Texas Housing Market Predictions for 2023 & 2024

Rich Fettke

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In this article, we will delve into the future, providing Texas housing market predictions and insights for 2023 and 2024. We’ll look at the market as a whole and then also dive into three of the best places to buy rental property in Texas — San Antonio, Dallas and Houston.

  • Texas has seen a lot of population growth in the last 2 years, especially in Austin, Dallas and Houston. We predict that population growth in Texas won’t slow down in the next two years.
  • With fast job growth and urbanization in places like Dallas and Austin, job growth in Texas is faster than many other states in the US. We do not expect a slowdown in job growth in Texas. And this will keep driving migration to Texas.
  • Recent interest rate hikes have impacted the Texas housing market negatively, causing home sales to slow down. This trend might continue for a while until rates stabilize and buyers get acclimated to the high rates.
  • Supply of homes in Texas has recently improved, which has reduced the pace of rising home prices. In places like Austin, home prices are dropping fast.

By combining data from various experts and authoritative sources, we aim to offer data-backed Texas housing market predictions for 2023 and 2024. This article is tailored for real estate investors, homebuyers, and homeowners who are interested in understanding the future dynamics of the Texas housing market. Staying informed about these trends will help you make well-informed decisions, whether you’re looking to invest, buy, or sell property in the Lone Star State.

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As one of the fastest-growing and economically vibrant regions in the United States, understanding the dynamics of the Texas real estate landscape is crucial for investors, homebuyers, and homeowners alike. Let’s explore key Texas housing market predictions, trends and factors driving growth in the Lone Star State.

Population growth and migration patterns

In the past two years, the populations of two of the largest states in the United States, Texas and Florida, have grown by more than 1.5 million residents each. This growth is in stark contrast to the populations of two other major states, New York and California, which have both lost population in the same period.

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The population of Texas grew by 470,708 people between 2021 and 2022, according to the U.S. Census Bureau. This is the largest nominal increase of any state in the nation. Texas now has a total population of 30,029,572, making it the second state in the country to have a population above 30 million.

Texas Housing Market Predictions - Population Growth Chart

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Texas home prices have risen steadily since 2016, due to a combination of rising demand for housing and shortages of supply. More recently, higher mortgage rates have added to home buying costs. Housing affordability in Texas has declined as more people move there than leave—but with rising housing inventory and moderating demand this trend may be slowing down.

Employment and economic indicators

When evaluating a housing market, there are many factors to consider. Location is one of the most important, as it can affect a home’s value in a number of ways. For example, proximity to schools and jobs can increase the value of homes near those amenities. Employment growth can also impact a housing market, as it leads to an increase in demand for housing.

The Lone Star State had some of the least-stringent COVID-19 restrictions in the country, which allowed schools and businesses to reopen earlier than in many other states. This made Texas an attractive destination for people looking to escape strict lockdowns in other parts of the country. The influx of new residents had a major impact on the housing market in Dallas–Fort Worth and Austin. In these two metro areas, house prices surged by double-digit percentages in 2021.

Employment growth in Texas accelerated in March 2023, with the state adding an annualized 3.0 percent (27,000 jobs) to its payrolls. The first-quarter gain was an annualized 3.9 percent (131,000 jobs), faster than the 2.9 percent (97,000) increase in fourth quarter 2022.

Texas Employment Growth by Sector

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Houston led the way with annualized job growth of 3.6 percent, followed by Fort Worth and San Antonio at 3.5 percent. Dallas added jobs at a slower pace of 2.9 percent, while Austin and El Paso both saw job growth of 2.5 percent.

Texas’ job market has been one of the strongest in the country in recent years, but there are signs that the pace of growth is slowing. Manufacturing payrolls were flat in the first quarter, and the Dallas Fed’s Texas Business Outlook Surveys (TBOS) suggest that labor market tightness is starting to ease.

Texas Housing Market Predictions - Job Growth

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The unemployment rate in Texas is currently at 4%, slightly above the national average of 3.5%.

Real estate development and construction trends

The Texas housing market cooled in 2022, with sales declining 11.3% from the previous year. However, the total number of sales was still the third highest on record, and the total dollar volume of sales was the second highest. Housing inventory also increased year-over-year by 1.5 months to 2.7 months at the end of the year.

The lower cost of housing in Texas relative to other large states like California and New York has helped it attract new residents. Between 2010 and 2020, the state added more people than any other state, and about half of the population increase was due to migration. The pandemic accelerated in-migration to Texas. Migration rose nearly 60 percent in the five quarters following the onset of the pandemic compared with the five quarters preceding it.

