Texas housing market is booming, not only in its capital. The Lone Star State is attracting residents and investors from all over the country who are looking for a place to live, work, and invest in the Texas housing market.

A recent article in the New York Times asked this question, “Will Real Estate Ever Return to Its Former Selves?” Unsurprisingly, much of the narrative was centered on Austin, which happens to be one of the hottest real estate markets in the state of Texas.

In Texas, the typical value of a mid-priced property has climbed by more than 20% from October 2016 to October 2021, according to the Zillow real estate data.

Insights into the Texas Housing Market

Texas home sales fell in October, but they were still on the rise as a result of the state’s ongoing housing shortage. Housing affordability has been eroded as a result of double-digit home price appreciation in tandem with rising mortgage interest rates. The high level of demand maintained, with properties being on the market for an average of approximately one month. On the supply side, single-family housing permits climbed for the second month in a row, while construction starts decreased as the price of lumber and other input materials soared.

The lack of accessible inventory in the state’s housing market is the most significant difficulty facing the state’s housing market. The state’s broad and increasing economy, friendly business policies, and stable population growth, on the other hand, all contribute to a more optimistic future for the state.

Prices in the Texas Housing Market

As a result of the continuous movement in the composition of sales away from lower-priced homes and toward higher-priced homes, which is a result of limited inventory at the lower end of the market, average home prices rose. The median home price in Texas increased for the tenth consecutive month in October, up 1.4 percent on a monthly basis and 15.5 percent year-over-year to a record-breaking $312,700, according to the Texas Association of Realtors.

The proportion of luxury homes sold in Austin has continued to grow, contributing to a 24.4 percent year-over-year increase in the median price ($453,600) in the city. The statistic in Dallas ($383,100) climbed by 17.6 percent, while the metric in Fort Worth ($319,600) increased by 18.2 percent over the same period. The metrics for Houston ($309,100) and San Antonio ($303,000) increased by 15.1 percent and 18.4 percent, respectively.

Demand in the Texas Housing Market

In October, total house sales remained steady, sliding 0.3 percent as a result of higher mortgage interest rates and a lack of available inventory. A contributing factor to the downturn was the historically low level of activity for homes valued less than $200,000. On the other side, the number of properties sold in the $400,000 to $499,999 range reached an all-time high, setting a new record. The decrease in transactions at the lower end of the price spectrum surpassed the increase in transactions at the higher end of the price spectrum by a small margin.

Large Metro Texas Housing Market

The booming Texas Housing Market shows few signs of faltering in 2022, at least when it comes to the state’s four largest cities.

Austin, Texas

• Population: 961,855
  • 10-year growth: 21.7%
• Employed population: 577,370
  • 1-year growth: 2.24%
• Unemployment: 3.4%
• Zillow home value: $606,319
  • 1-year change: 40.6%
• Housing units: 442,388
• Renter occupied: 48%
• Median rent 3-bedroom: $2,300
  • 1-year change: 17%
• Median household income: $75,413
  • 1-year growth: 5.41%
• Median age: 33.9

Commercial real estate development will be fueled by the expansions or relocations of companies such as Oracle, Facebook, Apple, Tesla, and Samsung, which have contributed to Austin’s spectacular growth. The demand for residential real estate of all types is extremely high. Because the demand for multifamily housing will surpass the supply, more condos, townhouses, apartments, and single-family rental homes will be built to keep up with the increased supply. Developers will buy more land and construct new subdivisions, with workforce and affordable housing being included in the mix as well as other amenities.

Mixed-use buildings account for the majority of new construction. It is possible that the healthy demand for Class A offices, which resists pandemic tendencies, may accelerate. Industrial warehouse construction will be concentrated around major highway routes.

Houston, Texas

• Population: 2,304,580
  • 10-year growth: 10.0%
• Employed population: 1,140,000
  • 1-year growth: -0.87%
• Unemployment: 5.4%
• Zillow home value: $238,591
  • 1-year change: 17.9%
• Housing units: 987,158
• Renter occupied: 39%
• Median rent 3-bedroom: $1,846
  • 1-year change: 10%
• Median household income
  • 1-year growth: $52,450
• Median age: 33.4

The industrial sector is expected to expand its presence in Houston in the coming year. Shops and restaurants have adapted to the pandemic conditions and are in fairly good condition overall. The multifamily housing market is not expected to slow down, and occupancy rates are expected to remain high. The office market, on the other hand, is less certain: vacancy rates in Houston’s core business district remain high.

