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Texas has one of the country's fastest-growing populations, which means many people are moving to this state.

Affordable housing, great weather, and a strong job market are just a few of the wonders you can find in the Lone Star State. However, you should consider other aspects before buying a house there.

Is the Texas housing market still strong? What do experts say about the future of this state's real estate sector?

If you plan to move to Texas or purchase real estate properties in this state, check out this information! Here are all the trends, statistics, and predictions you need to know.

Overview

The Texas real estate market is fascinating. Although home prices are lower compared to last year's figures, property values ÔÇőÔÇőhave increased in the past three months. Additionally, the housing supply is higher than in December 2022.

However, this state is still a top relocation destination for people looking for an affordable cost of living and reasonable housing prices. In addition, Austin and San Antonio earned spots on Bankrate's list of the best places to live in the US.

While rising mortgage rates and a drop in home sales have affected the Texas real estate market, both sellers and buyers can find plenty of opportunities in the Lone Star State.

Texas Housing Market Trends

According to Redfin's latest reports, these were the biggest changes in the Texas housing market:

  • The number of home sales went up
  • The average months of supply was higher
  • Texas home prices fell compared to March 2022 reports
  • The median days on the market rose by almost 30%

Here's more information on each trend:

Texas Median Home Prices

March 2023 reports showed that homes in Texas sold for a median price of $341,300. Compared to last year's figures, that's a 2.5% drop.

However, the median sale price in January of this year was $331,200. Last month, it rose slightly to $333,600, which means regional residential property values ÔÇőÔÇőare up in this year's first quarter.

Inventory

As of March 2023, 114,528 homes were listed for sale on the Texas real estate market. Compared to last year's figures, that's an increase of 41.4% year over year.

Additionally, the average months of supply increased from two months in March 2022 to three months in March 2023.

In Texas, the number of newly listed homes also fell by 4.2%, with just 37,355 new listings.

Housing Demand

Redfin's statistics show that about 17.1% of homes in Texas sold above list price, down 29.2% year over year. Contrastingly, 29.5% of residential properties had price drops after a 14.0% rise.

In March of this year, the sale-to-list price sat at 97.6%, down 4.2% compared to last year's figures.

Homes Sold

The latest reports also showed that the number of homes sold fell by 14.1% year over year. In March of this year, only 28,466 went under contract, down from 33,131 units sold last year.

However, the number of homes sold has risen by over 12,000 housing units since January of this year.

Median Days on the Market

In March 2023, the amount of time housing units spent on the market before going under contract rose compared to last year's reports.

Based on the latest statistics, the median days on the market is 51 days, which accounts for an increase of 29 days year over year.

However, it's the lowest median days on the market in this year's first quarter. In January and February 2023, it took an average of 56 and 60 days, respectively, to sell a home in Texas.

Foreclosures

Out of 50 states, Texas was ranked 19th for the highest foreclosure rate by SoFi, with 2,678 foreclosures in March of this year.

The Lone Star State had one foreclosure for every 4,270 housing units. Cochran, Madison, Ector, Liberty, and Camp were the counties with the highest figures.

Factors Affecting the Texas Housing Market

Multiple factors often influence the Texas housing market. These are the most important:

The Economy in Texas

Did you know that Texas is ranked as the 9th largest economy among the world's nations by Gross Domestic Product (GDP)? Also, this state has an unemployment rate of 4%.

As a result, the overall economic outlook remains positive in 2023.

Potential headwinds can impact the state's economy, such as a recession and growing inflation. However, experts believe it'll be stable.

If a state's economy is healthy, the housing market will be strong, which is what often happens in Texas.

Mortgage Interest Rates

Interest rates can also impact the Texas housing market. The higher they are, the lower the demand for real estate properties. Consequently, prices fall.

However, the costs to get mortgage loans and buy a home are lower when interest rates drop. As a result, Texas housing prices and demand go up.

The country's mortgage interest rates have risen sharply in recent months, reaching 6.79% for 30-year fixed-rate loans and 6.16% for 15-year fixed-rate loans in May.

Government Policies

In addition to interest rates and the state's overall health of the economy, investors should consider government policies.

Tax credits, subsidies, and deductions influence the housing supply and demand. Ideally, potential homebuyers should analyze government incentives to identify false trends and make informed decisions about real estate investment in this market. Texas has no state property taxes, for example.

Demographics

The composition of the population in terms of age, race, income, migration patterns, and growth can also provide important information about the Texas housing market.

According to Redfin's reports on US migration trends, Texas is one of the top five states homebuyers searched to move to from February to April of this year.

