According to the Institute for Regional Forecasting and The Texas State Data Center, the city of Houston will need an additional 32,000 – 52,000 new homes per year to support the job growth predicted from now through 2020. There were 25,627 new home starts in 2013, representing a 13% increase over the 22,685 new home starts in 2012. And while residential permits set an all-time record in 2013 at $2.3 billion, demand continues to outpace supply at an unprecedented velocity. As of January 31, 2014, there were only 2.6 month’s supply of inventory reported, the lowest in the city’s history. Months inventory represents the number of months it will take to deplete current active inventory based on prior 12 months sales activity – 6 months is considered equilibrium.
This housing shortage is presenting unprecedented opportunity for high-density urban development as with more jobs comes more people and more people means more traffic. And with the major employment centers of Downtown, Medical Center, Uptown and Greenway Plaza hovering in or around the 610-Loop, employees are becoming auto-minimalists and want to live inside the loop to eliminate or mitigate commute times. However, the scarcity of land, coupled with the difficulty in attaining construction financing for mid-rise and high-rise product, has resulted in the small footprint “tall & skinny” home becoming the dominant “for-sale” product type in Houston’s urban cores. These 6 – 10 home neighborhoods of bricks-and-sticks are typically zero lot line homes, 4-5 stories high with little or no green space or controlled access.
Single-story living, with services, amenities and controlled access, is highly desirable in America’s 4th largest city. In the 26 high-rise condominiums throughout the city housing over 4,500 residents, there are only 79 homes available for sale, and in the top five buildings selling for $498sf – $713sf, only 9 residences are available.