Texas is a hotbed for real estate construction, with five of the top ten cities in the nation for new construction projects located in the state. Houston, the fourth largest city in the United States, took the top spot in 2022. It was followed by San Antonio, Austin, Fort Worth, and Dallas.

However, housing costs have increased in recent years. In the fourth quarter of 2022, fewer than one-third of homes were affordable for a family earning the area median income in Austin, Dallas, Fort Worth and San Antonio–down from around 60 percent in 2014.

Government policies and regulations affecting real estate

State legislators are considering several proposals to address Texas’ affordability crisis. Two bills, HB 3921 and SB 1787, would lower the minimum residential lot size in large municipalities. The bills, sponsored by Rep. Goldman and Senator Bettencourt, are similar to bills that recently advanced in Montana. The bills would allow developers to build houses on smaller lots, which would lower housing costs by increasing supply in high-cost areas. Importantly, the laws would not require a smaller lot—they would simply allow smaller lots for private property owners who want one.

A new law, HB 2789/SB 1412, sponsored by Rep. Holland and Senator Hughes, allows homeowners to build accessory dwelling units (ADUs) by right. ADUs are usually attached to an existing home but can also be freestanding structures such as garage apartments or small cottages that are separate from the main house but located on the same parcel of land.

San Antonio, Texas Housing Market Predictions 2023 & 2024

Now that we’ve seen an overview of the Texas housing market, let’s look at Texas housing market predictions and trends for one of the fastest growing metro areas in Texas, San Antonio.

Overview of the San Antonio metro area

San Antonio, the second most populous city in Texas, is the hub of a metropolitan area that includes Alamo Heights, Castle Hills, Converse, Kirby, Leon Valley, Live Oak, Schertz, Terrell Hills, Universal City, and Windcrest. The San Antonio metropolitan area is home to over 2.5 million people—making it the 24th largest metropolitan area in the United States. The area is a major economic hub with a diverse economy that includes manufacturing, healthcare and tourism.

San Antonio is a transportation hub, with five U.S. highways, numerous state highways, and two major airports. The city is also served by Amtrak and the Union Pacific Railroad.

The Alamo City, the Mission City, the River City, and Military City, U.S.A. (which the city trademarked in 2017) are all monikers that reflect the city’s unique character. San Antonio’s history dates back to the early 1700s, when Spanish explorers established a presidio, a town, and five Franciscan missions along the San Antonio River.

The city’s early prosperity was built on agriculture and ranching. As the city grew so did its industry, transportation and educational institutions. The military also played a major role in San Antonio’s development and helped it thrive in the 20th century and beyond. In recent decades San Antonio has become a top tourist destination thanks to its rich history, vibrant culture and many attractions.

The San Antonio housing market reached a peak in June 2022, with the median sale price of a single-family home reaching $340,000. This represents a significant increase from the previous year, when the median sale price was $290,000. However, prices have fallen in recent months due to high interest rates and increasing supply of homes for sale. Despite the recent decline, housing prices in San Antonio are still up year-over-year.

San Antonio market predictions for 2023, 2024 & beyond

1 – Property prices

San Antonio will become a balanced market as housing supply improves

San Antonio saw the number of newly listed homes increase by 0.4% in April 2023 compared to April 2022. The number of active listings increased by 138.2% year-on-year.

As San Antonio’s housing supply improves, we expect prices to level off and become more affordable. The number of homes for sale in the MSA has increased dramatically over the last year, rising from 1.5 months of supply to 3.9 months of supply. This is above the national average of 2.6 months and is approaching a level typically considered balanced.

Buyers finally have more power, as higher mortgage rates level demand and cool off soaring prices.

Marginal price declines as home sales slow down

The San Antonio real estate market saw a decrease in home sales in February 2023. According to the Multiple Listing Service (MLS) Report from the San Antonio Board of REALTORS® (SABOR), there were 2,287 closed listings, a 17% decrease from February 2022. Despite declining sales, home prices rose in February. The average home price increased by 2% YOY to $365,678, and the median home price also increased by 2% to $310,000.

The report found that the average number of days a single-family home spends on the market has increased by 84%, to 70 days. Homes are taking longer to sell, forcing sellers to reduce their listing prices.

With the Federal Reserve suspending interest rate hikes, the housing market is poised for a resurgence. As mortgage rates stabilize and prices normalize, home affordability will improve. This will lead to an increase in sales, which will in turn drive prices back up. However, the pace of this recovery is likely to be gradual, as the market will need time to adjust to the new interest rate environment.

