The Texas housing market is certainly a fascinating one to explore in 2022. Using several statistics, we explore the 2022 Texas houisng market and where it's heading. The lack of inventory continues to inflate Texas housing prices for now, but many analysts predict that the rate of appreciation will slow down as compared to the last two years. Some of the fastest-growing real estate markets in 2022 are in extremely desirable sections of Texas, particularly in the suburbs of major metropolitan cities.
These communities often have great educational systems and provide more value for money. They are ideal for millennials seeking a place to raise a family. The suburbs of Dallas and Austin are by far the most popular areas to purchase in Texas. Real estate brokers also report increased sales of lake properties and ranches as individuals seek ways to get away from congested cities.
Texas has approximately 1,700 cities with populations ranging from 2.3 million to less than 100 people. According to PwC and the Urban Land Institute's Emerging Trends in Real Estate 2022 research, Texas has four of the top twelve markets with the highest house-building prospects.
According to Zillow, the typical value of a mid-priced property in Texas has climbed by 19.8% over the last twelve months. It stands at $314,837 (ZHVI), which is $52,837 more than last August. People from all over the country are flocking to Texas to live, work, and invest in the Texas real estate market.
- Texas housing price 1-year change: 19.8%
- Texas housing price 5-year change: 63.9%
The FHFA House Price Index (FHFA HPI®) is the nation’s only collection of public, freely available house price indexes that measure changes in single-family home values based on data from all 50 states and over 400 American cities that extend back to the mid-1970s. At the national level, house prices rose 18.3 percent from May 2021 to May 2022. House prices rose 1.4 percent from the previous month (April). House prices were up 4.0 percent compared to the first quarter of 2022 and 17.7 percent from the second quarter of 2021 to the second quarter of 2022.
Four-Quarter Appreciation in Texas (as of 2022 Q2)
- One-Quarter Appreciation: 5.2%
- Four-Quarter Appreciation: 20.5%
- Five-Year Appreciation: 63.6%
- Appreciation since 1991: 333.0%
Texas Housing Market Predictions 2022 & 2023
Texas has had some of the strongest housing appreciation rates in the country over the past decade. Over the past decade, Texas housing prices have risen 99.56 percent, which equates to an annual home appreciation rate of 7.15 percent, according to the data collected by NeighborhoodScout. If you are a house buyer or real estate investor, Texas has been one of the finest long-term real estate investments in the United States over the past decade.
The Texas housing market is expected to grow in 2023. In other words, if you're debating whether or not to purchase a house this year, you can't start preparing now to be a better buyer in 2023. Texas housing market mirrors larger national trends, albeit with some regional variation. An imbalance between demand and supply has fueled rapid home appreciation across the state.
According to Neighborhoodscout, the real estate appreciation rates in Lone Star State have been among the highest in the United States. Neighborhoodscout's lastest quarterly appreciation rate in Texas was 7.53 percent, which amounts to an annual appreciation rate of 33.67 percent.
- Texas appreciation rate has been 7.53% between 2022 Q1 – 2022 Q2.
- Texas appreciation rate has been 24.58% between 2021 Q2 – 2022 Q2.
- Texas appreciation rate has been 40.33% between 2020 Q2 – 2022 Q2.
- Texas appreciation rate has been 61.55% for the last 5 years, between 2017 Q2 – 2022 Q2.
- Texas appreciation rate has been 123.17% for the last 10 years, between 2012 Q2 – 2022 Q2.
- Texas appreciation rate has been 210.84% since 2002, between 2000 Q1 – 2022 Q2.
Although house sales have slowed in Texas, this is not always an indication of demand but rather of supply. Numerous analysts believe that the number of homes sold in Texas in 2021 could have been higher if there had been a greater supply of homes for sale. As newly constructed homes enter the market, this might increase overall sales.
If you want to sell your property in 2022, you are in an advantageous position. While Texas home prices are not predicted to increase as quickly or as sharply as they did in 2021, buyer demand remains robust and is unlikely to diminish. As Bidding wars are typical, your home is likely to attract a large number of buyers. This is a perfect moment to sell if you are not concerned about acquiring a new house with potentially higher interest rates.
After two years of the pandemic, analysts continue to forecast a surge in home sales. Unfortunately, this means that a large number of individuals will be priced out. Affordability will be a concern, and this might eventually lead to a decline in demand to more sustainable levels. Overall, the Texas housing market will likely continue robust, although not to the same extent as in 2021.
