Housing Stock in Houston

Exploring the supply of housing in our region

Overall, the housing stock and growth in the three-county area suggest a strong, but possibly slowing, housing market, with some concerns about the supply of affordable housing in the future.

Why the housing stock matters to Houston

In a healthy economy, new housing keeps pace with demand fueled by population and economic growth, and a good residential infrastructure helps attract new businesses and employees. Changes in housing stock also provide crucial information on how urban development is unfolding. With little zoning, Houston’s development is primarily driven by private residential development linked to highway and interstate construction.1 While these infrastructure improvements can help reduce congestion, it can also stimulate increased sprawl and future congestion to some extent. When there are enough housing options for a range of incomes in our community, more Houstonians have places to call home, strengthening families and revitalizing our community.

And the more we understand housing supply in our region, the more we can do to ensure availability and equality in access to these vital components of daily life.

The data

Available housing is increasing throughout the area, outpacing state and national growth

Between 2010 and 2017, the number of housing units in the three-county area increased by 13.2%; significantly faster than the 4.3% rate nationally and the 9.4% rate throughout Texas. Within the three-county area, housing units grew the most in Fort Bend County between 2010–17 (27.6%), while Harris County saw the lowest growth rate at 10.4% during the same time period. 

Most of the residents reside in either a single-family unit (a structure used as a single-dwelling unit, which may share one or more walls with another unit) or multi-family units (a structure with more than one dwelling unit contained within a building or complex). The other category includes mobile homes located in mobile home parks and on individual lots.

Single-family homes make up the majority of all housing units. Within the three-county area, Fort Bend and Montgomery counties have a much larger proportion of single-family homes, 86% and 70% respectively, compared to 61% in Harris County.

Multi-family housing, which is often an affordable alternative to single-family homes, comprises a smaller proportion of all housing units.2 While single-family homes in the Houston area grew by 14% from 2010 to 2017, making up 64.8% of area housing, multi-family units across the three-county area comprised just 31.1% of all housing units. Across the three-county area, Harris County has the greatest percentage of multi-family housing, at 36%, compared to only 15.2% in Montgomery County and 10.5% in Fort Bend. However, multi-family units have increased in all three counties, with multi-family stock increasing most rapidly in Montgomery County by 32.9% between 2010 and 2017, followed by Fort Bend County (23.3%) and Harris County (9.8%). 

Double and triple growth rates in multi-family housing

In Fort Bend and Montgomery counties compared to the state.

Vacancies

Vacancy rates are a measure of the general availability of housing in a community. A high vacancy rate can indicate a capacity for new residents, an oversupply of particular types of units, or inadequate units undesirable for occupancy. A low vacancy rate suggests that the housing supply meets the current housing market demand or that affordability and availability concerns exist in the area.2  

Since 2010, the percentage of vacant units has dropped nationwide, statewide and across the Houston area. In 2017, the overall vacancy rate was 12.6% in the U.S., 12% in Texas and 9.9% in Houston. Fort Bend County has the lowest vacancy rates, followed by Montgomery County and Harris County.

Breaking down these numbers further, the rental and homeowner vacancy rates provide a better glimpse into Houston’s housing supply and demand. The vacancy rate for rental units is a telling indicator of broad market conditions and the region’s overall economic climate and provides information on the general availability of housing in a community and how well the housing supply meets the market demand. 

According to the American Community Survey, 41% of vacant housing units in the three-county area were available for rent and 10% for sale in 2017, compared to 26% and 8% in the state, and 17% and 7% in the U.S. Across the three counties, Harris County has the highest proportion of vacant units available for rent (44.1%), compared to 34% in Fort Bend County and 21% in Montgomery County. Fort Bend County has the highest percentage of vacant units for sale (19%). Montgomery County had the highest percentage of vacant units (71%) that are unavailable for either rent or sale. The trend indicates a mismatch between supply and demand, especially in the rental market. 

Building permits

The number of building permits issued in a given year is a good indicator of housing market activity. Although there is always a lag between permit authorization by government agencies and the beginning of construction, building permits still provide good information on planned expansion and development in residential units, and are considered a gauge of economic vitality.

Between 2010 and 2017, the U.S. and the state of Texas have seen a surge in new building permits, up by 112% and 98%, respectively. Across Houston, the number of building permits was up by 57%, including an increase of 81% in Montgomery County, 57% in Fort Bend County and 52% in Harris County. Overall, the growth in the number of building permits issued in Houston is lower than the state or national average, indicating a cooler housing market.

Oftentimes, decayed, aging housing units are demolished, renovated, redeveloped and replaced by higher-priced housing. New construction, particularly among multi-family units, is targeted toward higher-income renters and millennials. With limited affordable housing units adding to the housing stock, there is concern about housing affordability going forward.  

81% increase in building permits

Montgomery County has seen the largest increase in building permits across the three-county area since 2010, coming closest to state and national growth rates.

Resources

References:

  1. Mapping Houston Development (1950-2015). Wittenberg, Gordon, Amanda Chang, and Kinder Institute For Urban Research. “Subdivision Plats Data in the Houston Area.Rice University-Kinder Institute: UDP, 2018.
  2. Joint Center for Housing Studies of Harvard University, “The State of the Nation’s Housing 2019,” Cambridge, 2019.