Rent prices are cooling off in Houston
by Sponsored Content
Finding a place to live in a major urban area can often be challenging, especially if you’re looking to live in a popular place. Real estate prices, both for owners and renters, are legendarily high in places like New York and Los Angeles, and you might think the same goes for the city of Houston — but that’s actually not the case.
As it turns out, the average rent in Houston is $1,152 per month, a surprising 23% lower than the national average. A three-bedroom apartment or home in Houston can be rented for $1,793 per month. Compare that to someplace like New York City, where the same apartment will cost you $3,500 a month to rent. So why have Houston’s rent prices dropped, and could renting actually be cheaper than buying? Let’s dig into some of the details.
Factors Influencing Houston’s Rent Decrease
According to recent data, Houston’s median rent has been dropping for the past few years, with the occasional spike in price. The market took a major dip in March of 2023, and slowly returned to the below-average median over the course of the year.
Why is this happening? It’s primarily a supply-and-demand issue. Houston has been undergoing a major surge in housing and apartment construction, meaning supply is copious. New residential developments mean a greater array of choices for prospective renters, and landlords must lower their rates to stay competitive. Certain neighborhoods have also experienced a disproportionate amount of development compared to others, which means landlords have had a particularly challenging time staying competitive.
Consider this data from Community Impact, showing not only Houston’s occupancy rate at a low of 89%, but also that in January 2024 alone, Houston saw:
● 27,252 new units opened
● 21,998 units currently being constructed
● 33,447 units proposed for construction
The Most Affordable Neighborhoods in Houston
Now let’s take a look at the most affordable neighborhoods in Houston. For purposes of this article, we’ll look at two-bedroom apartments, which cost an average of $1,568 a month as of this writing. Some of the most affordable neighborhoods include:
● Northshore (average rent $876/mo), a great neighborhood for lovers of green spaces, parks, trails, and picnic areas.
● Belfort Park (average rent $848/mo), with rows of affordable housing near several elementary schools.
● Hollister Manor (average rent $848/mo), a centrally located area with plenty of apartment complexes, also not far from an elementary school (specifically, Hollibrook Elementary).
● OST-South Union (average rent $848/mo), an area just south of Downtown Houston, making it an ideal area for both young families and college students.
Is It Cheaper to Rent Than to Buy?
As housing prices continue to soar nationwide, putting it out of the financial reach of many individuals and families, more people are asking themselves whether it’s cheaper to buy or rent in Houston. It should be noted that Houston’s home prices are also below the national average at around $308,000 — 17% lower than the median sale price. But that can vary wildly by neighborhood and size of home, and that sort of price tag could very well be out of reach for many.
With that in mind, let’s examine some of the pros and cons of renting vs. buying:
First and foremost, there are the much lower up-front costs of renting. Buying a home will likely require a mortgage, down payment, closing fees and other expenses, requiring significant savings before the buying process even begins. Finding a rental unit in Houston will still require a security deposit and possibly first and last month’s rent, but the investment is considerably lower.
There’s also the reality of maintenance costs, which homeowners must often pay for out of pocket. One of the major perks of renting is that things like maintenance, lawn care, etc. are handled by the landlords, with the tenant paying only for rent and utilities. They also don’t have to pay property tax or home insurance — though many landlords do require tenants to take out renter’s insurance as part of their lease agreement. Fortunately, Texas renter’s insurance isn’t bad compared to the rest of the nation: per numbers from The Zebra’s Ross Martin, the average annual premium is $253 per year, or about $21 a month. It’s possible tenants could find an even lower rate simply by shopping around and comparing prices.
Ultimately, the choice to rent or buy relies on one’s financial situation and desired level of commitment — it hardly makes sense to buy a home in Texas if you only plan to be there for a year or two.
It’s unlikely that Houston’s rental market will stay cool forever — there are already some signs that it’s warming up, and as the city’s population grows, those new developments will start filling up. But until then, now is a great time to find a rental property in Houston.
