COVID bringing rush for land in Houston
Acreage is enough for 70,000 houses
COVID-19 has kicked off a land rush in Houston driven by demand for housing and the e-commerce boom.
Some 17,000 acres of tracts greater than about 250 acres have sold across the Houston area since the pandemic began in early 2020, and an additional 19,000 acres are under contract, said veteran land brokers Kirk Laguarta and Duane Heckman of Land Advisors Organization, a brokerage and advisory services company with 22 offices across the country, including Houston. By comparison, 6,000 acres sold in 2018.
The combined acreage would be enough to accommodate 70,000 single-family residences.
“There’s just a big land grab going on because of COVID,” Laguarta said. “The market is starting to push farther out.”
Laguarta and Heckman spoke last week at Land Advisors Organization’s 2021 Land & Housing Forecast at the Westin Houston Hotel, Memorial City. More than 200 people attended.
The brokers said demand for land is “running white hot” and is the strongest they have seen in more than 30 years. Builders started nearly 37,000 houses in the Houston area in 2020, a 20 percent jump from 2019, according to housing information firm Zonda.
They are projected to start between 39,500 and 41,500 homes in the Houston region in 2021, according to Zonda. Next year, starts are projected to total 35,000 to 40,000.
Millennials who want more space and a better life-work balance are buying houses in big numbers, the brokers said. Many who saw their parents lose home equity — if not homes — during the Great Recession of more than a decade ago are coming around to buying homes, rather than renting, Laguarta said.
“They’re doing everything the baby boomers did, just about 10 years later in their life cycle,” Laguarta said.
Houston’s growth has pushed farther out as roads such as the Grand Parkway and Texas 249 have been constructed. The Houston metropolitan area has grown from 4 million in 1980 to more than 7 million in 2020, or about 100,000 people a year, according to Land Advisors, which is headquartered in Scottsdale, Ariz.
About 40 percent of the jobs lost in greater Houston during the pandemic-driven recession have yet to be recovered, said Patrick Jankowski, senior vice president of research at the Greater Hous
ton Partnership. Job losses in sectors that were already troubled before the pandemic such as construction, manufacturing and energy will hinder Houston’s recovery.
A bright spot is trade through the Port of Houston, which is creating a need for more distribution and warehouse space, Jankowski said. Developers are buying large tracts for grand-scale industrial buildings along major freeways, as the pandemic pushed more people to shop online.
“You’re seeing industrial competing with what normally people would think of as single-family land,” Laguarta said.
Investors are looking for land for the development of rental housing communities, Heckman said, but “there’s more money chasing build-to-rent deals than there are built-to-rent deals.”