A group chats shared by many residents of the garden-style apartment complex in Braeswood first alerted Audrey Hall to rising rents. During the renewal process for a neighbor lease, she was quoted a rent that was $200 higher than her previous rate. She was later joined by other neighbors who were experiencing the same increase.
“When I heard that, I was like, the writing’s on the wall,” Hall explained.
Hall used to pay $780 a month. Trying to find a similar-priced apartment, Hall found one in Midtown, which was much smaller – a studio rather than a one-bedroom.
“But I can afford it,” she said, shrugging.
Rental rates in Houston have soared to a record high, putting renters like Hall under pressure. People who had stayed with family or roommates during the pandemic eventually decided to move out on their own as vaccines became available.
These apartment demands hit the market at a time when builders slowed construction due to uncertainty about the economy. Consequently, rent has risen sharply and investors have bought up apartment buildings at historically high prices. Forecasters believe this trend will continue going forward even into 2022.
Rents are on the Rise
“Rents are going up because… people are moving into apartments like we haven’t seen in a long time,” Itziar Aguirre, a market analyst at CoStar said.
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Approximately 40,700 more people live in apartment units in Houston than a year ago. “That’s bananas.”
A trade group’s president-elect, Christy Rodriguez, said the pandemic has pushed up rental expenses as well. Over the past year, property taxes, sewer fees, insurance rates, cleaning supplies, and repair costs all increased.
“We have to be able to offset those expenses as well,” she explained. “Increased demand and increased expenses: Rent has to go up.”
Jay Malone, the political director of the Texas Gulf Coast Area Labor Federation, argued that inflation wasn’t the only factor at play.
“I heard from a friend whose rent got raised 20-25 percent when he went to renew,” he stated,
“You’re not raising rent by that much because of inflation… There’s a sense of: I can get away with it right now.”
Two friends and Hall’s one-bedroom Near Northside apartment was also going up in rent – from $895 to $1,000. Johnny Elaine and Lisa Longoria, Hall’s two friends, were also moving because of this increase. Elaine said, “It wasn’t worth it.” In the end, they rented a two-bedroom apartment nearby that was newly renovated and cost $1,280 a month. They learned from the woman who had lived there previously that she was also moving out because she couldn’t afford to stay.
“Because rents are rising everywhere, it’s becoming harder and harder for working people to live,” Elaine, a barista, stated.
The Trend Toward Increasing Rent is not Slowing
The owner of a real estate company, Cody Lutsch, said his company has generally raised rents by less than “major cost increases on their end such as higher utility bills, labor/supply costs, insurance, and property taxes.”
Backing the Fat Property’s purchase of the Terraces on Brompton last summer, he said, the management determined rental rates at the time were lower in the neighborhood than the market.
“We can’t raise rents arbitrarily (because) if we did, we’d price ourselves out of the market.” Rising rents do not appear to be slowing any time soon. Houston’s job growth continues apace, while apartment construction is sluggish.
As soon as the pandemic hit, developers had to slow down construction. CoStar data shows that 18,700 new units were added to the market in 2021, which is only a fraction of the demand increase of 40,700 units. Due to the two-year development time for apartment buildings, there will be even fewer apartments around 12,900 by 2022. Only Dallas-Fort Worth has experienced a greater decline in development than Houston in all states.
“In the next quarter, we’re projecting 10.9 percent rent growth, which is again a record high,” Aguirre expressed.
“We’re going to start seeing that rent growth start to curb a little bit toward the second half of 2022, but still near record highs.”
In contrast, salaries and wages in Houston grew by only 2.3 percent in the year ending, precisely at September. A large portion of the COVID-related assistance has already been distributed to families.
“This is where the confluence of events becomes really concerning,” Malone communicated.
“The rental assistance money, the protections are gone… and we’re experiencing rising rents that are not commensurate with rising salaries.”
Eventually, residents of the Terraces on Brompton began talking about rising rents by messaging each other and going door to door, eventually delivering a letter to Fat Property asking for a cap on rent increases and for timely repairs.
As one of the renters who had gone door to door to organize, Erin Boldt said it was impossible for her to remain silent about the price increases due to the level of service they had been receiving.
Saud Boldt added, saying “It seems like things are getting worse, and they’re asking for more rents.”
