B

Executive Summary:

The Houston multifamily market in Q4 2024 demonstrated steady, albeit mixed, performance. Overall occupancy remained flat at 88.6%, despite positive net absorption, indicating a balance between demand and new supply. Rent growth, while slightly down quarter-over-quarter, showed positive year-over-year gains, outperforming other major Texas metros. The construction pipeline is tapering, aligning with a more sustainable equilibrium between supply and demand. Job growth in Houston remains strong, fueling continued demand for multifamily housing. Sales activity saw a significant increase in average price per unit, driven by private investors.

Key Themes and Findings:

• 
  
• Occupancy and Demand:Overall occupancy held steady at 88.6%. “Houston’s multifamily sector experienced its eighth quarter of metro wide demand gains as Houstonians moved into 3,585 units… resulted in overall occupancy to remain flat at 88.6 percent during the fourth quarter.”
  
• Net absorption was positive at 3,585 units for the quarter and 16,783 for the year, a 61% increase over the previous year.
  
• Class A and Class C properties saw positive absorption, while Class B and Class D properties experienced negative absorption.
  
• Suburban submarkets like Katy/ Cinco Ranch/ Waterside, Tomball/ Spring, Willowbrook/ Champions/ Ella, and Bear Creek/ Copperfield/ Fairfield, experienced the most significant absorption.
  
• 16 submarkets experienced decreased occupancy rates quarter-over-quarter, with I-69 North experiencing the most notable decline of 5.5 percent.
  
• 
  
• Rental Rates:Metro rents averaged $1,274/unit, a slight decrease of 80 basis points quarter-over-quarter.
  
• However, Houston was the only major Texas metro to experience positive year-over-year rent growth of 1.0%. “Houston was the only major Texas metro to experience positive 12-month gain, with Austin falling 5.5 percent, Dallas/ Fort Worth declining 1.6 percent, and San Antonio trailing by a slide of 1.0 percent…”
  
• Submarkets like Greenspoint/ Northborough/ Aldine, Northline, I-69, and I-10 East/ Woodforest/ Channelview saw annual rental growth exceeding 5.0%.
  
• Downtown experienced the largest annual rental rate decrease of 4.7%.
  
• 
  
• Construction Pipeline:The construction pipeline is decreasing, totaling just under 14,300 units at the end of Q4 2024, down from 17,340 units in Q3 2024. “Houston’s construction pipeline totaled just under 14,300 units at the quarter’s close, edging down from 17,340 units in Q3 2024.”
  
• Completions totaled nearly 6,000 units.
  
• Submarkets with the highest construction concentrations include Katy/ Cinco Ranch/ Waterside, Woodlands/ Conroe South, Montrose/ Museum/ Midtown, and Heights/ Washington Ave.
  
• 
  
• Economy and Job Growth:Houston is forecast to add 71,200 jobs in 2025. “Metro Houston is forecast to add 71,200 jobs next year and finish 2025 with over 3.5 million full-time jobs…”
  
• Health care and construction industries are expected to lead job growth.
  
• The Houston area saw a 1.3 percent increase in single-family home sales in 2024 compared to 2023.
  
• Construction contracts awarded through October in Houston totaled $35.9 billion, a 27.6% increase from the same period in 2023.
  
• 
  
• Sales Activity:Average price per unit increased substantially by 28.1% year-over-year, reaching $146,355 per unit. “Investors completed 21 Houston area multifamily property trades during the fourth quarter with acquisitions averaging $146,355 per unit… a substantial 28.1 percent increase from $114,234 per unit during the same period in 2023.”
  
• Private investors were net buyers of multifamily assets in 2024, while institutional investors and REITs were net sellers.
  
• Notable property trades included GAIA Real Estate’s acquisition of Virage in Heights/ Washington Ave and Sagard Real Estate’s acquisition of Pearl Midlane in Highland Village/ Upper Kirby/ West U.
  

Submarket Highlights (Examples):

• 
  
• Katy/ Cinco Ranch/ Waterside: High net absorption (792 units) and significant construction (1,506 units).
  
• Montrose/ Museum/ Midtown: High rental rates ($1,942) and substantial construction (1,342 units).
  
• Greenspoint/ Northborough/ Aldine: Strong rental growth (7.3% year-over-year).
  
• Downtown: High rental rates ($2,068) but experienced the largest rental rate decrease (-4.7%).
  

Outlook:

The Houston multifamily market is expected to remain relatively stable in the near term, supported by continued job growth and a balanced construction pipeline. While some submarkets may experience challenges, overall demand should remain healthy. The increasing average price per unit indicates continued investor interest, particularly from private buyers.

Disclaimer:

This briefing document is based solely on the provided source. Additional research and analysis may be required for a more comprehensive understanding of the Houston multifamily market.convert_to_textConvert to source