Dallas, Texas

• Population: 1,304,379
  • 10-year growth: 8.9%
• Employed population: 681,944
  • 1-year growth: 0.06%
• Unemployment: 4.2%
• Zillow home value: $287,282
  • 1-year change: 19.6%
• Housing units: 589,260
• Renter occupied: 43%
• Median rent 3-bedroom: $2,300
  • 1-year change: 18%
• Median household income: $55,332
  • 1-year growth: 5.98%
• Median age: 32.9

The construction of single-family homes and multifamily developments is expected to continue to reach new benchmarks. While growing building costs may have resulted in some overvaluation, prices are not expected to fall in the near future. Even while the commercial office market has not recovered to pre-pandemic levels, some urban centers outside of downtown Dallas-Fort Worth are booming, with office buildings currently in the planning stages. The industrial sector will be very busy in North Texas this year.

Fort Worth, Texas

• Population: 918,915
  • 10-year growth: 24.0%
• Employed population; 445,986
  • 1-year: 4.73%
• Unemployment: 4.2%
• Zillow home value: $276,047
  • 1-year change: 24.1%
• Housing units: 346,502
• Renter occupied: 32%
• Median rent 3-bedroom: $1,945
  • 1-year change: 18%
• Median household income: $65,356
  • 1-year growth: 11.8%
• Median age: 32.8

In Fort Worth, the office, retail, and industrial sectors are all thriving. Tenant expectations are being exceeded by lease rates, resulting in a landlord’s market. The industrial space is dominated by biotechnology, warehouse, and e-commerce enterprises. The prices of Class A office buildings are breaking all kinds of records. In response to corporate relocations, new office buildings have been constructed outside of downtown. A startling number of new leases have been signed by out-of-town restaurants that are relocating to the area to take over for defunct local establishments.

San Antonio, TX

• Population: 1,434,625
  • 10-year growth: 0.98%
• Employed population: 745,940
  • 1-year growth: 8.0%
• Unemployment: 4.3%
• Zillow home value: $239,817
  • 1-year change: 20.1%
• Housing units: 548,473
• Renter occupied: 36%
• Median rent 3-bedroom: $1,695
  • 1-year change: 15%
• Median household income: $53,751   
  • 1-year growth: 9.46%
• Median age: 33.6

The city of San Antonio will continue to attract new people. As a result, the single-family and multifamily housing markets have responded in kind. While multifamily development is expected to surpass the rest of the country, single-family house growth is expected to moderate from its high pace this year.

The commercial real estate markets in the city should continue to be strong. The construction of about 900,000 square feet of new office space is scheduled to begin in the first half of 2022, while more than 4.9 million square feet of industrial space is also in the pipeline. The minor increase in office vacancies and rent cuts have seen this year should be replaced by increased activity, lower vacancy rates, and rent growth in the coming year.

Several hospitality projects that have already begun construction will be completed within two years of the start of construction. In spite of the fact that retail rates and occupancy have both dropped this year, more than 2 million square feet of projects are on schedule to be completed.

Read: 5 Best Places to Retire in Texas

Medium-sized Texas Housing Market

El Paso, TX

El Paso is the second most populous city in the United States after Phoenix, and it is the sixth most populated city in the state of Texas. El Paso, Texas, is a border city in the Rio Grande River Valley on the United States-Mexico border. It is part of the Borderplex metropolitan area, which includes the cities of Las Cruces, New Mexico, and Ciudad Juárez, Mexico, and has a population of about 2.5 million people. The foreign trade, energy, military, and government service industries are the engine that propels the economy. In addition to Fort Bliss being the city’s top employer, dozens of major corporations, including AT&T, Boeing, and Raytheon, have established operations in El Paso.

Smaller Texas Housing Market

Killeen, TX

Killeen is a city in Texas that is located between the cities of Austin, Dallas, and San Antonio. Killeen, Texas, is known as a military boom town since it is home to the United States Army base of Fort Hood, which employs more than 58,000 civilians. In the market, housing is typically in limited supply, which may be one of the reasons why rents have grown by more than 20% in the last year.

Lubbock, TX

Lubbock, Texas, is considered the economic heart of Northwestern Texas. It is located midway between Dallas/Fort Worth and Albuquerque, New Mexico, and is home to one of the world’s greatest cotton-growing regions, according to the United States Census Bureau. TTU is the city’s largest employer, with an undergraduate enrollment of more than 33,000 students, which makes the Lubbock real estate market a desirable option for students looking to rent an apartment.

Plano, TX

Plano, which is located north of Dallas, is a part of the Dallas/Fort Worth Metropolitan Statistical Area. Despite Plano’s small size, it is home to some of the most well-known corporations in the United States, including Frito-Lay, Keurig Dr Pepper, and Toyota Motor North America. Both the value of homes and the growth in rents in Plano have increased by more than 20% year on year in recent years.

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