The Texas housing market is a dynamic landscape with fluctuating trends and opportunities for buyers and sellers. In this article, we will explore the current state of the Texas housing market, examine key aspects such as home sales, pricing trends, and construction permits, and provide insights and predictions for 2024.
How is the Texas housing market doing currently?
Currently, the Texas housing market favors sellers due to high mortgage rates and a decrease in total home sales. This has created a situation where only committed buyers remain, giving sellers an advantageous position. Though Texas home prices have experienced a decline of 1.9 percent month over month (MOM), the prices still remain elevated. Despite the challenges, such as high mortgage rates and decreased demand, there is no evidence to suggest an imminent market crash. The market is experiencing fluctuations, and factors like the rebound in single-family permit levels indicate resilience.
High Mortgage Rates Impacting Texas Real Estate
The current challenges in the Texas housing market are primarily driven by high mortgage rates, which have exerted downward pressure on home sales. In a year-over-year (YOY) comparison, Texas home sales have experienced a 5.9 percent decline. The average home price has also followed this trend, decreasing by approximately $6,000 compared to the previous month. However, the demand for new construction has shown resilience despite the high entry barrier into the housing market. Homes are now spending more time on the market, with an increase of a week since the beginning of the year.
Weak Housing Demand in Texas
The impact of high mortgage rates is evident in the overall decrease in demand for homebuyers, resulting in a 3.7 percent fall in total home sales in October. The "Big Four" metros—Austin, Dallas, Houston, and San Antonio—experienced varied outcomes, with Austin and Dallas seeing gains, while Houston and San Antonio faced significant declines. The high mortgage rates have raised the entry barrier, leaving only committed buyers in the market. Additionally, the state's average days on market (DOM) has decreased to 52 days in October, indicating a shorter listing period. Active listings have increased for the seventh consecutive month, bringing the state back to October 2019 levels.
Median Home Price Fluctuations
Following a spike in median home prices last month, October saw a 1.9 percent month-over-month (MOM) decrease. Despite this decline, half of homes are priced at $200,000-$300,000 or $300,000-$400,000, making up 26 percent and 24 percent of total home sales, respectively. The Texas Repeat Sales Home Price Index (Dec 2004=100) moderated at a 0.1 percent MOM loss but showed a 1.5 percent year-over-year (YOY) increase. Austin experienced the lowest annual appreciation with a 5.7 percent YOY decrease, while Houston exhibited the highest annual appreciation at 2.5 percent.
Single-Family Permit Levels and Construction
Texas' single-family construction permits rebounded by 1.1 percent month over month (MOM) to 12,619 issuances. Houston experienced a 4.6 percent decrease, while San Antonio and Dallas saw double-digit monthly percentage gains at 31 and 24 percent, respectively. Austin rebounded with an 8.7 percent increase to 1,643 units.
Texas Housing Market Predictions for 2024
According to data from Zillow as of November 30, 2023, the average home value in Texas stands at $296,127, reflecting a marginal decline of 1.4 percent over the past year. Homes are swiftly moving into the pending phase, typically within 29 days of being listed, emphasizing the dynamic nature of the real estate landscape.
- For Sale Inventory: A substantial 108,777 properties are available for sale as of November 30, 2023, indicating a diverse range of options for potential buyers.
- New Listings: In the same period, 26,168 new listings have entered the market, contributing to its vibrancy and constant evolution.
- Median Sale to List Ratio: The median sale to list ratio, a key indicator of market competitiveness, is 0.987 as of October 31, 2023.
- Median Sale Price: The median sale price for homes in Texas is $325,000, while the median list price is $361,333, both figures reflecting the current market dynamics as of October 31, 2023.
- Percent of Sales: 20.1 percent of sales are recorded above the list price, while 58.8 percent are below the list price, illustrating the varying negotiation scenarios in the market as of October 31, 2023.
