COMMENT OF THE DAY: INNER LOOP RENTS, HARD AND HIGH “I have to disagree with rents being soft in the inner loop. I just relocated here in January and, unless things have changed, I found rents exceedingly high and availability low. Granted, I did not want a cookie cutter apartment, but I was blown away by the prices. I looked at the new Gables property on Kirby and they were $2,500 minimum a month for a two bedroom. The kicker was that they’d only accept a 18 month lease. I thought that was crazy. The Alexean on Westheimer was a little cheaper at $2,000 per month but it didn’t seem well built. I preferred condo’s or houses to apartment complexes and most of them were in the $2,000 plus range. Those under $2,000 that were nice rented almost immediately after coming on the market. I wound up in a two bedroom house in Montrose for $2,600 and everyone I talk to seems to think I got an ok deal. I have to concur that it seems more expensive to rent than buy. I certainly could have bought for less in this market but, being new to town, didn’t want to dive in to home ownership immediately. Anyone that says Houston is cheap hasn’t looked at inner loop real estate.” [Charlie, commenting on Where Rents Have Dropped]
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When I moved here 7 year ago, I signed a 6 month lease just west of Uptown on Westheimer with the thought that after 6 months I’ll find where I really want to live.
My first apartment I used an apartment locator since I was new to the city. My second apartment I followed the advice of many of my friends and use the Greensheets (make sure you grab the one in the neighborhood you like) and just drive around and write down phone numbers.
In the greater Montrose area, there tons of duplexes, quadplexes, and older apartment complexes for lower budgets.
Also, some of my friends that could easily afford a $1500/month apartment would actually find a $600-700/month older place. Sure, you’ll have to go without some luxuries, but being young means you have a lot left in life and it’s not worth it to waste all that money now. What’s great is that they have lots of extra money to be able to enjoy happy hours, go to concerts, and go eat out.
I wound up in a two bedroom house in Montrose for $2,600 and everyone I talk to seems to think I got an ok deal.
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Wow!
You could have rented a two bedroom in one of the nicest high-rises downtown for $225 less a month. I think you got hosed my friend.
I live in the inner loop and in a fairly nice 6 year old complex off Washington. My 860-foot apartment costs me $1050/month. It includes a full size W/D and covered parking. Of course this is higher than when I moved in 6 years ago — at $819/month — but this is the first year they didn’t raise my rent. My fiance is in a complex around the same age and his one-bedroom is $895 — with assigned covered parking and W/D included — on TC Jester.
You can find decent apartments, including 2-bedrooms, in some of “older” complexes for less than $1500. They’re going for about $1350 at my place now.
It does seem expensive, but compared to where rents were a year ago, there’s definitely softness.
There are two houses on my street for rent in E. Sunset Heights. Both are two bedroom/1 bath. One is on a 6000sf lot and the other on 12,000 sf. One is going for $1050 and the other $1200.
$2600 for a very nice house in Montrose on a good street is not bad. I haven’t seen a 2/2 bungalow for sale in my neighborhood of Cherryhurst for less than $380K in a couple years, so that rental rate would be good for one of them. There are plenty of cheaper places in other parts of Montrose/Neartown, but most have significant shortcomings; like no garage, “updated” outdated kitchens and baths, window units for A/C, 3′ wide closets, noisy neighbors on the other side of the wall, crappy apartments next door, etc. I rented all over Montrose and the Heights over 15 years paying from $450 to $2000 per month before buying, and I know that you get what you pay for.
I pay $950 a month for a 1200sf, 2-bedroom apartment (one unit in a fourplex) in University Place. It’s an older building and it’s far from lavish, but it does have central A/C, covered parking, and quiet neighbors. Best of all, it’s a short walk from the Museum District, Rice University, and the Village. I feel like I got a sweet deal on the place, but it actually did sit on the market for quite a while before I found it. I can’t imagine paying $2000+/month for a 2BR apartment (except perhaps an extremely nice high-rise unit downtown), but $2600 for a nicer house sounds pretty good.
Expect things to get softer. More and more people who can’t sell houses or condo’s are trying to rent them to cover the note and wait out the downturn. They will have a long wait.
I am not saying that there aren’t cheaper places available. Houston has a wider range of apartment sizes and quality in a single neighborhood than most cities I’ve seen. But for high quality residential, inside the loop, prices are high and availability is low.
The place I rented is a nice renovated 1,500 sf bungalow (1,700 sf if you include the finished attic)on an ok street with central ac, hardwoods, granite/stainless and a 1 car detatched garage. Compared to what I’ve seen in Dallas though it is probably about $700 more than I’d have paid in a similar area.
When I was looking everything I saw of similar quality in Montrose/Upper Kirby/Rice Village/ Midtown (west of the highway) was similarly priced. I didn’t want to be downtown. Realtors tried to steer me to the Galleria and I didn’t want to be there either.
For grins last month I wanted to look at a 2 bedroom place on Cherryhurst that came on the market for sale at $499k but it sold in a week before I could get in to see it. High quality on good streets must still be selling.
The flip side of people losing homes or being unable to sell is that they have to live somewhere. I don’t think rents in town will go down very much at all because there will be more renters chasing the available inventory. There isn’t a lot of new construction going on to increase supply. The only way that equation will work to lower rents is if people are moving out of town and that isn’t really happening.
