Dallas and Houston are both seen as low-cost housing markets, but when you start to pull back the curtain, you begin to see that while more affordable than some markets, there still remains a large gap in what is affordable for the middle class.
This creates an opportunity for developers to supply product in that range, and to benefit from the fact that it promises strong returns in any kind of market conditions.
The 2020 State of Housing in Harris County and Houston published by the Kinder Institute for Urban Research at Rice University reports that in 2018, 47% of total renter households in Harris County paid more than 30% of their income toward housing, classifying them as cost-burdened.
Plus, the affordability gap in Houston, or the difference between a home affordable to a household making the median income and the median home sales price, has grown. In 2018, a household with a median income of $60,146 could afford a $186,256 home, but median home prices were at $220,000.
Residents of Houston have to earn $21.02 an hour to pay for an average two-bedroom, market-rate rental. The minimum hourly wage in Texas is $7.25 and a minimum-wage worker would have to work 115 hours a week to afford this rent—nearly three full-time jobs.
Claridge Properties has acquired Northshore Meadows, a 291-unit community in Houston. Berkadia brokered the transaction.
According to Yardi Matrix, the affordable housing property last traded in 2007, when it was acquired by Envolve. Claridge assumed the existing HUD loan of $9.6 million, originated by Prudential Financial in 2007. According to public records, the note carries a fixed interest rate of 4.1 percent over a 40-year term.
Built in 1971, Northshore comprises one-, two-, three- and four-bedroom units, with walk-in closets and stainless steel appliances. Common-area amenities include a business center, clubhouse, playground, fitness center and laundry facilities. The property also has 400 parking spaces.
Located at 333 Uvalde Road, on 11 acres, the community is within 2 miles of Interstate 10 and 13 miles from Downtown Houston.
Berkadia’s team on the deal included Senior Managing Director Ryan Epstein, Director Jennifer Ray and Associate Director Scott Bray. In October 2020, Epstein arranged the sale of Legacy Creekside, a 338-unit community in San Antonio.