Commercial real estate company Berkadia has released its predictions for rental markets across the country in 2023.
In 2022, Houston’s rental supply was at 93.6% occupancy. Berkadia predicts that this level will slightly decrease to 92.7% into 2023, as builders continue to develop multifamily properties in greater Houston. However, demand is likely to keep up with the pace of new apartment deliveries in 2023.
“Even with heavy deliveries in the first part of the year, Houston no longer ranks among the top 10 markets for most new units under construction, which favors long-term rent growth and average occupancy rates,” Berkadia’s report reads. “Robust new migration and household growth should continue to fuel demand for Houston area apartments. Record-low, single-family for sale inventory and higher borrowing costs will hinder homeownership for many new residents in the near future. While the impacts on occupancy and rent growth will not be seen immediately, look for average occupancy rates and rent growth to rise in the second half of 2023 and beyond.”
Additionally, Berkadia forecasts that the average effective rent will rise to $1,358, a 2.4% increase year over year. The median household income is also projected to raise to $81,683 — meaning rent will make up 20% of the average household income, which represents a significant increase in affordability.