Current Texas Housing Market Trends
Aggressive central bank policies drag down the Texas housing sector, slowing sales. As housing inventories improve and prices fall, the housing sector continues to ease. Despite a nationwide decline in construction permits, high demand for construction shows many homebuyers are delaying significant purchases. Lower-priced homes, an attractive market for first-time buyers and younger households, sold less than higher-priced homes.
According to the most recent report from the Texas Real Estate Research Center at Texas A&M University, record prices and soaring mortgage rates deterred purchasers. According to the Texas Real Estate Research Center's Data Relevance Program, July house sales fell. Seasonally adjusted, the state's sales volume fell by nearly 3,000 deals to 28,121.
Texas Housing Demand
Demand lowered sales in all major cities. Austin and Houston closed sales fell over 16% MOM, while DFW and San Antonio fell 8%. While every potential homeowner faces financial hurdles, affordability hit first-time buyers the hardest, reducing sales of homes under $300,000. Texas' average days on market (DOM) remained low at 34 days, indicating a continued bargaining power imbalance.
Austin and Dallas homes sold in 22 days, while Houston and San Antonio took 30. The existing home DOM is much lower than the new home DOM. Existing dwellings are still scarce. $300K and $400K properties sold in 28 days on average. More expensive residences had shorter listing times than cheaper ones.
Texas Housing Prices
In July, the median home price in Texas fell by $5,000 to $344,000. Prices fell across the board. Austin ($510,000) and DFW ($406,000) lost $7,000 and $8,000, respectively, in a month. Meanwhile, Houston ($338,000) and San Antonio ($328,000) both dropped $3,000 and $4,000. Austin prices fell the most during the statewide downturn, falling $33,000 in three months. Housing prices are falling, but they are still much higher than a year ago, rising 13.2 percent year on year (YOY).
The Texas Repeat Sales Home Price Index, which accounts for compositional price effects, corroborated the trend of slowing price growth, as the index shrank from increasing 20.4 percent YOY in January to increasing 14.9 percent YOY. Falling prices pulled the state YOY growth down by 55 basis points in the last seven months. Austin fell from the fastest appreciating metro to second, behind San Antonio's yearly growths.
Texas Housing Supply
While homebuilding is expected to continue decelerating, the state's current supply is starting to accumulate. Active listings rose more than 17,000 units since May. This loosening up of housing availability indicates a breakthrough after the abnormally low inventories of the past two years. As a result, Texas' housing supply, which has been below two months of inventory (MOI), recovered to 2.2 MOI. The Texas Real Estate Research Center considers six to 6.5 months of inventory a balanced market. San Antonio led the pack with 2.5 MOI, and Dallas remained the tightest with 1.9 MOI.
Texas Housing Market Trends for August 2022
According to Redfin, Texas home prices (statewide) were up 10.2% year-over-year in August. At the same time, the number of homes sold fell 13.9% and the number of homes for sale rose 19.8%.
- Median Sale Price = $359,800, +10.2% year-over-year
- # of Homes Sold = 29,425, -13.9% year-over-year
- The median days on the market was 37 days, up 18 days year over year.
Top 5 Metros in Texas with the Fastest Growing Sales Price
Haslet, Texas: In August 2022, Haslet home prices were up 46.8% compared to last year, selling for a median price of $467K. On average, homes in Haslet sell after 21 days on the market compared to 17 days last year. There were 48 homes sold in August this year, up from 33 last year. Hot listings can sell for about 2% above the list price and go pending in around 14 days.
Allen, Texas: In August 2022, Allen home prices were up 34.8% compared to last year, selling for a median price of $600K. On average, homes in Allen sell after 28 days on the market compared to 19 days last year. There were 139 homes sold in August this year, down from 188 last year. The average homes sell for about 1% above the list price and go pending in around 24 days. Hot listings can sell for about 5% above the list price and go pending in around 13 days.
Azle, Texas: In August 2022, Azle home prices were up 34.1% compared to last year, selling for a median price of $370K. On average, homes in Azle sell after 33 days on the market compared to 18 days last year. There were 29 homes sold in August this year, down from 45 last year. The average homes sell for around the list price and go pending in around 23 days. Hot listings can sell for about 3% above the list price and go pending in around 13 days.
Red Oak, Texas: In August 2022, Red Oak home prices were up 33.3% compared to last year, selling for a median price of $399K. On average, homes in Red Oak sell after 14 days on the market compared to 19 days last year. There were 39 homes sold in August this year, up from 31 last year. The average homes sell for about 1% above the list price and go pending in around 19 days. Hot listings can sell for about 4% above the list price and go pending in around 12 days.
