Houstonians leased about 17,000 apartments in the two months after Hurricane Harvey, far more than this region leases in most years, new data show.
The supercharged rental activity has led to a swift reversal in Houston's multifamily market. Landlords who were offering as many as three months of free rent before the storm are now able to raise prices, especially if they're near residential neighborhoods most affected by the hurricane.
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"It's almost bordering on a year and a half worth of absorption in two months," said Bruce McClenny, president of ApartmentData.com, citing the new leases logged in September and October.
Yet even as landlords enjoy fuller apartment buildings and higher rents, their good fortunes may be limited.
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"Next year, there's a potential for 17,000 people to move out," McClenny said.
Indeed, thousands of Houstonians will move back into their newly repaired homes in 2018, and there may not be enough demand to refill the vacancies. Creating further uncertainty are the 15,662 damaged apartment units being repaired and coming back online and the units still under construction.
As homeowners move back into their houses, rent levels could stall or even fall back, McClenny said.
Swapnil Agarwal, founder and managing principal of Nitya Capital, still has a bullish outlook on rent growth.
During Houston's recent oil bust, developers put the brakes on starting new projects, and little will come online in the coming years to accommodate demand, benefiting existing properties, said Agarwal, whose company owns 29 apartment complexes in the Houston area.
"All of a sudden, the demand is outpacing the supply," he said.
Renters in October paid an average of $1,105 for an apartment, the highest average rate in two years, a report from Richardson-based real estate analytics firm Axiometrics shows. That's $19 more than September's rate and $30 more than October 2016.
Occupancy across the Houston area increased to 93.7 percent, the highest rate in almost two years, the company said.
The market's rebound is mixed, depending on location. Apartment complexes that have seen the most benefit are in Tomball, Spring, Katy and the Energy Corridor, where high-end subdivisions were flooded after the reservoir releases.
"Those people up and down Buffalo Bayou in high-priced homes in well-to-do neighborhoods had the means to say, 'Hey. let's go to those apartments in CityCentre and up and down I-10 that didn't get damaged,' " McClenny said.
In those areas, rental specials have disappeared.
On the flip side, landlords are still offering concessions in Montrose, downtown, the Medical Center and the Galleria area.
Catalyst, a new downtown tower near Minute Maid Park, is offering one month of free rent. The building is about 12 percent leased, and renters only began moving into the building after the storm.
Three or four of the new renters were displaced after Harvey flooded their homes, developer Darren Sloniger said. He doesn't expect them to return to their homes for at least a year.
Across Houston, a certain number of post-Harvey renters may never return to homeownership.
"Our leasing agents tell us why people are looking to move and many are selling their homes and moving into apartments," Sloniger said.
McClenny expects that group to be a small one.
"I imagine most are going to become homeowners somewhere else (in Houston) or somewhere different than where they lost their home," he said. "I do believe most of them will leave the apartments."