One of the questions on everyone’s mind when it comes to the current real estate market in Houston is how strains in the energy sector, particularly related to the oil patch, could have an effect on investments. Want more articles like this? Create an account today to get BiggerPocket's best blog articles delivered to your inbox Sign up for free Thankfully, the most recent report released by the Houston Association of Realtors with March 2016 data shows on a year-to-date basis, home sales are 1.0 percent ahead of last year’s pace, and new listings boosted inventory from a 2.8 months’ supply to 3.6 months. A six months’ supply of inventory is required to have a balanced market. The good news was reinforced by HAR Chairman Mario Arriaga. “Overall home sales held steady throughout March, and much of that may be due to an influx of new residents throughout the Houston area even as the energy industry suffered more layoffs,” he said. Demand for Single Family Homes Up 9 Percent There is even better news when it comes to townhomes and condominiums, as sales rose 1.9 percent in March as compared to last month’s year-over-year decline. Most importantly for property investors, demand for single-family lease homes increased 9.0 percent, and demand for townhomes and condominiums for lease increased by 7.4 percent. Related: 17 U.S. Markets With the Best Predicted Single Family Rental Returns for 2016 It appears that demand for real estate in Houston is still strong, thanks in large part to the diversified economy that is not solely relying on oil. Young urbanites continue to flock to the area for opportunities and affordability. Relatively speaking, the housing in Houston remains affordable when compared to other major cities in the United States. A recent report by the Greater Houston Partnership, updated in February 2016, showed the average sale price of a single-family home in Houston is $288,271. In comparison, the average price in San Francisco is $978,744, and the average price in Seattle is $548,187. Half of Houstonians Prefer a Smaller House With Walkable Amenities Part of the reason Houston is a great city for buy and hold investors is because Houston is a well-rounded place to live with several up and coming neighborhoods to choose from. As a buy and hold investor where “cash flow is king,” Houston’s “hottest” neighborhoods, which offer a concentration of jobs and are still walkable with entertainment and things to do, are great locations to buy property at a relatively low price. According to the 2016 Kinder Houston Area Survey, “50 percent of Houstonians would rather live in a smaller home in a more urbanized areas located within walking distance of shops and workplaces than a single-family home with a big yard, where you would need to drive almost everywhere you want to go… It’s no surprise that some of Houston’s most walkable areas — Inner Loop neighborhoods like Montrose, Midtown, the Museum District, and The Heights — are also some of the most expensive places to purchase a home.” Related: BiggerPockets Real Estate Investment Market Index: The Best (and Worst) Major Markets for Real Estate Investors, 2015 If an investor is able to purchase one of the very few affordable homes in a prime walkable neighborhood such as Midtown, high demand for condos for rent in these sought-after areas will help create a short-term positive cash flow situation for said investor. Furthermore, Houston has been recognized multiple times as a city where housing prices are expected to continue increasing over the next few years due to ongoing population growth. This is definitely good news for investors who take the initiative to invest in buy and hold property in Houston, where there is a strong likelihood of the property being a good investment for years to come. Investors: What do you think of the Houston market? Is this somewhere you’re looking to invest? Why or why not? Let me know with a comment!