Single-family lease rates within the Katy area stabilized during the month of June. After plummeting to multi-year lows, the average rents of Katy Texas homes appear to be finding some footing. Average rents in South Katy (area 36) were basically flat compared to last year, while average rents north of I-10 (area 25) softened just slightly compared to last year on higher year-over-year activity.
Average rents in Cinco Ranch, Katy’s largest master-planned community, were just under $2300 during the month of June.
Looking at price per square foot, average rents are still hovering near five-year lows but appear to be bottoming.
Recent weakness in oil prices has tempered some of the enthusiasm seen during the first quarter of the year, with oil prices once again falling below the critical threshold of $50 per barrel. As a result, energy sector relocation remains subdued, at least in terms of abundant high-paying engineering and manufacturing jobs. What we have seen instead this year in the Houston area is solid growth of lower paying service-oriented employment. (aka the kind of jobs that put more people into apartments).
The June housing report is going to show another solid month of home sales in Houston, with Katy lagging behind both in total sales and new home sales. The energy sector may have recovered, but those high paying jobs that were lost during the last boom-bust cycle may not be coming back for quite some time.
With the Federal Reserve attempting to raise rates into a soft economy, things are going to get interesting in the local real estate sector. Mortgage interest rates have been trending downward for most of the year. This week Treasury yields spiked higher, and mortgage rates have bumped up as well. Houston are area home prices (at least median prices) are already at nominal highs, so any bump in mortgage rates will be painful for home buyers.