Jan 31, 2023 - Real Estate

Houston rents are still high, for now

Change in average asking rent for apartments in select markets
Data: Moody's Analytics; Table: Kavya Beheraj/Axios

In the fourth quarter of 2022, the average asking rent in Houston was $1,268, up 7.6% from a year earlier, per economic research firm Moody's Analytics.

Why it matters: Affordability concerns are starting to weigh down the booming rental market.

What's happening: Many would-be home buyers chose to rent longer last year, sustaining apartment demand, economists at Moody's Analytics say. But folks are hitting their spending limit.

  • For the first time in more than two decades, households have to spend 30% of their income on average rents, according to a new report.

Year-over-year rent growth slowed in the second half of the year across the board, "and we expect further deceleration as new supply makes it to market at the same time the labor market softens," Moody’s Analytics senior economist Lu Chen tells Axios.

Zoom out: Rents are already falling in cities that were near the epicenter of the pandemic home-price boom, Axios' Matt Phillips reports, citing Realtor.com data.

What we're watching: New apartment construction. The expected surge in supply could help bring down prices.

  • The former 45-story Exxon skyscraper will transform into an apartment complex in downtown, per the Chron and a 573-unit apartment building west of the Energy Corridor is under construction, the Houston Chronicle reported.

Yes, but: Experts say most cities will "remain undersupplied with the kind of affordable units that see the highest demand," per the Wall Street Journal.

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