Houston: 1 of 10 Best

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Houston one of 10 best cities to buy rental property

The American dream of homeownership has dissolved into the daydream of a decent rental, and some cities are making it very easy on their month-to-month newcomers. Vacancies among the nation's rental properties dropped from 6.6% last year to 6.2% last quarter as 44,000 more units found renters during that period than during the same period a year earlier, according to Reis. That's the largest increase during that normally slow winter period since 2000 and the lowest vacancy rate since 2008.

Slight improvements in job growth and employment figures are driving demand for housing again, but even the 4.5% rate on a 30-year fixed-rate mortgage quoted by Fannie Mae in June -- the lowest since December -- hasn't kept year-to-date existing-home sales from plummeting to 13% of what they were just before the first-time homebuyer credit expired during the same period last year, according to the National Association of Realtors. The foreclosure rate is leveling off, according to RealtyTrac, but the U.S. Census Bureau found that U.S. homeownership dropped from 69% in 2004 to 66.5% at the end of last year.

The $163,700 median existing-home price is 5% lower than it was a year ago, but potential homebuyers facing 9.1% national unemployment and tight credit requiring a 20% down payment on home purchases are content to wait it out in a rental.

Potential landlords love to hear that. Average asking prices ($1,047) and actual paid rent ($991) are up roughly 2% as 79 cities reported rent increases and shrinking rental stock. Reis noted that landlords who were offering incentive packages a year ago that gave tenants three to four months free on 12- to 15-month leases have cut those concessions to a month or less.


Would-be homebuyers are sitting on the sidelines now, and many are spending their time in rentals despite the housing bargains out there. It could be a great time to buy a house to rent..  Houston has:

Vacancy rate: 10.2%                                  Average rent: $792

 For a potential rental-property buyer, Houston is the best of all worlds. Not only does the city have adequate room to expand, which explains its second-highest-in-the-nation vacancy rate, but a thriving economy drives both demand and prices.

"The great thing about Houston and other Texas markets is that there isn't as much building constraint and that it's a net job creator that builds demand," Canalog says. "Given that supply constraints aren't as operative, you get vacancy rates that won't be pulled down, because supply will match that increasing demand."

Houston rental rates have risen 2.1% within the past year as the good fortunes of local energy companies, including ConocoPhillips, Marathon Oil, Enterprise Products and Halliburton, fuel the decline of the city's below-average 8% unemployment rate.

While scared buyers and sellers haven't exactly flooded the market, as average housing prices actually climbed from $151,000 in 2008 to $155,000 just last year, there still may be a chance for a would-be landlord to snag a deal. Average housing prices have dropped 1.1% since the first quarter of last year and plummeted from a high of $159,000 last summer to $148,500 now. We are here to assist you with Buy/Rent in Houston metro.

Here is to an awesome 2011


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Alicia Barrington
Houston Home Staging Presents Alicia Barrington

We explain to many of our staging clients the importance of listing their properties in turn-key condition.  There are always investors out there willing to pay top dollar for good investment properties (at almost all price points).

Jun 27, 2011 12:46 PM #1
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