The Houston rental market has always been dynamic, shaped by unique economic drivers and ever-evolving real estate trends.
If you’re trying to determine whether to sell or put your Houston home up for rent, it’s important to understand these factors so you can price your rental right.
Interest rates. Between 2020 and 2022, interest rates were the lowest they’d ever been in 50 years. Many homeowners still enjoy these 30-year mortgages at historic lows and so instead of selling, some are opting to rent out their Houston homes.
In addition, today’s higher interest rates are driving sellers to try out the Houston rental market, hoping that the sale market will improve later.
Houston’s economic drivers. Several industries fuel the Bayou City’s economy: oil and gas, healthcare, technology, and aerospace. Corporate relocations and job creation, especially in the energy sector, can quickly shift the Houston rental market from a slowdown to a spike.
When demand spikes, many high-income tenants look for quality rentals. During slowdowns, rentals, especially ones that aren’t priced according to market conditions, may sit unoccupied longer.
New apartment development. Developers have added over 40,000 new apartment units in Houston in the past couple of years. These complexes have not only increased supply. They’ve also made the market more competitive, often offering concessions to attract and retain tenants.
These concessions can be in the form of discounted rates or free months, making it harder for individual landlords to compete.
Location, school zoning, and accessibility. The factors that drive Houston real estate appreciation unsurprisingly also drive rental rates. During periods when the market is softer, demand for Houston rental homes in great neighborhoods, zoned to top-rated schools, and in central locations remains strong.
High quality homes for rent—well-maintained, move-in ready, and priced competitively—tend to stay on the market for shorter periods and attract more qualified tenants.
So how would a first-time landlord know if their Houston rental home is priced well for the market? There are a couple of ways to find out.
The first option is to look at historic rental trends in that specific neighborhood and find comparable homes that have been rented out in the past six months. For a closer “comp”, landlords will need to look at factors like number of bedrooms, square footage, and location.
Another way is to use an online calculator for rental prices. While convenient, these can vary in terms of accuracy. Many just provide general ballpark pricing, so this method would require additional research.
The most reliable way to determine pricing is to ask an expert, either a real estate agent or a Houston property management company. They can share accurate comparables and rental trends, plus detailed reports showing how long similar homes stayed on the market and whether prices were adjusted.
Understanding what drives the Houston rental market can help you make informed decisions when it comes to one of your biggest investments: your home. Whether you own a single-family home you’d like to rent out or a portfolio of rental properties, staying proactive and adapting to market conditions is key to maximizing your returns.
Need expert advice? Email us today to request a rental analysis on your home.