Source: Zillow
Top 10 Areas in Texas with Expected Price Rise in 2024
Looking ahead to 2024, specific regions in Texas are poised for notable growth in home prices. The data, based on Zillow's forecasts, highlights the following areas:
- McAllen, TX: This metropolitan statistical area (MSA) in Texas is anticipated to experience a significant growth of 2.2 percent in home prices by November 30, 2024.
- Jacksonville, TX: Despite a slight dip, Jacksonville is projected to rebound with a 2.1 percent increase in home prices by the end of 2024.
- Stephenville, TX: This region is expected to witness a moderate rise of 1.3 percent in home prices, showcasing a steady upward trajectory.
- Palestine, TX: With a projected increase of 1.2 percent, Palestine is among the areas where the real estate market is expected to show resilience and growth.
- Mount Pleasant, TX: This metropolitan statistical area (MSA) shows stability with no change in home prices, followed by a marginal decline of -0.1 percent by February 29, 2024. However, by November 30, 2024, a modest growth of 0.7 percent is anticipated, indicating resilience in the real estate market.
- Wichita Falls, TX: Similar to Mount Pleasant, Wichita Falls starts with a status quo in home prices by November 30, 2023, but experiences a slight dip of -0.2 percent by February 29, 2024. Nevertheless, a positive trajectory is predicted with a 0.5 percent increase in home prices by November 30, 2024.
- Hereford, TX: This region starts with a marginal increase of 0.1 percent in home prices by November 30, 2023. However, there is a projected decline of -0.3 percent by February 29, 2024, followed by a more stable growth of 0.3 percent by November 30, 2024.
- Waco, TX: Facing a slight decline of -0.4 percent in home prices by November 30, 2023, Waco experiences a more substantial decrease of -1 percent by February 29, 2024. However, signs of recovery are evident with a modest 0.2 percent increase in home prices by November 30, 2024.
- Tyler, TX: This region witnesses a negative trend, starting with a -0.2 percent decline in home prices by November 30, 2023, and a further dip of -0.4 percent by February 29, 2024. However, a marginal recovery is expected with a 0.1 percent increase in home prices by November 30, 2024.
- Corsicana, TX: Beginning with a -0.4 percent decrease in home prices by November 30, 2023, Corsicana continues to experience a decline of -0.7 percent by February 29, 2024. However, signs of stabilization emerge with a 0.1 percent increase in home prices by November 30, 2024.
Top 10 Areas in Texas with Expected Price Reductions in 2024
While certain regions in Texas are poised for growth, it's equally crucial to explore areas where home prices are projected to undergo substantial reductions in 2024. The following regions, based on Zillow's forecasts, indicate potential challenges for sellers and opportunities for buyers:
- Zapata, TX: This metropolitan statistical area (MSA) is expected to face a significant decline in home prices, starting with a -1.6 percent reduction by December 31, 2023, followed by a more substantial dip of -3.9 percent by February 29, 2024. The downward trend intensifies with an anticipated -9.5 percent drop by November 30, 2024.
- Pecos, TX: Similar to Zapata, Pecos is projected to experience a consistent decline in home prices, beginning with a -1.6 percent reduction by December 31, 2023. This trend continues with a -3.4 percent decrease by February 29, 2024, and a more pronounced -9.1 percent drop by November 30, 2024.
- Alice, TX: This MSA is expected to face challenges in the real estate market, starting with a -0.9 percent reduction in home prices by December 31, 2023, followed by a more significant decrease of -2.2 percent by February 29, 2024. The trend persists with an anticipated -8.9 percent drop by November 30, 2024.
- Sweetwater, TX: A decline in home prices is foreseen in Sweetwater, beginning with a -1 percent reduction by December 31, 2023. This trend continues with a -2.8 percent decrease by February 29, 2024, and a cumulative -8.2 percent drop by November 30, 2024.
