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The second most populous state in the country, Texas is a top destination for people seeking an affordable cost of living and below-average home prices. A warm winter and a lack of state income taxes don't hurt, either. In fact, Texas has topped moving giant U-Haul's list of growth states for the past two years in a row, making it the company's top destination for one-way truck rentals. And her two Texas cities, Round Rock and Arlington, made it to Bankrate's latest list of the best places to live in America.
But rising mortgage rates and weak home sales are impacting home buyers and sellers across the country, including the Lone Star State. Here's what you need to know before entering the Texas housing market.
Texas Housing Market Overview
Because Texas is such a large state, housing trends and prices vary widely by city and region. For example, the median home price in Austin, a popular city with a rapidly expanding tech industry, is $554,500, which is high but down from last year, according to Redfin data. That's more than double the price in less busy towns like Amarillo, where the median price is just $230,000, but prices there are rising. The statewide median falls somewhere in the middle, remaining relatively flat year-over-year.
Texas market trends and statistics
- According to Redfin data in August 2023, the median home price across the state was $351,500. This is only a 0.4% increase compared to August 2022, but still significantly lower than the current national median price of $407,100.
- The number of homes for sale in the state rose 1.2% year over year, according to Redfin data, but there was still only three months' supply of inventory. Although this is a small increase, it is still short of the five to six months needed for market equilibrium.
- The state's median days on market has remained the same from last year to this year, at a relatively slow 37 days.
- The sales-to-listing ratio for August was 97.8 percent, meaning homes tend to sell for about 2 percent below list price.
- Closing costs in Texas average 1.5% of the home sale price, according to data from CoreLogic's ClosingCorp. For a home with a median price of $351,500, this would be $5,272.50.
Should you buy or sell in the Texas housing market?
Whether you're thinking of buying or selling in Texas, it's important to understand the current housing market and how it affects you.
If you are a home seller
For those looking to sell a home in Texas, many aspects of the market are on your side. Demand remains high, there is not enough supply to meet it, and prices have increased (albeit slightly) year over year. These are all signs of a seller's market.
However, mortgage rates are currently so high that many buyers won't be able to spend that much money on a home. It's wise to be aware of how much your home is worth and be careful when choosing a list price. A real estate agent who is familiar with your specific area of Texas can be a great help in this regard.
If you are a home buyer
There's both good news and bad news for Texas buyers. Unfortunately, with today's high mortgage rates, you may not be able to afford a big purchase as much as you were a year ago. But on the plus side, prices in Texas are relatively affordable, and many buyers are holding off on buying, so even if you decide to buy a home now, there may be less competition. .
Before jumping into the market, make sure you understand your financial situation. Bankrate's calculator can help you determine how much home you can afford. Be sure to get pre-approved for a mortgage before you start looking for a home. Pre-approval lets you know how much money your lender is willing to lend you, making it easier to stick to a realistic budget.
Texas housing market forecast
With mortgage rates remaining high and the economic outlook uncertain, it's no wonder some people are worried. Will there be a housing collapse? Fortunately, national experts don't think so. And local experts agree. Texas A&M University's Texas Real Estate Research Center said in a recent report that the state's market is “cooling” rather than crashing, and while existing home sales may be down, new construction is on the rise. , noted that the price increase was only slight. “Stable.”
Find a real estate agent in Texas
Working with an experienced local real estate agent is one of the best ways to gain insight into the Texas housing market. Agents know the market inside out and can help guide you through the buying or selling process, avoid common mistakes, and streamline the time-consuming logistics of selling or buying a home.
Before you hire a real estate professional, be sure to ask about their experience, work style, past client success, and anything else that's important to you. Ideally, you want to find someone you like and trust. Treat it like a job interview and don't be afraid to ask questions.
FAQ
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There is an upward trend, but only slightly. Median home prices in Texas rose 0.4% year over year in August 2023, according to Redfin data.
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The Austin and Round Rock metropolitan areas have been plagued by fires in recent years. Although it grew rapidly during the pandemic and has slowed recently, it still has the highest median home sales price in the state at $470,000, according to the latest data from Texas Realtors. Round Rock was named the best place to live in America in Bankrate's latest rankings.
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The Lone Star State has many affordable places to live, especially outside of the big cities. For example, the Beaumont-Port Arthur, Abilene, and Texarkana areas all have a median price of less than $225,000, and Wichita Falls has a median price of just $199,375, according to Texas Realtors Q2 2023 data. .
