The lively city of Houston, Texas, is not only known for its vibrant energy and cultural diversity but also for its thriving real estate market. With its booming economy, abundant investment opportunities, and droves of homebuyers moving to Houston, the city has become a top destination for real estate investors. From commercial properties to residential developments, the city offers many options for those looking to capitalize on its growth. If you’re curious about investing in Houston real estate, take a moment to study the factors that make Houston an attractive investment hub and understand the potential returns and long-term prospects for the region.
Why Invest in Real Estate?
Real estate investing is one of the most tried-and-true methods of investing money for substantial returns over time. While real estate markets have their ups and downs (as do all types of investments), the value of real estate continues to rise as populations grow, economies develop, and the need for quality shelter remains. Supply and demand work in favor of property owners—as the saying goes, buy land; they’re not making any more of it.
There are many great ways to invest in real estate, but the most basic method is by buying a property to use as your home. This allows you to make monthly payments on a mortgage (if you don’t own the property outright from a cash purchase) and build your equity over time even while you benefit from the property as your home.
Equity is one of the primary advantages of buying vs. renting. To illustrate: if a renter pays $1,000 for their monthly rent payment, they’re out $1,000. If a property owner pays $1,000 towards the principal of their mortgage, they now own $1,000 worth of their home that they can later sell.
Investing in houses or similar properties to be used as rental properties has grown in popularity to take advantage of the long-term momentum of the real estate industry, even while generating passive income in the short term through charging tenants for rent. This kind of real estate investment carries more risk and higher potential rewards.
Why Should You Invest in Houston Real Estate?
Houston, Texas, boasts one of the country’s most booming real estate climates. Drawn by affordability and the abundance of property and job opportunities, many people continue to move to the state, creating a demand for homes of all kinds in big and small cities—and Houston is no exception.
The Houston Real Estate Market Is Huge
As a hub of activity for several industries, the already massive Greater Houston area continues to grow and expand at a striking rate. With about 6.7 million people in the Houston metro area already and tens of thousands of new Houston residents every year, home values are likely to continue to rise, and the demand for purchased and rental properties will remain high.
Due to its size, the Houston market has many different home styles available all over the city, making it relatively easy to find the right real estate investment for you. Commuting in Houston is simplified by the robust state and interstate highways that run through the city.
Millions of Houston residents continue to rent rather than buy their homes within the bustling real estate market. This means that there is abundant opportunity for buying properties to rent out if that’s your goal.
Homes and Land Are Affordable
Another great reason to buy in Houston is affordability: homes and vacant lots for sale in Houston list for a fraction of the prices in other large cities across the country. Even compared to the national median price of a home in January 2023 (about $383,000), the median price of homes for sale in Houston comes in slightly lower, typically around $379,000. More importantly, the price per square foot of living space in Houston is far lower than in cities of similar size such as Boston, Miami, Seattle, or San Francisco.
For example, a 1,000-square-foot, two-bedroom condo in San Francisco might sell for $550,000, whereas you could get a 2,500-square-foot, three-bedroom house for the same price in Greater Houston. In Boston, the price per square foot is nearly four times as much as in Houston—about $900 vs. about $230. Miami and Seattle’s prices per square foot are closer, but they also have far higher median home prices than Houston.
Because of this affordability, you can either start smaller with your real estate investment (if preferred) or simply buy more for your money than you would elsewhere.
Houston Is a Highly Attractive Market
Houston continues to draw people worldwide who are interested in its low prices and great job prospects. Several industries are headquartered in the Houston metroplex, including oil and gas companies, utilities, and engineering.
Even as the outskirts of the metroplex expand, the inner-city districts continue to grow in character with new attractions such as world-class restaurants and museums.
The city also boasts a robust Theater District with Broadway-quality shows year-round, and Space Center Houston is nearby in close connection with NASA’s headquarters.And while development codes are implemented in the city to guide what gets built and where, Houston is unique in that it does not have land zoning laws, which creates more opportunities for businesses and neighborhoods of all kinds to grow and develop. This is perhaps one of the best reasons to invest in Houston now; despite its off-the-charts growth thus far, it still has a long way to go as a major hub of business and residential development.
Where Should You Invest in Houston Real Estate?
Being an ever-growing metroplex of different areas gathered under one umbrella, it’s helpful to break down Houston’s real estate market into the various districts and cities that make it up. Here’s a snapshot of several of the best areas to buy a home in Houston.
Downtown
There are many reasons to love living in Downtown Houston, and many also apply to real estate investment here. The iconic Minute Maid Park and several convention centers (including the Toyota Center) are located here, meaning that live sports and music aren’t far away from Downtown homes. The world-class medical center in Downtown is on the south side, and the Theater and Historic districts are also on full display. Public transportation is widely available and Downtown is, naturally, one of the most walkable neighborhoods in Houston, making it a convenient place to live for on-foot exploration of the rest of the city.
Among other colleges and universities in Houston is the South Texas College of Law, which is located in Downtown Houston, along with the University of Houston-Downtown. The residential real estate scene in this area of Houston is largely condos, with a wide price range available. Many of these Houston condos feature private patios, and some have great views of the iconic downtown Houston skyline up close.
Midtown
Midtown Houston is nestled between the Downtown Houston and Museum District areas near the center of the city, and it plays host to a vibrant nightlife and restaurant scene as well as several theaters and parks. There are many murals to admire on the streets of Midtown, and the district layout allows residents to walk to most local spots easily. Midtown Houston is also close to several colleges and universities (including the University of Houston and Rice University), and it’s home to a share of the townhomes in Houston. It’s also one of the more affordable neighborhoods in Houston, making it an appealing prospect for entry-level investing.
