Members of the Houston Apartment Association were told by local economist Steve Spillette, president of Community Development Strategies, that with the trouble in the oil and gas industry is facing, he expects an affordable housing shortage in the near future. His analysis is based on his expectation that only low and moderate-income jobs will be created over the next few years, however, developers are building mostly Class-A, luxury level apartments — creating a mismatch between what the majority of the population will be able to afford and what the market is providing in the way of rental housing.
“The bad news for Houston is that the oil and gas industry … it’s in pretty bad shape,” Spillette said during the presentation. “And it’s not looking like it’s going to be any better anytime soon. Unless there’s some radical factor that we just can’t anticipate, we may have had our last real oil boom, ever.”
Spillette attributes the over development of Class A luxury apartment housing to the fact that developers are not finding it financially feasible to build moderately priced apartment units in this economy — unless the developments are subsidized via the use of housing tax credits or by some other means. Many housing tax credit properties never see the light of day due to a competitive state application process that is often circumvented by elected officials in the region surrounding Houston with letters of dissent that forces developers to abandon plans to serve residents in those communities.
Spillette recognizes the region is likely to see another apartment building boom in the short-term, but also warns that the type of apartments being built is not likely to match the needs of the local workforce — resulting in affordable housing shortage.
“We’re adding all these warehousing jobs, medical jobs—everything that pays moderate and low wages. Where are these folks going to live?” Spillette said. “Moderately priced apartments have pretty high occupancy, and yet it’s not financially feasible to build new for those rents that people can reasonably afford.”