell after 72 days on the market. The trend for median days on market in Memorial has gone down since last month, and slightly down since last year.
8. Lake Houston, Houston, TX
Though another suburban district, Lake Houston has a considerably largest population above 73,000, with real estate values averaging close to the national median at $175,915. The Lake Houston region consists of several growing communities. From golf courses to country living and from upscale mixed-use developments to signature shopping, the Lake Houston Area has it all.
Niche.com rates Lake Houston as the safest place to live in the Houston area, so the community is appealing to buyers looking for the more urban type of suburb. Interestingly, median household income here is near twice the national average, suggesting that the job market performs highly for such an affordable area.
Currently, Lake Houston is a very hot market, according to Realtor.com Market Hotness Index. It ranks in the top 10% of neighborhoods in the area and the top 29% in the U.S. Homes sell 19 days faster and are 132% more popular than homes in the surrounding area. The median list price of homes in Lake Houston was $289.9K in December 2020, trending up 4.3% year-over-year. The median listing price per square foot was $114.
9. New Territory, Sugar Land, TX
New Territory is another suburban neighborhood where house prices and rental values are above the national average. New Territory is a census-designated place and master-planned community within the extraterritorial jurisdiction of Sugar Land in Fort Bend County, Texas, United States. It is a popular area with quiet streets and lots of community programs, and as such, the population is likely to keep rising. As usable land for housing decreases with current housing developments, property prices are likely to increase, so the investment opportunity is there.
Neighborhood Facts for New Territory (Source: HAR.com)
|Average Price/Square Ft.||$129|
|Average Year Built||1997|
|Average Square Ft.||3,750|
On Realtor.com, the median list price of homes in New Territory was $375K in December 2020, trending up 25.2% year-over-year. The median listing price per square foot was $121. It is a seller's market, which means that there are more people looking to buy than there are homes available. On average, homes in New Territory sell after 86 days on the market. The trend for median days on market in New Territory has gone up since last month, and slightly up since last year.
10. Cinco Ranch, Houston, TX
Cinco Ranch is a census-designated place and master-planned community located in the extraterritorial jurisdiction of the city of Houston within Fort Bend and Harris counties in the U.S. state of Texas. This suburban neighborhood is known for its great community and array of superb schools and shopping centers. Residents praise the comfort and safety of the area. The terrific Cinco Ranch lifestyle and top-notch education continue to attract new-home buyers from across Houston and across the nation.
Median home values are considerably above the national average and the job market caters for above-average earners. The area attracts buyers and renters who can afford the higher home prices in Houston, so as growth continues there are profits to be made. On Realtor.com, the median list price of homes in Cinco Ranch, TX was $434.5K in December 2020, trending up 11.6% year-over-year.
The median listing price per square foot was $131. It is a seller's market, which means that there are more people looking to buy than there are homes available. On average, homes in Cinco Ranch, TX sell after 47 days on the market. The trend for median days on market in Cinco Ranch, TX has gone up since last month, and slightly down since last year.
Neighborhood Facts for Cinco Ranch (Source: HAR.com)
|Average Price/Square Ft.||$139|
|Average Year Built||2005|
|Average Square Ft.||3,621|
Buying Your First Investment Property in Houston?
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Remember, caveat emptor still applies when buying a property anywhere. This article aimed to educate investors who are keen to invest in Houston real estate in 2020. Purchasing an investment property requires a lot of studies, planning, and budgeting. Not all deals are solid investments. We always recommend doing your own research and take the help of a real estate investment counselor. 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.