Texas has long remained one of the finest real estate investment locations in the US. In fact, the properties in Texas have appreciated by as much as 125% in the past decade, enabling investors to make massive fortunes on their holdings.
However, the current housing market in Texas is facing a downturn – all thanks to harsh Fed policies and uncertain economic conditions.
But what do the current housing trends of Texas reveal about the overall market? Let’s find out!
Texas Housing Market Overview
The overall housing market of Texas has slowed down, partly due to the low affordability factor of Americans. The main reason for the slowdown is the unprecedented rise in mortgage rates, which are currently floating at around 6.83%.
Even though home prices have slightly declined, the economic uncertainty and high mortgage rates have reduced homebuyers’ demand in Texas. In addition to this, the lack of inventory is another strong reason that’s fueling the home’s prices in recent times.
On the flip side, the good news is that some of the fastest-growing real estate projects are taking place in popular destinations in Texas, especially in the suburbs of major metropolitan cities.
Therefore, the Texas market could become a buyer’s market in the future if the FEDs start relaxing the mortgage rates. That being said, let’s dig deeper into specific housing trends in Texas.
Current Housing Trends in Texas
The performance of a regional real estate market is gauged by several factors. Let’s briefly talk about each of them.
Inventory levels
According to Redfin, the current housing supply in Texas can cover up to a maximum of 3 months’ demand. Furthermore, homebuilders are initiating a few building projects and the number of permit issuance is staying below 10,000. Plus, single-family housing starts have also declined, which further adds pressure on the housing supply.
Number of homes sold
21240 homes were sold in February 2023, which is 15.7% less compared to the last year. The reason for this decline can be attributed to the rising mortgage rates with inflation, which has affected the spending propensity of Americans.
Furthermore, the sales have declined especially for homes under $300,000, while the demand is steady for homes ranging between $400,000-500,000. This reveals that lower-income households are delaying their purchases, while the upper-middle-class isn’t affected by the interest rates.
Active Listings
Active listings have significantly risen compared to 2021. However, despite the increase in listings, the sales were still low, which can be explained by the increase in mortgage rates in the country.
Days on Market (DOM)
The average time a listing takes to sell is 59 days, which is 33 days higher compared to last year.
Home Price
According to Redfin, the average home price declined slightly by 0.8% in February 2023 as compared to last year. The decline is nominal, but it should be noted that there are several affordable neighborhoods in Texas as well. For example, College Station is an affordable city in Texas, where the median home price is $290,880.
Is it a Good Time to Purchase a Home in Texas?
As evident from the above-mentioned facts, it seems that a seller market prevails in Texas at the moment. After all, the home price appreciation and persistent demand significantly favor the seller.
While the high mortgage rates and home prices don’t favor first-time homebuyers, one positive aspect for them is that there’ll be less competition in the market. Therefore, if you’re looking to purchase a home in Texas, you can negotiate with the seller and luckily lock in a win-win deal.
Parting Thoughts!
If you’re looking to sell or purchase a property in Texas, a professional realtor, like Raheema Ashfaq, can help you steer clear of any obstacles and secure a top deal.
