The Texas real estate market can be scary for homebuyers with limited budgets, as residential property prices have increased by 53.9% in the past 5 years. Yet, people are flocking all over the US to buy a property in the US as the price hike results from new constructions entering the market every year. Also, the homebuilders built new houses targeting a specific demographic: the high-achieving affluent homebuyers. Therefore, these lavish houses increased TX's net average residential property prices. Upon careful market study with professional help, prospective buyers can still manage affordable housing in Texan cities and suburbs.
Should You Avoid Texas in 2023 Because of The House Price Hike?
Although the Texas real estate market saw price hikes all through 2023, the local markets are more balanced and heading toward becoming a buyer's market. Rather than avoiding the Lone Star State’s housing market, it will be better to take advantage of the inventory abundance and neighborhoods with price drops. The inventory profusion made negotiation easy for the homebuyers; October 2023 saw only 14.8% of houses sold over the listed price- closer to the historic low pandemic era of 14.6% (February 2020). Hence, prospective buyers can purchase a home that was way over budget for them even a few months ago.
4 Reasons to Buy a House in Texas in 2023
1. Juxtaposition of Property Value
TX’s price growth in particular areas doesn’t portray the overall scenario to the homebuyers. The juxtaposition of property value in TX cities and suburbs is good for buyers because it allows them to compare the prices, find the undervalued houses, and find a good deal. Unlike a competitive state where every neighborhood has price growth, TX's contrasting housing price can be a cash-grab opportunity for buyers to purchase at a lower price and potentially profit in the future.
By avoiding competitive markets- such as Port Aransas, which had a 37.3% YoY price growth in November 2023- and targeting locations with flailing prices, like Austin, Dallas, and Fort Worth face -which saw 2.1%, 1.1%, and 3.5% dip respectively- the prospective buyers can get a bargain. The homebuyers started to take advantage of selective price drops as the Austin housing market saw a 7.4% annual sales increase in October 2023.
2. You Can Still Make Revenues as an Investor
Texas holds excellent potential for real estate investors; the proper neighborhood brings rental income and higher resale value for the homeowner. Even though the Texas housing market saw a price drop, buying a property in the lavish communities attracts high-achieving young professionals and seniors nearing retirement who will enter the market in the near future. A stunning 3,795 sqft riverfront property at the DFW’s gated River Bend Villas community is predicted to bring over $5,000 as rent and is bound to sell over the listed price.
In contrast, buying a single-family home under $500K in a regular neighborhood can incur a loss as an investment property. For instance, a detached 1,744 sqft Garrison St property (a location 15 minutes away from downtown) is expected to be sold at $284K-$313K and bring in only $2200 as rent/month. The downward market graph since August 2022 threatens a lower price if the investor decides to sell later.
3. The Abundance of Listed Properties
Thanks to the abundance of listed residential property - 132,525 homes for sale in TX in October 2023, a 4.5% YoY increment- the homebuyers have too many options. Unlike the summer months or the same period of 2022, buyers can attain their dream house without bidding wars. Even with the existing listing, new properties are coming into the market; there were 33,381 new homes listed in the TX real estate market- the highest inventory since August 2019.
Also, the buyers can take advantage of the high inventory throughout the year as it is slowly depleting- the number of homes sold in Texas has decreased by 24.6% between May and September 2023. For cash-strapped homebuyers and investors, Q4 of 2023 became the ideal month for home purchases as sellers are lenient in reducing prices due to the limited buyer pool.
4. Opportunities for Employment and Affordable Living
Considering the Texas boom, which diversified in military infrastructure, aerospace industry, fossil fuel companies, and agriculture corporations, the employment opportunities won’t slow down anytime soon. Moreover, legislative changes -SJR 93, proposing a constitutional amendment for creating the Texas Energy Fund, and HJR 3, proposing a constitutional amendment relating to the Texas University Fund- will lead to potential employment growth and migration from other states. Hence, buying a residential property when the market is lukewarm poses a great opportunity when the economy grows even more,
Even though the Consumer Price Index leaped to 3.7% in September, Texas offers residents favorable living costs (6%-8% lower than the national average)- appealing to individuals who want to relocate from overgrown and overpriced cities. The Texas living conditions are projected to improve through lower tax as the HJR 132 bill proposed a constitutional amendment prohibiting the imposition of an individual net worth or wealth tax.
Be it investors, Texans looking for upsize, or relocators from other states, the TX housing market holds plenty of options for buyers. The price drop reaching pandemic-low in DFW and Austin serves as the perfect opportunity for Innovative real estate buyers waiting for a good deal. Hence, the rest of 2023 will be the ideal time to join the Texas real estate scenario for the abundant inventory, value decrement, and employment benefits - rather than avoiding it.
