Featured Market 2022: Houston
There's a lot of concern about where the U.S. economy is headed, and rightly so, and I know many that have money to invest, but aren't sure where to put it. Let me share my research and conclusions on one metro that should provide the right conditions for a solid multifamily investment: Houston, Texas.
My goal with Streamline Capital Group is to find investment opportunities in growing metros with an experienced ownership group and for that purpose, spent a few days this past week in Houston. Personally, I'm very excited about the possibilities that will come from this trip... more on that in another email...
Why I like Houston today, in August 2022, is much different than what I would have said a year or two ago. We're in a much different economic environment now and I think that we should do as much as we can to reduce the risks to investments while still seeking solid returns, and I believe that Houston provides the perfect environment to achieve both. Of course, the right team and the right property also matter, but that's the subject of another email...
Be the first to hear about our next investment opportunity by clicking here. Here are my main reasons:
1. The Economy
One big reason I LOVE Houston from an investment standpoint is it has a robust economy. We don't know how long or deep the current recession will be, and every recession hits the various sectors of our economy differently. Houston's economy is large and diverse, which reduces the risk that Houston will be significantly affected compared to other metros. Here are a few things I'll point out about the economy - and notice how many different sectors thrive in Houston.
Gross Domestic Product of Houston is $500 billion. If Houston were a country, it would rank 27th in the world - right between Austria and the United Arab Emirates.
Houston is headquarters to 24 of the Fortune 500 companies - only two cities in the U.S. have more.
Houston is home to the Texas Medical Center - the largest medical complex in the world - which employs 106k people and produces $25 billion in annual GDP.
Not suprisingly, Houston also has a large biotech industry with 1,760 companies and 5,700 medical researchers.
Houston is an international logistics hub with the Port of Houston being the 10th largest in the world and 2nd largest in the U.S.
Houston is home to NASA, the Johnson Space Center and 150 aerospace companies with over 50,000 employees.
Houston ranks #2 in the nation in manufacturing with 6,400 manufacturing establishments and over $80 billion GDP
Higher education institutions in Houston host over 417,000 students, adding thousands of highly educated people to the labor force annually.
Houston has a signficant amount of tech companies with over 228,000 tech jobs spread among 9,290 tech companies.
Energy... some say Houston is the Energy Capital of the World, which isn't surprising considering the oil and gas industry. But Houston is also positioning itself as a leader in renewable energy sources too.
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2. Growth and Affordability
The robust economy should reduce the risk of potential losses, but there is still significant growth expected which will likely make it a great place to invest for returns as well. The relative affordability will also continue to drive growth as demographic trends in ths U.S. include migration from the less affordable metros to the more affordable ones.
Houston's population grew by over 1 million residents between 2010 and 2020, and is expected to grow by over a million more by 2030.
Houston's cost-of-living is below the national average and is second lowest among the 20 most populous metros in the country. The low cost of living should continue to attract new residents.
Housing costs in Houston are also second lowest among the 20 most populous metros in the country, which would also incentivize inward migration.
Houston's median family income was $81,000 in 2021 and is expected to continue to grow. Higher incomes coupled with a reasonable cost of living tend to produce more economic growth, which will also push real estate values up and up and up.
Final Thoughts
Overall, I believe that the Greater Houston Metro provides the right conditions for multifamily investments to provide solid, stable returns, while reducing the risk from an economic downturn. Finding the right team, in my opinion, is the next most important factor. Fortunately, I was able to spend some considerable time with someone that owns 3,000 units in the Houston metro and expect the trip to provide many future investment opportunities.
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