According to most analytics, Houston is still one of the fast growing cities in America. To keep pace, real estate developers have been building a lot of new luxury apartments.
However, as the economy has slowed, it has begun to affect the rental market. Nadia Balint works with Rent Café – a national apartment listing service and research firm.
"We are seeing a visible slowdown in rent prices in the Houston metro areas," says Balint.
Luxury – or Class A – apartments have been most affected by the economic downturn. Balint says it's simple supply and demand. Almost 90 percent of the 15,000 apartments built last year, she says, were considered Class A units. This supply, along with a suffering energy sector are giving renters more buying power.
"With the drop in energy prices we saw an immediate and sharp decline in rent growth, beginning in May last year. And this, in combination with the large supply that's on the market right now, this is causing a visible slowdown in rent prices," said Balint.
Monthly rent on luxury apartments have dropped about 2 percent in the last year, while rents on mid-priced apartment continue to increase.
Balint says, "This stark contrast is caused by a stronger demand we see now in mid-priced properties, while the supply has been focused on the higher end of the quality scale of the buildings."
On average, a renter will pay almost $600 more per month to live in a luxury apartment in Greater Houston. But as more high-end units hit the market, Balint says that gap should shrink. And all renters will benefit.
"Considering that we're going to have such a huge supply of new apartments on the market that might drag down even the low end apartment prices," she says.
According to the Greater Houston Partnership, developers are scheduled to deliver 25,000 new apartments by the end of 2017.