Texas real estate: What buyers and sellers need to know
The saying “everything is bigger in Texas” is hardly an understatement. It’s the second largest state in the country both in terms of land mass and population — and the population is still growing. In 2022, Texas’s population increased more than any other state, according to Census data.
The Lone Star State’s massive size also impacts its real estate market. Prices and market dynamics vary significantly depending on the city and region. Here’s everything to consider about real estate in Texas if you’re thinking of buying or selling a home here.
Texas real estate market
Market dynamics in the state are starting to become more favorable for buyers, according to Redfin data. The median sale price in June was $361,900, which is lower than the nationwide median and a 2.6 decline over June of 2022. In addition, homes spent 15 days longer on the market than they did in June of last year, and the number of homes for sale actually rose by more than 9 percent — remarkable given the nation’s overall housing shortage.
Still, all real estate is local, and this is especially true in a sprawling state like Texas. Some of the most desirable areas in the state, including some suburbs surrounding major cities like Dallas and Austin, continue to experience a brisk market. And that’s good news for sellers.
It’s no surprise that rents also tend to be higher in the bigger metro areas. According to Statista data, asking rent in Austin is the most expensive in the state at $1,585, followed by Dallas at $1,546 and Houston at $1,267. Smaller metros are much more affordable: $907 and $867 in college towns Waco and Lubbock, for example.
The majority of homes in Texas — 62.4 percent, according to 2021 Census information — are owner-occupied. However, the state is also a hot real estate market for foreign investors. It’s the third most popular state in the nation for foreign buyers, according to a 2022 report from the National Association of Realtors, behind Florida and California.
Living in Texas
Texas is especially popular among transplants because of its affordable cost of living compared to many other states. But just how much more affordable it is depends on where you live. Plano, for example, is a whopping 31 percent more expensive than Houston, according to Bankrate’s cost of living calculator, and El Paso is 13 percent cheaper than Austin.
Homeowners insurance is another cost to consider in Texas. It’s one of the more expensive places to insure a home due to a high risk of weather-related disasters, like hurricanes. The average cost of Texas home insurance is $1,967 for $250,000 in dwelling coverage.
Homebuyers and sellers in Texas get a break when it comes to real estate transfer taxes. The state does not charge this fee on real estate transactions. There is no state property tax in Texas, either, but local or county governments do levy property taxes. The average property tax collected by counties in the state is 1.68 percent of a property’s assessed fair market value, according to the Tax Foundation. On a median-priced $361,900 home, that amounts to a property tax bill of just over $6,000 per year.
Texans also do not pay individual income taxes. It does have a 6.25 percent state sales tax, though, and local municipalities may charge an additional tax. The average combined state and local sales tax is about 8.2 percent.
Texas cities
In a state as massive as Texas, there’s no shortage of places to choose from when looking to settle down. There are more than 1,200 incorporated cities in the Lone Star State, according to the state comptroller’s office. Some popular options include:
- Austin: Ranked Bankrate’s best city for first-time homebuyers, Austin is the Texas state capital and home to the flagship campus of the University of Texas. The city is also known for its booming job market, legendary music scene and healthy outdoor lifestyle.
- Round Rock: About 15 miles outside of Austin, the city of Round Rock tops Bankrate’s list of the best places to live in Texas — and was also named the best place to live in the entire country. Why all the fuss? This city of a little over 120,000 people is not only affordable, it’s also a tech hub that’s home to Dell and many other technology companies. Round Rock is close to the action in Austin, but also has its own hopping arts and music culture.
- Arlington: Arlington is located in-between Dallas and Fort Worth. Given its position between these two bustling cities, Arlington offers convenient access to an abundance of career opportunities — not to mention access to the Dallas Cowboys and the Texas Rangers, both of whose home stadiums are here. Some of the top employers in the area include Southwest Airlines and Texas Instruments.
- Houston: Sprawling Houston has a dynamic and trendy nightlife scene with plenty of restaurants, bars, clubs and honky-tonks. Employment opportunities are also relatively plentiful. Major companies that have set up shop here include Hewlett-Packard and NRG Energy, in addition to its booming oil and gas industry. And of course Houston is also home to NASA’s Johnson Space Center.
Texas real estate agents
Whether you’re buying or selling in the Texas housing market, a professional real estate agent can make the process much less stressful. An agent who knows the local market well can help sellers price and market their home more effectively, not to mention evaluate offers and negotiate the best deal possible. And if you’re looking to buy, an agent’s knowledge and expertise can help you find a community that fits your needs and a home that fits your budget. Agents can also be invaluable when it comes time to navigate the closing process.
Alternative ways to sell a house
If you’re looking for an alternative to using a Realtor, though, there are options:
- iBuyers: These online companies can make quick cash offers on homes that meet their criteria, with a quick closing too. However, you are unlikely to get full market value for your home when working with an iBuyer. And there could be steep fees to pay for their service. The two biggest iBuyers, Opendoor and Offerpad, both operate in multiple Texas markets.
- “We buy houses” companies: Similar to iBuyers, these homebuying companies are also known for expediting the home sale process with quick cash offers. Many will purchase homes in any condition, even those in serious need of repair. But here too, don’t expect to get top dollar for your home.
- Hold and rent: If you don’t need cash right away, yet another option to consider is not selling at all but instead becoming a landlord. Hang on to your home and rent it out to generate an ongoing stream of rental income.
Next steps: Moving to Texas
If you’re considering moving to the Lone Star State, be sure to do your research first. It’s important to know what your budget is — getting preapproved for a mortgage can help with that — as well as what cities make the most sense for your lifestyle. Enlisting the assistance of a professional real estate agent can make the moving process far easier. A local agent who knows the Texas market dynamics inside and out can identify neighborhoods where you’ll be able to find a property that fits your needs.
FAQs
-
They are dropping, but only slightly. As of June 2023, the median sale price for homes in Texas was down 2.6 percent compared to one year earlier, according to Redfin data.
-
While median home prices in Texas have dropped 2.6 percent year-over-year as of June 2023, per Redfin, Florida’s home prices have taken slightly less of a hit. Florida’s median price is down just 0.33 percent since June of last year. However, Florida is experiencing a home insurance crisis that may make it difficult — or just extremely expensive — to secure a policy there.
-
With home prices declining and properties spending longer on the market, the Texas housing market slightly favors buyers at the moment. Inventory in many major cities across the state is also higher than it was during the pandemic, giving homebuyers more options. However, mortgage interest rates remain stubbornly high, so it’s not entirely an ideal market for buyers.