- Raymondville, TX: This MSA faces a decline in home prices, starting with a -1.2 percent reduction by December 31, 2023, followed by a -2.4 percent decrease by February 29, 2024. The downward trajectory is expected to intensify with an anticipated -7.8 percent drop by November 30, 2024.
- Lamesa, TX: This metropolitan statistical area (MSA) starts with a -0.7 percent reduction in home prices by November 30, 2023. The decline deepens with a -2.1 percent decrease by February 29, 2024, and a cumulative -7.2 percent drop by November 30, 2024.
- Dumas, TX: Similar to Lamesa, Dumas experiences a consistent decline, starting with a -0.7 percent reduction in home prices by November 30, 2023. The trend continues with a -2 percent decrease by February 29, 2024, and a projected -6.8 percent drop by November 30, 2024.
- Beeville, TX: This MSA faces challenges in the real estate market, starting with a -0.6 percent reduction in home prices by November 30, 2023. The downward trend persists with a -1.6 percent decrease by February 29, 2024, and an expected -6.4 percent drop by November 30, 2024.
- Borger, TX: Anticipating a decline, Borger begins with a -0.5 percent reduction in home prices by November 30, 2023. This trend continues with a -1.5 percent decrease by February 29, 2024, and a cumulative -6.1 percent drop by November 30, 2024.
- Big Spring, TX: While this region starts with a positive trajectory, indicating a 0.9 percent increase in home prices by November 30, 2023, challenges emerge with a -0.3 percent decrease by February 29, 2024, and an overall -5.9 percent drop by November 30, 2024.
Will The Texas Housing Market Crash?
Several regions in Texas, such as McAllen, Jacksonville, and Stephenville, are expected to experience positive growth in home prices, showcasing the resilience and dynamism of the Texas real estate market. These projections, sourced from Zillow, indicate that certain areas are positioned for stability and appreciation, offering opportunities for both buyers and sellers.
Conversely, several MSAs, including Zapata, Pecos, and Alice, are projected to face substantial declines in home prices throughout 2024. These anticipated reductions highlight challenges in specific regions, signaling potential difficulties for sellers and a buyer-friendly market in these areas.
The Texas housing market appears diverse and dynamic, with varying trajectories across different regions. While some areas are poised for growth, others face challenges that may impact property values. It's important to note that real estate markets are influenced by a multitude of factors, including economic conditions, job markets, and local developments.
While the overall outlook is not indicative of a statewide crash, the market's nuanced nature underscores the importance of caution and informed decision-making. Potential buyers and sellers should closely monitor regional trends, economic indicators, and local developments to navigate the real estate landscape effectively.
As with any market, the Texas housing sector requires vigilance and adaptability to respond to changing dynamics and ensure a stable and sustainable real estate environment.
Top 10 Places to Buy a House in Texas
According to Niche.com, these are the top 10 areas to buy a home based on home valuations, property taxes, homeownership rates, housing prices, and real estate trends. The ranking is based on statistics from the United States Census Bureau, the FBI, and other sources. The best place in Texas to buy a house is Cottonwood Creek South, a neighborhood in Richardson, TX.
- Cottonwood Creek South, a neighborhood in Richardson, TX
- Arapaho, a neighborhood in Richardson, TX
- Lakeside City, TX
- Fulshear, a town in Fort Bend County, TX
- Canyon Creek South, a neighborhood in Richardson, TX
- Heights Park, a neighborhood in Richardson, TX
- Shady Hollow, a suburb of Austin, TX
- Red Lick, Bowie County, TX
- Woodway, a suburb of Waco, TX
- Timberbrook, a neighborhood in Plano, TX
Top 10 Texas Cities Having Highest Real Estate Appreciation Rates Since 2000
According to Neighborhoodscout.com, these are the top ten cities in Texas that have had the highest real estate appreciation since the year 2000.
- Westworth Village
- Gustine
- Balmorhea
- Garden City
- Mico
- Runge
- Granger
- Encinal
- Falls City
- Wingate
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