Camden Property Trust, a real estate company that specializes in multi-family apartment complexes, with its head office in Greenway Plaza, made some interesting comments on its earnings call on the state of the Houston housing market in 2017.
They rate the Houston market as a ‘D’ as they expect same store revenues to decline 4% in 2017 (they declined 1.2% in 2016). Houston only produced 15,000 new jobs in 2016 and estimates are around 25,000-30,000 for this year. The problem is that another 10,000-12,000 new apartments are expected to open in 2017 (though that’s down from about 16,000 in 2016).
In the past, Camden has said that the rule of thing is that it takes 5,000 new jobs to absorb 1,000 new apartments. However in 2016, Houston absorbed 15,000 units on 15,000 new jobs. The CEO, Ric Campo, attributed this to new high-rise apartment complexes being built downtown, a product that didn’t really exist in the past. As a result, many sold their homes in the suburbs and moved to the urban core.
Regarding other markets in 2017 they rated them as follows;
|Denver||A||Declining (30,000 jobs, 10,000 new apartments)|
|Phoenix||A-||Stable (50,000 jobs, 7,500 apartments)|
|Dallas||A-||Declining (70,000 jobs, 20,000 apartments)|
|Atlanta||B+||Stable (53,000 jobs, 13,000 apartments)|
|Southern California||B+||Stable (110,000 jobs, 28,000 apartments)|
|Raleigh||B+||Stable (20,000 jobs, 5,000 apartments)|
|Orlando||B+||Stable (38,000 jobs, 8,000 apartments)|
|Tampa||B+||Declining (30,000 jobs, 6,000 apartments)|
|Washington, DC||B||Improving (70,000 jobs, 10,000 apartments)|
|South Florida||B||Stable (37,000 jobs, 10,000 apartments)|
|Austin||B||Declining (20,000 jobs, 8,000 apartments)|
|Charlotte||B-||Stable (30,000 jobs, 7,000 apartments)|
The CEO alluded to the slacker economy in Austin (my words, not his). He said he had been surprised at the company’s revenue growth in Austin in the past two years, despite tepid reported jobs growth. He believes that the jobs growth may be under-reported and that ‘there’s a different category of folks that show up in Austin and find their way into the tech community and find jobs and pay rent in ways that may not be conventional’.
As an aside, Ric Campo, was also the chairman of the Houston Super Bowl Host Committee. The Super Bowl was held in Houston the past weekend and the logistical planning and execution of the event was superb, and reflected well on the city of Houston.