2 – Rental rates

Rents will still be affordable in San Antonio despite steady year-over-year increases

SABOR’s data shows that residential rental prices increased slightly in February 2023. The average rent in San Antonio is now $1,804, according to the San Antonio Board of Realtors.

The average rent for a two-bedroom apartment in San Antonio was $1,430 in March 2023. This was a 1.4% decrease from February 2023, but a 4.4% increase from March 2022. The average rent for a one-bedroom apartment was $1,160, a 0.90% increase from February 2023, but a whopping 7.4% increase from March 2022.

The San Antonio metropolitan area is booming. Employment has surpassed pre-pandemic levels, and the city has added nearly 36,000 workers in the past year. This strong economic growth is driving up housing demand, and rents are rising as a result.

In addition to its strong economy, San Antonio is also experiencing rapid population growth. The metropolitan area’s population grew by over 1.5% in 2022. This population growth is putting even more pressure on the housing market, and rents are likely to continue rising in the near future.

However, the influx of new multifamily construction planned for 2023 and 2024 could help to slow the rise in rents.

The rental vacancy rate will become more stable but will still be higher than the national average

San Antonio’s rental vacancy rate decreased from 10% in April 2022 to 7.2% in December 2022. However, the area’s vacancy rate is still notably higher than the national rate of 5.8%. As mortgage rates rise, some buyers are forced out of the market and into the rental market. This sends vacancies downward.

A few San Antonio neighborhoods to consider investing in

1 – New Braunfels

New Braunfels is a charming city located within the San Antonio-New Braunfels metropolitan area in Texas. Founded by German settlers in 1845, the city is known for its rich cultural heritage, historic downtown area, and picturesque landscapes along the Comal and Guadalupe rivers. New Braunfels offers a variety of recreational activities, including the popular Schlitterbahn Waterpark, the Natural Bridge Caverns, and the Gruene Historic District. With its unique blend of small-town charm, outdoor activities, and lively events, New Braunfels is an attractive destination for both residents and visitors.

2 – Downtown

Downtown San Antonio is the vibrant heart of San Antonio, Texas, known for its rich history, diverse culture, and lively entertainment scene. This bustling district is home to the iconic Alamo, the scenic River Walk, and numerous museums, shops, and restaurants. With its mix of historic landmarks and modern attractions, Downtown San Antonio offers a unique experience for visitors and locals alike.

3 – Seguin

Seguin is a charming city located 35 miles east of San Antonio, Texas. Known for its rich history and picturesque downtown area, Seguin boasts a variety of attractions including the Sebastopol House State Historic Site, ZDT’s Amusement Park, and the Guadalupe River. With its small-town atmosphere, beautiful parks, and proximity to San Antonio, Seguin offers residents and visitors a delightful blend of rural living and urban convenience.

To view Sample Multi-Family Investment Properties in San Antonio starting at $400k, sign up for your free RealWealth membership.

Dallas, Texas Housing Market Predictions 2023 & 2024

Let’s discover more Texas housing market predictions and see what to expect from Dallas in 2023 and 2024.

Overview of the Dallas metro area

Dallas is a city in Texas with a population of 1.3 million people as of the latest census, making it the third-largest city in Texas and the tenth-largest city in the United States. It is also an anchor for two metropolitan areas (the Dallas-Fort Worth and Arlington metropolitan areas) that together have 6.1 million people—more than one quarter of all Texans.

Dallas has something for everyone: sports fans can attend a professional football game with the world-famous Dallas Cowboys; nature lovers can enjoy quiet horse trails just a short drive from downtown; history buffs can explore the Fair Park National Historic Landmark District, which contains the largest example of Art Deco architecture in the world; and architecture buffs can visit Old City Park, where they can see museums and historic buildings from around the world.

The Sixth Floor Museum in Dallas, Texas, traces the history of President John F. Kennedy’s assassination. It serves as a reminder of this tragedy that took place on November 22, 1963.

Dallas is a city of commerce and industry, with a rich history in cotton and oil. Its strategic location along major railroad lines and its status as a financial center have helped to make it one of the most prominent cities in the United States.

Zillow predicts that the Dallas real estate market will be among the hottest in 2023, following Charlotte, Cleveland and Pittsburgh. Homes are still selling quickly in Dallas, spending just 11 days on the market as of March 2023, compared to an average of 24 days before the pandemic.
Dallas multifamily construction is also experiencing growth, with technology start-up companies attracting young and skilled workers to the area.

Dallas market predictions for 2023, 2024 & beyond

1 – Property prices

Marginal home price depreciation despite strong sales decline

The number of existing single-family home sales in the Dallas-Fort Worth area fell by 30% from November 2021 to 2022, as mortgage rates rose. Meanwhile, the median household income in the area rose from $72,642 to $74,673.

