The outgoing director of the University of Houston Institute for Regional Forecasting delivered a thumbnail sketch on the state of the apartment industry to apartment owners, investors and operators in Houston. The decade began with record-low vacancy rates, and Barton Smith says that led a period of over-building.
“Low vacancy rates stimulates a lot of new supply and the builders got a little bit carried away. They got carried away when we get the tech stock collapse and the recession nationwide. And then it finally hit home in Houston post-911 and then the Enron/Calpine/so forth, debacle. We didn’t go into a major recession in Houston at the first part of the decade, but we went into a stall mode at the same time that we were building an awful lot of new apartment complexes.”
Innovative mortgage schemes in the 90s and recent low-interest mortgage rates and tax credits contributed to a healthy move to home ownership.
“We were able to qualify people for owner-occupied housing in Houston that would never otherwise have been qualified. Our best estimate is that we qualified somewhere between 100,000 and 150,000 that under normal circumstances wouldn’t have been capable of buying owner-occupied housing. We actually have a couple years in which total occupancy in the apartment markets fell. Even though Houston was growing, the single-family market was stealing all of these households from the apartment market.”
The Houston Apartment Association hosted its annual Education Conference and Expo at Reliant Center.