Population Growth & Strong Gross Yields
The Greater Houston Metro Area offers modest average entry points ($183K)11 for real estate investment properties in a region with rapid suburb growth12 and above-average forecasted household growth of 2.475%13.
The Houston investment and income property market is expected to maintain its current 11% average gross rental yields through 2020, compared to an expected 8.4% average across 63 major U.S. single-family rental markets.
Looking at the economic landscape, more than 29,000 new jobs15 are forecasted for 2017, with growth16 in a number of non-energy and consumer-driven sectors offsetting losses in sectors closely tied to energy. In 2018, the region is expected to return to a long-term trend17 of adding 60,000 jobs each year. Current and forecasted average job growth rates, of 1.4% and 1.075% respectively, are on par with national averages.18
Name-brand companies are also bringing more jobs to Houston. Amazon is hiring 2,500 employees to staff its distribution center19 in Summer 2017, and FedEx is opening a new 800,000-square-foot distribution center20 in September 2017 that will eventually employ 2,200 people. Currently, two dozen Fortune 500 companies are headquartered in Houston.
Additionally, Houston is ranked7 as one of the youngest8, most racially and ethnically diverse9 areas in America, and considered a great place to raise a family. The Bayou City, as it has been nicknamed, is currently No. 20 out of 100 on the U.S. News & World Report's Best Places to Live 2017 rankings10, with an overall score of 7/10.
Overall, we believe population growth, strong expected gross yields, an expanding business economy, and modest average entry points make Houston an up-and-coming investment and income property market for single-family rental investors.