Uptown
Uptown Houston is a business district (one of the largest in the country) that is also home to several parks, such as Post Oak Park and Williams Tower Park, which is where the architectural Williams Waterwall is on display. Bus transportation is available in and out of Uptown, helping to simplify transportation for the area. Over 2,000 businesses are located in this Houston district, demonstrating its high potential for growth and real estate value.
Greater Heights
Greater Heights (more commonly referred to as simply “The Heights”) is one of the oldest planned communities in Texas and one of the most popular neighborhoods in Houston. Boasting popular shopping areas like the Northline Commons and quirky standalone shops and restaurants, The Heights is known for its tree-lined streets and vintage homes from the early 20th century. The community features walking and riding paths, including a hiking path that leads straight to downtown.
The Heights is a great location to have relatively quick access to the north freeway (I-45), the 610 loop around the inner areas of Houston, and the Downtown Houston and Midtown Houston areas just a few miles south. Houston Community College is nearby, in addition to several of the charter, private, and public schools in Houston.
All in all, The Heights is a great microcosm of the eclectic nature of Houston as a whole.
West University Place
Known as “the neighborhood city,” homes in West University Place are within the Houston metroplex and located on the southwestern corner of the 610 loop. With a population of just under 15,000, West U offers an eclectic mix of new and old homes. New construction of homes in recent decades has helped to keep the city fresh and new without dampening the classic feel it maintains. Parks and quick access to the Galleria make it a pleasant place to take a walk or shop, and the wide price range available in its real estate market make it widely accessible.
Montrose
Located just west of Midtown and south of the Heights, Montrose has a lot of character with its extensive art galleries and excellent views of the Houston skyline. Eateries of all kinds can be found lining the streets of Montrose’s four square miles, including such excellent establishments as Kau Ba, Traveler’s Table, and Uchi. Eleanor Tinsley Park is a popular spot for relaxing or meeting up with friends.
The residential real estate scene in the Montrose area offers a wide array of options, including condos, townhomes, and houses all ranging from the high $100s to $1 million or higher. And while there are plenty of older properties with a lot of character in this area, the presence of both older and newer homes is just one of the reasons to love living in Montrose.
Katy
Katy is a city straight to the west of Houston’s city center and several miles southwest of Cypress, and it’s an up-and-coming area full of new constructions and establishments. You can go fishing at at Mary Jo Peckham Park, visit a local museum preserving the earliest days of Katy (which was founded in the 1890s), or go shopping at the well-known Katy Mills Mall. There are also wineries and breweries in town.
The real estate scene in Katy is mostly houses in residential neighborhoods, including plenty of new homes and communities still being developed. Homes for sale in Katy list from the high $100s all the way up to the $1 million mark and above, with a median price typically in the low $400s, which could easily get you a four-bedroom, three-bath new construction home of 2,500 square feet or more. New investors should note that the City of Katy and the Greater Katy Area are often considered separately, with the latter being denoted primarily by the boundaries of Katy ISD.
Cypress
A surprisingly rural but quickly growing part of the Houston metroplex, Cypress is an unincorporated community that has plenty of space yet to be developed, making it a pleasant drive with lots of fresh air and new communities. Located northwest of the Houston beltway and just along the 99 freeway, Cypress offers a more spacious feel while still keeping close access to major freeways for those who need to commute or drive across town often. Parks, breweries, outlet shopping, and golf clubs all dot the landscape of Cypress. Homes in Cypress generally list for a median price in the mid-$400s.
Humble
Humble, Texas, is located several miles northeast of the Houston Beltway (Beltway 8), which gives it some space from the closer quarters of Houston proper. This is nice for those who are looking for a more open horizon around their home, and it also takes you one step closer to the north side of Houston, where new residential development is very much in progress. Humble boasts plenty of parks, nature centers, and sporting facilities (such as golf courses), and its neighborhoods are relatively quiet and tucked away from the hustle and bustle of the big city. Homes for sale in Humble can list from the high $100s to more than $1.5 million.
Tips for Investing in Houston Real Estate
If you’re looking to invest in Houston real estate, there are several things to keep in mind that may help you to find a strong investment property. They go beyond targeting the Houston neighborhoods with high appreciation rates, including schools and rental values.
Top-Ranked Schools Often Estimate Strong Growth
Homes near top-ranked schools have a strong chance of continuing their climb in value simply because of the demand that those schools bring to the area. More demand means higher prices, so taking advantage of this for long-term returns is a good idea.
Major Business Hubs Mean High Growth Potential
For similar reasons, buying a home in an area of significant business activity can give you a good chance of increased home value over time. The more jobs there are in a given area, the more likely there will be demand for homes in that area, driving prices up.
Be Aware of Flood Zones
It’s vital to research the flood zones and flood history of the area you’re looking in. This matters because of the hassle that flooding can cause and because if you choose to rent out your property, you might have difficulty finding tenants.
Area Rental Value Is a Strong Indicator
Finally, consider the rental value of homes in the area you’re considering. Even if you’re planning on investing in a home mostly to live in it, you may want to rent it out later on, and it’s a good idea to have a sense of the rental market in your neighborhood and how healthy it is.
Investing Wisely in Houston’s Real Estate Market
Houston stands as a beacon of opportunity for savvy real estate investors seeking lucrative ventures. With its robust economy, affordable suburbs and neighborhoods, favorable investment climate, and bounty of fun things to do, the city continues to attract a multitude of investors from across the globe. From the thriving commercial sector to the ever-expanding residential market, the city presents a wealth of possibilities for those willing to tap into its potential.
As Houston’s real estate market continues to flourish, the prospects for sustainable returns remain high. Whether you’re a seasoned investor or someone looking to diversify your portfolio, Houston’s real estate scene beckons with promises of growth and profitability.
