MM Research Services - Apartment Operations Moving in the Right Direction for Houston

Houston will lead the nation in job growth this year, supporting stronger apartment operations and enabling owners to begin making healthy rent increases. The market last led the country in employment gains in 2007, when a comparable number of positions were created. Although job growth is similar, the economic climate in 2011 is significantly different from four years ago. For one, the local housing market has yet to gain footing, and traditional loans, including a 10 percent or more downpayment, still prevail for all but FHA-qualified, first-time homebuyers. As a result, renter migration into homeownership will be measured for the next several quarters. Additionally, current operators will not contend with an influx of new competition this year. Only 1,100 units are coming online in large properties, significantly less than the 8,200 apartments delivered in 2007. While vacancy at the end of both years measured the high-8-percent range; unlike 2007, momentum is moving in a favorable direction for operators heading into 2012.

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