Around 14,000 people wanted to move to Texas. The state is a top destination for migrants and workers seeking relocation.

Will the Texas Housing Market Crash Soon?

Rumors about a potential housing market crash are growing. However, experts insist that it'll be just a slowdown.

These are a few of the signs that the Texas housing market is unlikely to crash:

  1. There's Still High Housing Demand

Many buyers are looking for the perfect home in Texas. This state's population has grown in the past few years because most people believe that it's a great place to live in.

As a result, there are many potential homebuyers, which increases demand across various demographics, including Hispanics moving to the state and Millennials in their prime buying years.

  1. The Texas Housing Supply Is Low

A housing market crash occurs when the supply is too high but there are not enough buyers to purchase properties.

Although the number of homes for sale in March was higher, it's still low compared to last year's figures. In addition, Texas is an attractive destination with high demand for real estate.

  1. There Are Fewer Newly Constructed Homes

In Texas, the supply of newly built homes is also low. Additionally, experts say that it should return to pre-2007 levels in order to impact the housing inventory. Therefore, the number of houses for sale is expected to remain low.

  1. People Must Meet Tighter Lending Criteria

In 2007, getting a loan was easier. Today's borrowers must meet strict lending criteria to purchase a property.

Most lenders only grant loans to people with excellent credit scores and applicants willing to make down payments.

  1. Foreclosures Have Fallen

Although Texas is one of the states with the highest foreclosure rates, there is no risk of a foreclosure crisis.

Homeowners now have stronger personal balance sheets and significant equity in their real estate properties. Additionally, the country's foreclosure rate has dropped.

Texas (TX) Housing Market Statistics

Besides considering the latest housing trends, you should also look at the following statistics to determine if you should buy a home in Texas.

  • The latest data from Texas Realtors showed that the median home sale price across the state was $345,000 as of December 2022. In March of this year, it's even lower.
  • The median home sale price in Texas is around $34,000 below the national median sale price.
  • Texas homes are spending about 29 more days on the market before going under contract.
  • This state ranked 19th for the highest foreclosure rate.
  • The Texas Realtors data also revealed that closed sales were down by 14.8%.
  • Several areas in Texas are even more affordable. According to Bankrate, College Station had 9 points out of 10 for affordability.
  • Texas Realtors says the median home price in College Station is $290,880.

Housing Market Predictions

Knowing experts' predictions can also help you determine if investing in Texas' current housing market is a good idea.

This is what analysts are saying about it:

Mortgage Interest Rates Will Be Higher

Experts believe that mortgage rates will be higher as inflation rises and geopolitical tensions intensify.

According to analysts, the mortgage rate could reach 8.50% for 30-year fixed-rate home loans. Many also believe that it could rise to 7.70% for 15-year fixed-rate loans.

Home Prices Will Fall

In addition, experts predict that Texas home prices will fall due to higher interest rates. On average, the value of real estate properties in this state could drop by 5-10%.

The Housing Supply Will Be Lower

Although the housing supply is up in Texas, the number of homes for sale is still low, as homeowners are unwilling to get loans if mortgage interest rates rise from 3% to 7%.

Home Affordability Will Also Be Low

Additionally, analysts believe that home affordability will fall or remain low as mortgage payments rise since properties may look less affordable.

Texas Housing Market Predictions

Many people are worried about what may happen to the Texas housing market. However, experts predict a positive future.

Most analysts say there will be a slowdown, but not a crash. Local experts have similar opinions.

According to Denton Record-Chronicle reports, the Dallas-Fort Worth area is facing a housing downturn, but it isn't as bad as it was 15 years ago.

The Final Verdict

The Texas housing market is strong and attractive to first-time buyers and seasoned investors. However, before buying a property in this state, you must consider different aspects, including your budget and preferences.

If you still have doubts, remember that you can contact an expert real estate agent to get the guidance you need.

Frequently Asked Questions

Is It a Good Idea to Buy or Sell a Property in Texas?

In Texas, housing prices are increasing, which favors sellers. Also, there are many affordable housing opportunities for buyers.

However, although the Texas housing market predictions are positive, you must analyze different aspects to know if buying a property in this state is a sound decision.

Is Texas in a Market Bubble?

No, it isn't. A market bubble often occurs when housing prices rise at a rapid pace. In Texas, home prices are still low.

David is the co-founder & CMO of DoorLoop, a best-selling author, legal CLE speaker, and real estate investor. When he's not hanging with his three children, he's writing articles here!

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