Buckle Up! The Looming Supply Bubble in Houston’s Apartment Market

July 17, 2024
Is Houston's apartment market heading for a supply bubble? Brace yourselves as Bruce McClenny, from MRI Real Estate Software, joins Marcus Armstrong to analyze the unsettling trends in Houston's multifamily landscape. Bruce unveils a 50-year high in new supply, fueled by pandemic-era demand and low interest rates. But with single-family rentals booming and job growth slowing, is a market correction on the horizon? Tune in to get Bruce's expert insights and prepare for the potential challenges ahead.
 Buckle Up! The Looming Supply Bubble in Houston’s Apartment Market
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"Buckle up!"

That's the stark warning Bruce McClenny from MRI Real Estate Software delivers in this eye-opening episode of The Multifamily Review. Bruce joins Marcus Armstrong to dissect Houston's Class A apartment market, which is facing a looming supply bubble.

Bruce dissects the ripple effects of the pandemic, which fueled a frenzy of construction activity and unprecedented rent growth in Houston, exceeding even the boom of the 70s and 80s. But with job growth slowing and a record influx of new units hitting the market, a potential downturn is on the horizon.

Complicating the situation further is the rise of single-family rentals. Driven by the pandemic's work-from-home revolution, institutional investors and individual landlords are rapidly expanding their single-family rental portfolios, pulling renters away from traditionally stable apartment classes.

Bruce highlights the concerning trend of renters leaving Class B, C, and D properties and opting for single-family rentals, creating a shadow market difficult to quantify. This shift in renter preference, coupled with the potential financial strain on developers facing refinancing at higher interest rates, paints a challenging picture for the future of Houston's multifamily market.

 

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