Take a look at HAR and you’ll see what I mean. Limit your search to 2 bedrooms between $1,000 and $3,000 in 77006 and you’ll find 37. Granted that doesn’t include “for rent by owner” or apartment complexes but that isn’t a lot of available units. The supply is even more limited if you want a garage or off street parking.
And to add on to Charlie’s point:
This is also why new construction of apartment complexes will continue. There is limited supply of rental space. Current economic condition lends itself to renting since people want to be mobile. Houston also still having an OK economy has become a magnet for people moving. San Antonio is seeing this. Developers in the Metroplex are pushing for new apartment construction also. The far suburbs of Austin are also on the rebound.
The high-rise at Studemont will be open soon. New apartments along Richmond and Westheimer in the loop have been added. A new complex on the light rail line in Midtown is underway.
The other major project that may get underway would be Regent Square. The city is interested in pushing this project by annexing more land into TIRZ #5.
There is a large supply of new apartments coming online in the loop, though not midtown. One new complex is under construction on OST near Kirby and another is opening on Braeswood near Stella link. There is also a whole building of unoccupied apartments/condos behind the Rice Market on Holcombe. The building is maybe 2 years old. Don’t know if it is REO or what. I doubt these last could be called luxury.
Re: my statement above about people renting out their homes and condos, even Treasury Secretaries are doing it :)
http://www.cnbc.com/id/31082378
I wonder how much the apartment supply in the south areas (below the medical center and rice u) affect the apartment supply along Buffalo Bayou, Midtown, Montrose, and Upper Kirby?
From the site development group at my office, they are telling me that the apartment market will heat up if the housing slump holds or gets worse. Right now developers are scouring for new sites for apartment complexes if they haven’t already.
likely not a tremendous amount. But, upper Kirby has a new development underway that will have more effect.
I think the bigger factors in the higher priced areas will be the economy. Renting a fancy place requires a good salary.
If the new oil bubble collapses like the old one did, there could be more layoffs or salary cuts.
There are also stories of yuppies or whateve they are called these days moving back in wth the parents when things get bad.
As to developers, a bigger problem may be the financing. Banks are a lot stricter than they used to be.
ahh, mike always a joy with that positive upbeat mood and attitude!
“Right now developers are scouring for new sites for apartment complexes”
really?
of the local big players (ie camden, morgan, hanover, crow, gables, etc), not one is actively looking for new sites. it has never, ever been this difficult to obtain construction financing. to put things into perspective, it was easier to get a contruction loan in the late 80s and early 90s than it is today. lenders are requiring more “real” equity, limited rent growth (if any at all), higher debt to service coverage ratios, and full recourse (except for hud 221d4 loans).
developers today are focusing on their existing product and attempting to roll construction loans into long term financing. this is especially the case with merchant builders since cant sell their current properties. they have millions tied up and the last thing they want to do is chase bad money with good.
sure, some deals will break ground going forward but to proclaim developers are actively pursuing sites is not the case. if you were a journalist, i would call your reporting irresponsible and lacking facts. for example, you claim theres “limited space” in a sub 90% market. seriously? you may want to let the managers know because most are offering concessions of up to 2 months free, waived deposits, and look/lease specials. you never, ever see those deals in a tight market.
/ real life experince rant
houston-development,
Several of our apartment development clients are moving forward in the Metroplex, Austin, and San Antonio. We are moving forward with site plans for infrastructure on three of them. The DFW apartment job we were awarded just last week is located in the Castle Hills area along SH 121 between Lewisville and The Colony. It is the first phase of a 250-acre mixed development. The apartments are first.
You are right about the Houston market having some saturation. None of our clients or moving on the Houston market right now since so much supply has been put on the market in the last couple of years.
The idea that the financing isn’t available is a myth. It’s there for those that qualify.
Most of our land development and site development clients anticipate San Antonio to rebound first of the Texas metros. Austin and Houston will come back next then DFW for single family specifically. DFW suffers from having to many municipal entities allowing development of smaller subdivisions. Many of these came online simultaneously flooding the market (even when it was hot). There wasn’t a clearing house for developers to gauge accurately the supply entering the market through looking at plats and permits being filed. So now the DFW area has much more supply than Houston, San Antonio, and Austin. In the Houston and San Antonio area, the majority of development occurs within some purview of a planning commission that has a large jurisdiction. Outside of the planning commission’s coverage there are only a couple of separate entities. It’s easier to keep track of the plats and permits being filed. In the Houston and San Antonio region.
As for apartments, San Antonio looks promising specifically on the south and east side. The Texas A&M expansion will generate some demand since no student housing is being added to the rapidly expanding campus. This is on the south side along Loop 410. The east side will see increase warehouse and distribution center construction to intercept trucks from Mexico. The east side is also where SH 130 is being built which will serve as a bypass route of I-35 which is congested throughout the daytime hours from San Antonio to Austin. The activity on the east side of San Antonio will spur some renewal and new growth which will require apartment housing.
it’s become popular to live inside the loop again so prices are going to reflect that.
Most of the foreclosures are hitting low-to-moderate income families, especially construction. Most of these families do not move inside the loop. The ones that do move inside the loop are going the undesirable areas or rundown complexes. Many of the houses in the $100k are being turned into rentals by investors.
There is always a high demand for high quality housing inside the loop. There is a stronger demand now that many Californians have fled East to find jobs.