Dallas-Fort Worth home prices have been on a downward spiral for seven months straight, according to the latest data from the S&P CoreLogic Case-Shiller Index. Prices in the area peaked in June 2022, and in February 2023 fell by a staggering 9.2% from the peak.

We expect some correction in home prices in Dallas, but not a significant drop. This is because mortgage rates are likely to improve and consumer confidence will increase.

Single family and multi-family home construction will slow down due to high construction costs

The Dallas metro area has seen a major decline in new home construction over the past year. In the fourth quarter of 2022, builders started building almost 8,000 new homes in the area, down 38% from a year ago when they started just over 12,900 homes.

But the Dallas market has seen some increase in multifamily housing construction recently. In December 2022, permits for 3,102 units were approved—an 86% increase over December 2021.

The construction industry is facing a number of challenges in the DFW area, including the potential availability of credit, labor availability as well as high material prices. These factors are expected to slow down the pace of construction in the region.

Recent banking sector challenges have also made it harder for builders to obtain loans. This is especially true for smaller builders who do not have a long track record of success.

2 – Rental rates

Year-over-year rent prices will continue to increase slowly but steadily

A new report from Realtor.com found that the median Dallas-Fort Worth asking rent was $1,502 in March 2023, down 1% from March 2022. The study covers studios, one- and two-bedroom apartments, condos, townhomes and single-family homes listed on the platform.
The cost of owning a home in the Dallas-Fort Worth metro area is significantly higher than the cost of renting.

According to data from John Burns Consulting, the average cost of owning a single-family home in the Dallas-Plano-Irving metro division is $3,389, while the average cost to rent a similar home is $2,346. This means that homeowners in the Dallas-Plano-Irving metro division pay an average of $1,043 more per month than renters.

The cost of owning a home in the Fort Worth area is also higher than the cost of renting. The average cost to buy a home in the Fort Worth area is $2,900, while the average cost to rent a similar home is $2,023. This means that Dallas residents will continue to favor renting over buying, keeping rent prices strong.

The rental vacancy rate will decline

Dallas is a thriving Texas metropolis with a booming rental market. The city’s vacancy rate has been steadily declining in recent years, falling to 6.6% in December 2022. This is down 1.4% from the previous year and slightly higher than the national vacancy rate of 5.8%. This trend is expected to continue in the coming years, as Dallas continues to attract new residents and businesses.

RentCafe’s Texas Year-End Report ranked Dallas third among Texas cities in terms of rental market competitiveness, behind El Paso and McAllen. The report took into account the number of days rentals were vacant, the percentage of apartments occupied by renters, and the number of prospective renters competing for an apartment. It also considered how many renters renewed their leases and the share of new apartments completed in 2022.

A few Dallas neighborhoods to consider investing in

1 – Downtown Dallas

Downtown Dallas is the central business district and heart of Dallas, Texas. It is home to a diverse mix of architectural styles, including modern skyscrapers and historic buildings. The area offers a vibrant urban atmosphere with a variety of attractions, such as the Dallas World Aquarium, the Sixth Floor Museum, and Klyde Warren Park. It is also a hub for shopping, dining, and entertainment, featuring the Dallas Arts District. This district houses several cultural institutions like the Dallas Museum of Art and the Winspear Opera House.

2 – East Irving

East Irving is a residential and commercial neighborhood located in the city of Irving, part of the Dallas-Fort Worth metroplex in Texas. This diverse community offers a mix of housing options, parks, and local amenities. The area is known for its accessibility to major highways and the Dallas Area Rapid Transit (DART) system, making it convenient for commuting to other parts of the metroplex. East Irving also provides easy access to the Dallas/Fort Worth International Airport and is close to shopping centers, restaurants, and entertainment venues, such as the Toyota Music Factory.

3 – South Arlington

South Arlington is a suburban neighborhood located in Arlington, part of the Dallas-Fort Worth metroplex in Texas. Known for its family-friendly atmosphere, the area offers a variety of housing options, parks, and recreational facilities. South Arlington boasts excellent schools, shopping centers, and dining options, making it a popular choice for families and young professionals. The neighborhood’s proximity to the University of Texas at Arlington, major highways, and entertainment venues like the AT&T Stadium and Globe Life Field further adds to its appeal.

To view Sample Single and Multi-Family Investment Properties in Dallas starting at $220k, sign up for your free RealWealth membership.

Houston, Texas Housing Market Predictions 2023 & 2024

Let’s explore the Texas housing market predictions and trends and key factors influencing the future of housing in the nation’s fourth-largest city.

