As anybody can see, the Texas housing market has been interesting to witness over the past year and a half. We’ve seen influxes of inventory with high buyer demand and low-interest rates as our cities were coming right off the height of a rare pandemic. But as our markets and economy begin to return to normalcy, the Texas housing market is slightly shifting. Now inventory has gone down and inflation continues to make its presence known. However, it’s one that still can’t compare to markets around us, as our variation and trends make us one of the most compelling markets to explore.

Our Current State

As we explore the interworkings of the current market, we first start with a few statistics. According to Norada Real Estate, did you know that Texas has some of the fastest-growing real estate markets, particularly in suburbs of major metropolitan cities? We see these areas experiencing a lot of movement in terms of population. In fact, Texas has four of the top 12 markets with the highest house-building prospects. Texas equips its residents with areas ideal for those wanting to settle down and raise their families. Not only that, but our job market continues to equip people with jobs, enticing more to move where the work is. San Antonio alone created over 54,000+/- jobs last year. This year, the numbers still see unemployment improvement, with San Antonio on track to create about 40,000+ more jobs. 2.6 people move with every job, so this desirability means that as more people continue to move, the value of homes will also rise. And until rates slow their rise, home values will be challenged, and job creation will continue to make inventory scarce. In the last year, the average price of a mid-size property in TX increased by 19.8%, with an interest rate increase with it. However, analysts view this as a temporary phenomenon. The lack of inventory continues to inflate Texas housing prices for now, but they predict that the rate of appreciation will slow down compared to the last two years. Appreciation as a market will be a high single-digit rate than the high double-digit increase we have seen in the past. And as more newly constructed homes appear, overall sales will also increase. 

Point blank, the worst thing you can do is wait if you’re looking to buy a home. If you’re waiting on values to drop, you’ll lose more buying power as rates continue to escalate. It has been shown that all buyers who wait have lost 36% buying power since the first of the year, and they will lose another 12+% by the end of the year. If you wait until spring of 2023, it will go up to 60% since the start of 2022 and possibly 72% by next summer. Why is this? Because every time rates rise, you lose 12% of your buying power each time.

While this may seem nerve-wracking, there is an upside to this trend. The market is experiencing strong appreciation rates in home values. Texas has some of the best long-term real estate investment opportunities in the United States. Based on the increase in Texas home prices over the past decade, the home appreciation rate equates to an annual increase of 7.15%, appealing to home buyers and real estate investors.

Market Predictions

As we’ve mentioned, this trend will only be temporary. With the current low inventory rate, if you want to sell, now is the time to do it. Analysts are continuing to predict a surge in home sales. Sellers are in a favorable spot because while we do not expect home prices to rise rapidly, buyer demand remains high and unlikely to dwindle. Your home can attract many buyers, often resulting in bidding wars and offers asking over the listed price. However, because there can be a mix of confusing messages from the public, start by pricing lower than the median to entice potential buyers. Analysts expect the market to grow in 2023. As a result, companies will develop open land, and constructors will build homes, eventually solving our inventory hiccup and stabilizing buyer demand. 

The Bottom Line

The bottom line is that the housing market will stay strong, just not to the extent it was in 2021. After all, we were coming off the height of a pandemic where everything was unnavigated terrain. Now that we enter this new state of stabilization, we should get used to the realization of higher prices and raised rates. As much as we would like to, we can’t keep the market trends of the last two years as it’s just not economically plausible. Instead, we need to focus on the fact that our market is sound. It will not bend to the rumors of a collapse just because it returns to more reasonable trends that align with what we have seen historically. Regardless of what comes our way, we are prepared and equipped to guide you through it. Our experience with the rising and falling of the market has given us insight into how to navigate it. If you have any questions or need further insight, connect with one of our agents today. You can either contact us through our website or give us a call at 210-801-9115.