It’s been a tough year for the U.S. economy, although Houston apartments are bucking trends and seeing positive absorption. To find out what’s going on with fall occupancy and rental rates, see Bruce McClenny’s report from the November issue of ABODE, available to members for download online now at www.haaonline.org and mailing this week. Here is an excerpt from his report:
“The Houston apartment market is an enigma wrapped in a conundrum. But what could be so puzzling about the market? After all, it is a certainty that a global economic recession is well under way, and the Houston economy has not been spared from participating. As of the end of August, the Bureau of Labor Statistics reported that the Houston-Sugar Land-Baytown metro area had lost 95,100 jobs over the past 12 months, which equates to a -3.6 percent rate of decline. Job growth (or the lack of it) is a metric that the industry has come to rely on to predict demand for apartments. When job growth is positive, demand for apartments follows with positive absorption, and the converse generally holds true.
The last time the Houston area experienced a loss in jobs was 2003 when 11,400 jobs were lost and the market responded with a negative absorption performance of more than 4,000 units. Now that the area has posted a job loss of 95,100 over the past 12 months, expectations should be that absorption would be negative or at least flat. However, overall absorption for this period has registered a positive 9,284 units … This level of absorption is more indicative of very strong job growth and is the main source of the market’s enigmatic behavior. How could the market produce such positive absorption as the area’s job market records the worst job losses since the 1980s?
There are at least two reasons for this extraordinary absorption performance. The first is Hurricane Ike, which struck last September. Along with property damage, Ike produced absorption-enhancing renters from displaced homeowners and armies of insurance adjusters and contractors. Overall absorption during the fourth quarter of 2008 was greater than 2,500 units. Without Ike, absorption would have been much less considering that the economic downturn had arrived in Texas.”
For the rest of the article, see the November ABODE, available now at www.haaonline.org and arriving in HAA member mailboxes next week.
Houston Apartment Association Blog 