Overview of the Houston metro area

Houston is the most diverse metropolitan area in Texas, with over a quarter of its population foreign-born. It is also considered to be the most racially and ethnically diverse major city in the United States.

In the summer of 1836, two brothers named John Kirby Allen and Augustus Chapman Allen arrived in Texas with a dream. They wanted to build a new city on the banks of Buffalo Bayou. The brothers had big plans for their city. They envisioned it as a major commercial center, a hub for trade and transportation. They also wanted it to be a symbol of Texas’s independence from Mexico.

The brothers named their new city after General Sam Houston, who had led Texas to victory at the Battle of San Jacinto. Houston was incorporated as a city on June 5, 1837. It quickly grew into a thriving community, thanks to its strategic location and its abundance of natural resources.

Houston, known by many names including the Bayou City, Space City, H-Town, and the 713, has become a global city with a vibrant culture, world-renowned medical institutions, and cutting-edge research facilities.

The Museum District in Houston, is home to many cultural institutions and exhibits that attract more than seven million visitors a year.

The Houston housing market has been in a state of flux in recent years, with the COVID-19 pandemic and rising inflation having a significant impact on sales and prices. In 2022, sales and prices reached record highs, but they have since fallen back somewhat. However, they are still higher than they were in pre-pandemic 2019.

Houston market predictions for 2023, 2024 & beyond

1 – Property prices

Houston will become a balanced market as housing supply increases

The Greater Houston Partnership reported that there was 59.8% more active home inventory in March 2023 than there was in March 2022. Home sales also decreased by 25% during that time period.

Summary - Metro Houston Residential Transactions

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Based on Realtor.com’s April 2023 data, the Houston housing market is currently a balanced market. This means that the supply and demand of homes are about the same. On average, homes in Houston, TX sell after 55 days on the market.

The average home price will drop slightly from 2023 to 2024

In March 2023, the median price of a single-family home fell slightly compared to March 2022, according to data from HAR. The median price fell 3% year-over-year to $325,000 in March, but it was still significantly higher than the $240,000 median price recorded in March 2019.

HAR Chair Cathy Treviño said “Houston real estate is starting to return to normalcy with more new listings hitting the market and prices easing. Inflation and interest rates are still causing angst, but once consumer confidence is finally restored, home sales will pick up and probably return to their seasonal cycles before the pandemic.”

Construction will decline as builder confidence becomes low

Houston’s housing market is currently awash in affordable options, with 268 builders offering homes priced under $300,000. And the city is poised to become even more affordable in the near future, as builders complete the thousands of units currently under construction.

The Houston housing market continued to cool in March 2023, with housing starts down 37.2% year-over-year and vacancies up 42.3% annually. New home sales have been trending downward for months, and existing home sales were down 29.9% annually in March. This affects builder confidence, as they are less likely to start new projects in a market where there is an excess of inventory.

2 – Rental rates

Average rent will increase year-over-year, despite month-to-month declines

In the first quarter of 2023, the median rent for a single-family home in Houston increased from $1,900 to $1,950. Conversely, rental affordability increased from 46% last year to 48%, according to the Bureau of Labor Statistics. The Houston rental market is holding its own, with rents increasing at a modest pace.

A few Houston neighborhoods to consider investing in

1 – Conroe North

Conroe North is a suburban neighborhood located in North Houston, Texas. Known for its family-friendly atmosphere and scenic surroundings, Conroe North offers a peaceful retreat from the bustling city life. The area features a mix of residential communities, parks, and recreational facilities, making it an ideal place for families and nature enthusiasts. With its close proximity to Lake Conroe, residents can enjoy various water activities. Nearby shopping centers and dining options provide convenience and entertainment. Conroe North is also the site of the Conroe North Houston Regional Airport, ensuring easy travel access for residents and visitors.

2 – Richmond

Richmond is a vibrant city located within the Houston metropolitan area in Fort Bend County, Texas. Known for its rich history and diverse community, Richmond offers a blend of small-town charm and urban amenities. The city boasts a variety of parks, recreational facilities, shopping centers, and dining options. With easy access to Houston’s downtown and major highways, Richmond is an attractive destination for families and professionals alike.

3 – Pearland East

Pearland East is a thriving suburban area located within the Houston metropolitan area in Brazoria County, Texas. As a part of the larger city of Pearland, this eastern section is known for its excellent schools, family-friendly environment, and a wide range of recreational activities.

Now that you’ve seen some of the most pertinent Texas housing market predictions for 2023 and 2024, check out trends and forecasts for the US real estate market from 2023 to 2027 here.

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