What's the deal with Houston?

Question

Hi All,

I am new to real estate investment, and am trying to develop my ability to pick out of state markets. I've seen a lot of people recommend Houston as one of the best cities to invest in for a buy and hold strategy. However, it appears that the oil industry is the main driver of the economy in Houston. Given the current strong trend towards electric vehicles and phasing out fossil fuels, is Houston still a good market to invest in? I know that there are probably other sectors that would pick up the slack as the oil industry winds down, but would you risk it? I would love to hear the communities thoughts on this.

Thank you!

Matthew

Daniel J Dominguez · Answer

Happy new year Matthew!

Great question. i believe that Houston is a strong enough market that it will be able to survive without oil for some time. My reason for this is due to the strong healthcare industry here. Many people dont know but Houston is the home of the worlds largest medical center (Texas Medical Center)

Add to that, that the cost of living for a large metropolis city is low in Houston compared to other top 5 largest cities. The influx of people moving here due to that and low inventory everywhere,, will cause prices to go up for a good few years at least.

Aside from that, Houston many other thriving industries, ranging from construction to exports. Texas in general is a large economy, i believe Texas has one of the largest air turbine farms in the country.

So in summary i dont really see Houston taking a hit because it has a lot more diversity in industry than it did a few years ago

Hopefully this was helpful

J Scott · Answer

Actually, that's a big misnomer about Houston. Used to be that was true, but these days, other than specific parts of the city (the energy corridor, to be specific), Houston has a very diverse employment/industry base.

Brian Pownall · Answer

Great posts and replies. As someone in oil and gas and RE I'd point put two things.

1) As pointed out above Houston is a diverse economy. Healthcare is the big one but also look at tech and jobs moving here...see HP being built in Woodlands.

2) Oil dying is overblown. Individuals should study the statistics a bit more. Sub 3% of car sales are EV. Of course this means as a % of the total fleet it is much less. A transition will take a LONG time, and even then oil and gas is critical for many everyday products and the global economy.

I am long Houston.

Matthew Vedder · Answer

Thanks @Daniel Rainmaker and @J Scott! That really helps to clear up the misconception I had about the Houston market. I'll be sure to look into the Houston area more deeply now, as it looks like it is full of promise. I appreciate you both pointing me in the right direction.

What's the deal with Houston?

What's the deal with Houston?

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