With the shale oil boom generating expansions in the U.S. energy sector, hot beds of oil and gas production activity are seeing more employment growth and as a result, higher housing and commercial property demand. Houston, for instance, has experienced huge hiring gains to keep up with the energy needs of the nation. As the Energy Corridor in Houston, the city is home to some of the biggest oil and gas producers in the U.S., including ExxonMobil and Chevron. The combination of rapid job growth and rises in housing demand increases the number of Houston investment opportunities in the rental market.
Sales in the Houston housing market broke a record in July, reaching its largest monthly total ever with 9,250, up 0.7 percent from last year’s July, according to the Houston Association of Realtors. Sales of single-family homes drove this growth as July marked the second straight increase for this category, rising 1 percent compared to the previous year. The HAR reported single-family home rentals expanded 7.2 percent from July 2013.
“July did not bring the most dramatic sales performance we’ve ever seen, but the numbers are headed in the right direction,” said HAR Chair Chaille Ralph with Heritage Texas Properties. “We are beginning to see a steady resupply of housing inventory with proportionate sales and pricing gains, all of which translates to a healthier real estate market.”
Economic impact of energy sector growth in Houston
As more energy sector jobs are being added in Houston, the city has experienced a 3 percent increase in employment in June – higher than average added in the U.S., according to the U.S. Bureau of Labor Statistics. Not only are energy companies expanding employment, they are also paying these workers higher wages, which could support higher rent increases. The HAR report notes rental prices of single-family homes rose 13.7 percent in July from the same period last year.
Commercial property rentals might also see rises in demand. Houston-based developer Wolff Companies has a positive outlook about the future growth of the Energy Corridor, citing increases in the number of development projects in the area as well as high demand for rental properties, Houston Business Journal reported. Since there are fewer vacant lots, developers are adapting to changes in the market by transforming existing properties to suit needs for commercial spaces for energy companies and even firms outside of the sector.
Given that there is more need for both residential and commercial properties, as an investor, you can take this opportunity to work with an investment firm like HomeUnion® to cash in on residential rentals and meet this growing demand.