Hurricane Evacuees Drive Two-Point Spike in Houston's Multifamily Market

HOUSTON-While official numbers about Hurricane Katrina's impact on the Greater Houston real estate market have been difficult to come by, a recent report published by locally based O'Connor & Associates suggests both occupancy and absorption in the multifamily housing market have increased due to the influx of hurricane evacuees from the Big Easy. Occupancy has risen 2.4 points to nearly 90% since the beginning of summer.

According to the newest data, an estimated 383,000 evacuees have taken up at least temporary residence in Texas, with approximately 87,000 of those people or equal to 30,000 households have ended up in the metro area. "This is why we've seen an increase in apartment absorption within the past month and that's why we'll continue to see that on the rise as more people leave shelters and hotels to move into apartments," says Richard Zigler, O'Connor's research director.

Zigler cautions that the influx doesn't mean a sudden large drop in vacancies, particularly over the long term. "There are those who will be here temporarily for the next several months, at least until things are safe in New Orleans. Then they'll leave to go back," Zigler tells GlobeSt.com.

Then there are those, Zigler continues, who will want to stay because there is nothing left at home in New Orleans. "That could end up being 4,000 or 5,000 apartment units occupied over a long-term basis," he projects.

While the increase in population also has meant a decrease in concessions, it has not led to rent gouging. Nor has it led to optimistic developers making plans to throw up new buildings. He says apartment developers are continuing to show restraint, taking a cautious attitude toward the new residents.

"We're still seeing apartment developers who want to build in Houston, but most are saying that it's fortunate the units here are filling up," Zigler says. "We've had a two- or three-year supply of units, but now it's down to a more manageable number."