Headline Writers are Quick to Claim So!
Newsweek points to data showing Texas home values are currently 17.7 percent overvalued today compared to long-term historical norms. It predicts prices will continue to drop before adjusting to reach that balance.
Research by Investors Observer says that oversupply in Texas metro areas and affordability pressures have led to increased listing staleness. They way it’s prompting 30.3% of sellers to adjust prices to attract buyers. Its data shows Texas has a median DOM of 67. 72% of listings are unsold after 30 days and 53.1% after 60 days. So that puts the Lone Star State at #8 on their list of Top 10 U.S. States with the Most Stale Listings.
Rent prices in Texas are also down due mainly to an increase in housing supply driven by a homebuilding boom. The construction surge has expanded rental inventory, thereby creating downward pressure on prices. Austin cracked the Top 10 of metros with the most substantial median rent decreases from this time last year. It, in fact, lead the pack at No. 1, according to a Redfin report released in May. The report showed median rent prices in Austin down $400 compared to a record high in August 2023. The Austin-Round Rock area’s median rent, now listed at $1,399, decreased 9.6% year over year. Dallas’ median rent prices lowered 2.2% to $1,480 a month. Houston just superceded the national median rent’s year-over-year decrease, reporting a 1.2% decline in prices down to $1,250 a month.
But Most Analysts Concur: We’re NOT Headed Toward a Crash
Indeed, there is some validity in saying that we became overheated during the pandemic. And Texas is now experiencing a so-called correction. But it’s important to consider the sources
Housing inventory in Texas still remains low compared to historic trends. 300,000+ housing units still needed is the number used in describing the current housing shortage in the Lone Star State.
Each quarter, over 100 housing market experts weigh in for the Home Price Expectations Survey from Fannie Mae. They consistently agree on one thing: not only in Texas but also nationally, home prices are expected to rise through at least 2029. Yes, the sharp price increases are behind us. But experts project a steady, healthy, and sustainable increase of 3-4% per year going forward.
Citing this analysis, the real estate blog, Keeping Current Matters, warns buyers on the sideline: “The longer you wait, the more buying could cost you.“ The widely touted lowest homeownership rate in five years could indicate pent-up demand, after all.
After weeks of sitting stagnant, mortgage rates surged above 7% again in May following a downgrade in the U.S. credit rating.
Naysayers vs. The Whole Picture–Texas Isn’t Alone in the Scrutiny
From a national perspective, elevated interest rates, tariff concerns and the volatility of building material costs muddied America’s economic outlook this spring. And seasoned economists are watchful for housing markets to follow the cyclical patterns they historically have—marked by periods of growth, correction, and stabilization. As many wait for the fallout, others predict continued sustainability for housing at least for another five years.
Ali Wolf, chief economist for Zonda and NewHomeSource aptly describes the current atmosphere. “Today’s housing market is shaped by the intersection of politics, economics, affordability, and consumer sentiment. The resulting impact is a choppy market, and mixed messages.”
Wolf was specficically speaking on the national lot supply front. Zonda’s Lot Supply Index in the first quarter came in at the highest level in five years thanks to slower housing starts and more cautious consumers. But Wolf points to data showing that just like housing supply, lot supply still remains significantly undersupplied.
Total upcoming lots (delivery over the next 12-18 months) for 1Q25 increased 4.7% year-over-year, and were up 6.5% from last quarter. Additionally, they were up 26.3% compared to the same quarter in 2019.
“There has been a lot of money invested in land and lot development in recent years. And we are seeing the fruit of that labor show up in total upcoming lots,” said Wolf. “The big question now is how aggressive builders will be in the shifting market with housing starts, new community openings, and their land acquisition plans.”
HousingWire reported in April amid rising mortgage rates, trade war escalations and stock declines the latest data shows positive year-over-year growth in housing demand. And our recap of development activity inside (see Activity Report) indicates there’s no hesitancy about Texas’ immediate housing market on the part of investors and developers with thousands of homes on the drawing boards across all the major cities.
