The Changing Face of Texas Housing

The latest stats report 1,000 people move to Texas every day.

The Texas Triangle contains the state’s five largest cities and is home to the majority of the state’s population. 

Photo, courtesy Spaceboyjosh

The Changing Face of Texas Housing

According to the Texas Real Estate Research Center at Texas A&M University, a way to determine housing affordability in a region is by dividing the median prices of homes in the state by the median household income. Economists say that the result should be around three in order for a market to be considered affordable. This means that the cost of a home is three times the median household income. 

Currently, Texas is around a four when you do the math.  And other states like California and New York hover around eight to 10 according to the A&M data. So, it’s no wonder then that Californians and New Yorkers make up the lion’s share of homebuyers arriving to the state.  COVID-19 Federal stimulus packages gave them an extra incentive to move.  

An article by TCU 360, the news website of TCU Student Media, said the stimulus provided enough funds to cover their moves and help them afford larger mortgages. Texas sales uphold the national stats that show luxury home sales in the U.S. are booming with home prices rising at double the rate of non-luxury home prices.  Texans also pay the 7th highest property taxes in the U.S., per Wallhut’s 2024 property tax report.

In 2020, median home prices averaged around $266,000. Now, Texas real estate is averaging around $340,000, according to the TCU 360 data.  But Texas is still underneath the nationwide average home price of $431,000 as of Q3 2023.  And this is one reason the migration continues.

Texas attracts the most millennials moving from other cities, like Los Angeles and New York.

The Changing Face of Texas Housing influenced by millennials
Texas added nearly 630,000 jobs last year. The 4.8% jump in non-farm payrolls was among the best in the nation. The number of big corporations based here now trails only California and New York.

A report released in March by moving company Hire A Helper, shows where millennials are moving and why. It shows millennials are moving for new or better housing, job opportunities and to establish their own household. Last year, the Lone Star State welcomed almost 400,000 millennials among its new residents.  This represents nearly 10% of all the cross-state moves made by millennials in 2023.

The Austin-Round Rock area saw a net millennial move increase of 47%, the Houston-Woodlands area saw a 39% rise, and the San Antonio-New Braunfels area saw a 12% incline. The Dallas-Fort Worth area saw a 5% jump, according to the study.

Millennials are moving to Texas

The traditional nuclear family model is no longer the dominant demographic

The Changing Face of Texas Housing

Singles and unmarried couples comprise a higher percentage of the buying pool. Young professionals drive demand for floorplans with flexible layouts catering to modern needs, including those designed for multi-generational families. 70 percent of all home buyers are child-free households (no children under 18 living with them), reports Inman Real Estate News.

And as owners seek to reduce the percentage of housing costs used for their monthly existence, more are looking for plans with separate entrances and dedicated rental units.


March 2024 saw a slight rise in construction input prices, fueled by inflation and increased supply chain disruptions. This trend marks a continuation of price hikes throughout 2024, overshadowing a brief stabilization at 2023’s end. 

 

Buyers arriving with much more buying power than they had where they originated from, have an edge.  The newcomers outbid other buyers and entice sellers with their ability to pay in cash.

Meanwhile, the same potential homebuyers have to compete with the investment firms that are trying to buy up Texas property in bulk. Texas’s major cities are among the strongest-performing markets in the country for total property returns, enticing investors ranging from private equity firms to large corporations.  Statewide, 28% of all Texan homes sold in 2021 were bought by investors. 

Gov. Greg Abbott wants the Texas Legislature to rein in investors behind large-scale home purchases.

 

The Changing Face of Texas Housing
Nationwide, a total of 27,500 houses for rent were completed in 2023 — 75% more than a year prior.  41% of the total number of build-to-rent homes were built in the last five years. That’s about 68,000 rental homes. Most of the new BTR houses are available in Texas, Florida, and even California.  And according to RentCafe, the number of units under construction (45,000) is larger than ever. Dallas with 4,780 BTR homes  and Houston with 2,553 are number 2 and number 3, respectively, on RentCafe’s Top 5 Metros with BTR homes in the pipeline. 

But as more and more people become renters, there’s the fact that they don’t fair quite so well in the disparity between monthly income and monthly housing costs, says the Texas Comptroller’s Office. It’s a conundrum:  High rents make it hard to save up for buying a home.  But the longer people rent, the less opportunity they have to enjoy the wealth that that others see from home value appreciation. There is certain to be a wealth gap between owners and renters, says the National Association of Realtors. 

The Bottom Line:

The changing face of Texas housing reflects a dynamic landscape influenced by various factors. Demographic shifts, economic trends, and cultural changes play significant roles in shaping housing preferences and patterns across the state.

Related Content:

2023-2024 Housing Analyses All Point to Texas

Millennials and Gen-Zs are Distinctly Different

Newsweek: Texas Housing Market Could Be Getting a Major Change

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