As Homes Flood, Thousands Of Harvey Evacuees Look To Houston's Rental Market

Harvey Evacuation
Harvey Evacuation

Harvey has left tens of thousands of Houstonians without habitable homes. In the wake of the historic storm that carved a devastating path through Southeast Texas, Federal Emergency Management Agency Administrator Brock Long said his agency is operating more than 200 shelters and housing more than 32,000 people in the state.

But displaced Texans also cannot stay in evacuation shelters forever, Texas Gov. Greg Abbott said at a press conference Wednesday. Eventually, they will have to find alternative housing while waiting for claims and repairs.

Past major storms in Houston and natural disasters in other locations point to a rush of apartment leasing in the weeks after the flood waters recede.

"Think of all the people that are going to be displaced, all the crews coming into the area. All these people will need a place to stay for at least a year," Colliers Multifamily Senior Vice President Matt Guse said.

RealPage calculates metro Houston’s apartment base as of mid-2017 at about 662,400 units, with approximately 47,000 of them vacant. Many apartments will be damaged and uninhabitable. Still, the metro should be able to accommodate a major influx of renters more easily than just about anywhere else in the country.

Harvey Home Devastation
Harvey home devastation

In addition to storm evacuees, many insurance companies, contractors and other businesses will send platoons of employees to the area, all in need of a place to stay. GEICO, Farmers, Travelers, USAA, Nationwide and State Farm have already announced thousands of employees headed to the area to handle claims.

With the sudden influx of demand, rents that were running at -0.2% over the last 12 months will likely spike just from the mere cessation of any concessions, according to multiple sources on apartment data. In 2005, when we experienced the exodus from New Orleans from Hurricane Katrina, and after Hurricane Rita locally, rents rose 5.9%. In 2008, Hurricane Ike sent rent levels up by 5.7%, according to ApartmentData.

Guse believes the biggest boost will be to Class-B and C apartments, but higher-end product will also benefit.

Guse predicts the home rental market will become extremely competitive as displaced single-family homeowners look to stay out of multifamily units. Where they cannot find single-family homes rentals, affluent homeowners in flooded areas like Katy and Memorial will likely turn to the Class-A rental market, boosting the sector's recent sluggish numbers.

"Harvey will affect everything," Guse said. "How could it not?"

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Related Topics: Hurricane Harvey , Matt Guse
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