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Houston Among Top Markets for New Apartments in '22

Published Jan 14, 2022 by A.J. Mistretta


Houston developers are set to add more than 17,000 apartment units to metro Houston's supply this year, one of the largest increases in the nation, according to a new report. 

The report from multifamily analytics firm RealPage shows Houston is set to deliver an estimated 17,053 units before the end of this year, a 2.4% increase in inventory. The increase puts Houston at No. 7 among the nation’s 50 largest apartment markets in terms of total units slated for delivery. 

Though multifamily complexes are rising across the metro region, much of the activity is concentrated within the urban core in markets such as Downtown, Montrose and Uptown. One example is a mixed-use building boom taking place along Allen Parkway between Downtown and Shepherd Drive. 

Other Texas metros are among the top 10 markets for total new apartments, with Dallas set to add roughly 17,166 units and Austin expected to bring another 18,375 units online this year. 

Nationwide, RealPage says most of the growth is happening in the south and west regions of the U.S., the same areas that have seen continuous growth since the end of the Great Recession. Other high growth markets include Phoenix, Los Angeles and Atlanta. 

Metro Houston’s population has grown by more than 1 million residents over the last decade to 7.1 million people. The region gained 91,078 new residents between July 1, 2019 and July 1, 2020, the third largest numeric increase in population among U.S. metros. Job growth is likely to aid continued population increases. The region is expected to gain more than 75,000 new jobs this year, according to the Partnership's employment forecast

Learn more about population growth and other trends in Houston Facts and get additional details on the multifamily market in the June 2021 edition of Economy at a Glance

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Economic Development

Report: Houston 2nd Most Active Real Estate Market in the Nation Over Last Decade 

Metro Houston ranks second in the U.S. when it comes to real estate activity across commercial and residential sectors over the last 10 years, a recent report from StorageCafe shows.  Houston was the most active single-family residential market in the country while the New York City metro saw the highest number of building permits issued for new apartments.  Over the last decade, Houston logged:  392,136 single-family permits  170,817 multifamily (apartment) permits  44.3 million square feet of new office space  153.3 million square feet of new industrial space  51.9 million square feet of new retail space  17.5 million square feet of self-storage space  The report looked at activity between 2012 and 2021 across the nation’s 50 largest markets. When all sectors are totaled up, Houston falls just behind Dallas which ranks No. 1 across all real estate sectors over the decade.  According to StorageCafe: “Houston has been the primary destination for newcomers moving to Texas, especially Californians who find respite in Harris County’s lower home prices and tax rates, cheaper land and sound economy. A typical home in Harris County, for example, is 57% cheaper than in Los Angeles County (approximately $848,000 vs. $365,990) whereas the average annual pay is about the same (approx. $75,000 in Harris County and $73,000 in Los Angeles County). StorageCafe data shows that the best year for single family homes in Houston was 2021, with over 52,000 units planned to be delivered, followed by 2020, with over 52,000 units. The metro area also permitted about 170,000 multifamily units over the past ten years, with 2014 peaking at around 25,000 units. With more than 44 million square feet of office space built over the past decade, and new industrial construction surpassing 153 million square feet, signs are pointing to even more growth for Houston in the years ahead. “The historically oil-driven hotspot is slowly evolving into a hub for digital technology as well as manufacturing and life sciences,” StorageCafe indicated in its report. “Among the big players that announced new offices in the area in the past year are Hewlett Packard Enterprise, Avetta, Maddox Defense, Dominion Aesthetics Technologies Inc. and Roboze.”  Learn more about metro Houston real estate and why businesses are choosing Houston. 
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Home Sales

How Rising Interest Rates Could Impact the Houston Housing Market

The Houston area experienced record home sales in 2021, and economists and real estate brokers believe the market will remain strong this year despite the Federal Reserve's plan to start raising interest rates in March. The demand for housing will continue as people keep moving to the region, said Patrick Jankowski, Partnership Senior Vice President of Research. Jeremy Fain, a broker associate with Greenwood King Properties, echoed that sentiment. He expects there will be buyers despite higher interest rates. "I think there may not be as many of them in the price points [or] brackets they were in a few months ago, but I think as long as we have a lack of inventory, it's still going to be busy," Fain said.  The Fed wants to raise interest rates in hopes of slowing down inflation. The central bank has not announced how many times it will raise interest rates, but economists predict it could be at least four times this year.  According to John Burns Consulting, interest rates on a 30-year conventional mortgage have already jumped 100 basis points since January 2021. Jankowski said he expects the rate to increase by at least 1% next year. "One percent doesn't seem like much, but when you're looking at a house that's $300,000 or $350,000 that could add as much as $200 to $250 to your monthly note," he said. Fain and Bernstein Real Estate Owner Amy Bernstein agree that the market is currently in a "frenzy," partly due to talks about higher interest rates. People wanting more space and a home office, as well as millennials entering the housing market, have also contributed to the increased demand.  "Anything that comes on the market right now, if it's priced correctly, will get bought up almost immediately by multiple offers. I have never, ever experienced a market like this," said Bernstein, who has been in the market for 40 years. According to Bankrate, the 30-year mortgage rate is currently 3.78%. Fain, Bernstein and Jankowski remind homebuyers that interest rates will remain relatively low, especially compared to the 1980s when they hovered around 10% to 16%. In 2021, Houston-area realtors sold 106,184 single-family homes, up 10.3%from the same period in 2020. The median sales price for a single-family home rose to a record high of $319,000 in December 2021 from $263,000 in January 2021.  Click to expand According to Jankowski, the cost of housing will only increase but not as sharply as last year. As a result, buyers should prepare to potentially buy a smaller home, buy in a less desirable neighborhood or put down a larger down payment. "If they wait six months to a year, they may not be able to get into a house at all without a substantial increase in income or a larger down payment," he said.  Read the Partnership’s latest reports on home sales and the economy.
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Houston Facts

The Greater Houston Partnership's Research team will provide an overview of Houston Facts, an annual Partnership publication that provides information on the Houston region. For this event, each member of the…

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