Houston Named Best Market for Real Estate Investment Prospects

With the housing sector on the mend, there are key real estate markets in the U.S. that investors are seeing as the best for investment, including in Texas. According to a report by Pricewaterhouse Coopers, the Lone Star state had two of the best cities for real estate prospects, Houston and Austin. Houston was ranked No. 1 on the list for investors with Austin close behind with the No. 2 spot. The rise in housing sales in Texas could be attributed to the increase in employment prospects in the state as well as growth stimulated by crucial sectors like the oil and gas industry.

Houston named best market for real estate investment prospects

“In the past several years, we reported that real estate market participants’ main fears revolved around the uncertainty with the economy,” said Mitch Roschelle, partner and U.S. real estate advisory practice leader at PwC. “Now, the trepidation in their eyes has more to do with the ability of the growing real estate markets to adapt to a series of mega trends impacting society and the global economy.”

ULI Global Chief Executive Officer Patrick L. Phillips said investors are searching for investment opportunities that are away from core markets, which are cities typically found along the coasts of the U.S. He said the cities showcased in the list pose as strong competition against these coastal cities because of the employment rates and amenities offered by areas like Houston and Nashville, which was ranked No. 13.

Why Houston is becoming a hot market for investors

Houston is drawing investors to the area due to the boost in demand from new residents and families wanting to live in single-family rentals. Rental homes are increasingly becoming a popular housing option for families who want to have their own space while having the flexibility to move whenever they want.

With these factors in mind, investors are flocking to this metropolitan area in particular to purchase Houston investment properties.

The National Housing Trend Report published by Realtor.com in September showed Houston had one of the best housing markets with sales moving quicker than other major cities, The Houston Chronicle reported. The median age of inventory for Houston was 54 days in September, faster than the Los Angeles-Long Beach area with a median of 56 days.

“The Houston market has been one of the best housing markets in the country coming out of the recession as its economy has been one of the strongest and fastest growing,” Jonathan Smoke, chief economist for Realtor.com, wrote in an email, according to the Chronicle. “The market is not just recovering – it’s actually setting new highs in employment and home prices.”

Smoke said that housing trends may depend on the movement of baby boomers and their demand for homes. As baby boomers look for new places to live for their retirement, they may choose to downsize and sell their homes. They could decide to live in rental homes to avoid having to spend time and money to maintain their homes. Housing demand may also be affected by professionals in the science, technology, engineering and math (STEM) fields moving into some of the fastest growing markets, according to Smoke.

In Houston, STEM job holders account for 5.5 percent of employment in Houston, according to the Chronicle. These high-paying salaries make it possible for them to compete in a market like Houston. The market in Houston, however, seems to be restricted in terms of inventory, with supply reduced 25 percent compared to the same period last year. This could make renting more desirable for Houston residents because housing prices may rise due to lowered inventory.

Investors interested in buying Houston investment properties should consider partnering with a real estate investment firm to navigate the housing market and select the right homes.

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