Houston Real Estate Market in 2019 for Investors Looks Good

I recently wrote about what I think sellers should expect this year and I touched on what a great year I think it will be for buyers a couple of months ago. This year might also be a good year for people interested in investing in real estate in the Houston area. We’re seeing oil is currently at around fifty dollars per barrel, but the number of rigs has increased approximately 15% over this same time last year. Texas has an overall unemployment rate of around 3.5% and Houston is forecasting 71,000 new jobs in 2019. So, what does the Houston real estate market in 2019 for investors look like?

2018 was a record-setting year in Houston real estate with 82,000 homes sold and an average sales price of $237,500. However, December slowed down and this has led experts and forecasters to believe that 2019 is going to continue to trend a bit slower and with lower purchase prices.

Despite things slowing down in December, the greater Houston area continues to appreciate year over year. The average appreciation for 2018 was 2.5% with Humble, Texas doing incredibly well. If you own investment real estate in Humble, you made a good choice. If you want to own real estate in an area that is appreciating, move quickly on Humble, Texas. Naturally, areas that depreciated the most are areas that flooded during Harvey. It takes 2-3 years for homes hit by natural disasters to recover.

There are over 100 communities in the Houston area classified as opportunity zones. These areas are ideal for buy and hold investors and come with Federal tax benefits through the Opportunity Zone Program. Areas on the below image in dark green are classified as opportunity zones. There are also opportunity zones outside of the city of Houston, stretching out to Berkshire, Winnie, La Marque, and Willis.

There seems to be a lack of consumer confidence right now due to the state of the United States economy, the trade war, affordability, and interest rates among others. Additionally, we have a yield curve inversion on the horizon, and the last two recessions were preceded by exactly this. With a possible recession on the horizon, getting ready to invest and act quickly seems prudent.

Houston has a resiliency that the rest of the nation lacks. When a recession comes, we stretch a little, we bounce a little, but we don’t plummet. The market is going to open up a little bit for investors and this is the time to make moves. The question is “what are your goals?” Are you looking for something you can flip and make money this year? Do you want to buy and hold for three to five years? Do you plan to hold a property for thirty years? You need to know the answers to these questions before you start shopping for investment property in Houston. Knowing your timeline will help you choose an area that works with your timeline. In a nutshell, focus more on your exit strategy than if the house meets this rule or that rule.

It’s not always about cash flow, especially in a city like Houston where the 2% rule doesn’t apply (shoot, often the 1% rule doesn’t apply.) You have to consider if appreciation for the area is good and projected to continue. You need to look at the equity in the home and what debt paydown looks like. It may not have a great cash flow today, but it could appreciate being worth a lot when you sell. I understand that you want to at least cover your expenses and generate some profit – who doesn’t?! This leads right into my next point.

Make sure you’re buying with the right kind of debt. If you put the right amount down for your timeline and your goals, you can definitely find an investment property in the greater Houston area. Did you know that property values double on average every fifteen years? If you buy and hold for 30 years, your property could be worth four times its original value. The great thing about Houston is that properties steadily appreciate, and this is great for the buy and hold investor.

When you’re ready to talk about buying your first or next investment property in Houston, reach out to me anytime. 832-513-9931 | Angel@AngelFultzRealty.com.

Have questions or comments? Share below!