Euless, Texas: In August 2022, Euless home prices were up 30.2% compared to last year, selling for a median price of $390K. On average, homes in Euless sell after 21 days on the market compared to 17 days last year. There were 56 homes sold in August this year, up from 53 last year. The average homes sell for about 2% above the list price and go pending in around 17 days. Hot listings can sell for about 6% above the list price and go pending in around 11 days.
Texas Employment Situation
Home sales are typically intimately related to the health of an economy and increase and decrease in tandem with economic activity. As economies decline, the money supply becomes more constrained. As it gets more difficult to obtain money, fewer house buyers enter the market. With fewer buyers accessible due to stricter credit criteria, inventories of houses rise or take longer to sell. Price decreases when there is more product supply and less demand for it.
Rising prices force the Fed to respond to inflationary pressures. As economic uncertainties grow, bond yields and mortgage rates rise. As market fears increase, Texas' labor market has slowed but is still increasing. Initial unemployment claims are at a record low as out-of-state employees join Texas' booming workforce. In three major metros, nominal earnings rose. In July, the three metros with salary increases beat month-over-month inflation, offering real wage increases.
The Dallas Fed's Texas Business-Cycle Index reported 1% growth in Texas' economy in July over June (SAAR). The state's economy is slowing but remains strong. Last July, statewide YOY growth was 13%; this year it's 12%. Austin saw the highest annual drop, from 17% to 11%. Houston replaced Dallas as the only metro with year-over-year growth (8.7%).
The Texas Leading Economic Index (a measure of future directional changes in the business cycle) ended its streak of post-pandemic expansion and edged down for the third straight month. The fall in the leading index was due to rising recession worries. The Texas Consumer Confidence Index retreated after April's rebound as consumers' inflation fears and Fed rate hikes dissipated purchasing power.
Record prices and soaring mortgage rates deter buyers and cool the market. The state lost nearly 3,000 housing sales during the summer, which is peak season. July SAAR house sales topped 28,000. COVID-19 continues to affect housing, offsetting historical sales patterns. The sales slump is also due to the Fed's efforts to limit inflation by raising interest rates. While sales are down this month, they're close to July 2019's record-setting sales before COVID-19. As the economy remains weak, sales are projected to decline.
Inflation and recession fears haven't slowed Texas' nonfarm job recruitment in July. Arts/entertainment and personal services lost the most jobs. A poorer U.S. economic outlook puts downward pressure on Texas' companies, according to the Dallas Fed's annual employment prediction. Texas' unemployment rate is 4%, while the national rate is 3.5%.
Since Texas' unemployment rate is usually the same as or lower than the national average, an infusion of out-of-state employees could explain its high rate, not a weak labor market. The state's labor force participation rate was 63.8%, above the national rate of 62.1%. Texas has fully recovered and is expanding. As workers fear a recession, the national labor force is down 1.3% from pre-pandemic highs.
Texas added 16,400 net payroll jobs, or 0.1 percent, on a seasonally adjusted basis during August. In the prior month, Texas added 73,400 jobs. Over the past twelve months, Texas added 726,900 payroll jobs or 5.7 percent. Texas nonfarm payroll employment had increased in each of the past 12 months.
Texas ranks 1st among the 50 states and the District of Columbia for percentage gain in nonfarm payroll employment over the past 12 months. During August, Texas’s private sector added 8,300 jobs or approximately 0.1 percent. The private sector in Texas added 62,800 jobs in the prior month. Over the past twelve months, private-sector payrolls in Texas added 716,300, or 6.6 percent. Texas private-sector payroll employment has increased in each of the past 12 months.
- Texas added 16,400 net payroll jobs and the unemployment rate rose by 0.1 percentage point to 4.1 percent in August.
- Over the past twelve months, Texas added 726,900 payroll jobs and the unemployment rate fell by 1.3 percentage points from 5.4 percent.
- In August, Texas’s private sector added 8,300 net private payroll jobs and over the past twelve months it added 716,300 private payroll jobs in the establishment survey.
- In the household survey, the number of unemployed rose by 5,616 on net in August, and over the past year employment rose by 500,804.
- Texas’s labor force participation rate remained steady at 63.8 percent in August. Since last year, the labor force participation rate rose by 0.4 percentage points.
Top 10 Places to Buy a House in Texas in 2022
According to Niche.com, these are the top 10 areas to buy a home based on home valuations, property taxes, home ownership rates, housing prices, and real estate trends. Ranking based on statistics from the United States Census Bureau, the FBI, and other sources. Cottonwood Creek South is the best place in Texas to buy a house in 2022.
- 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
References
- https://www.zillow.com/tx/home-values/
- https://www.redfin.com/state/Texas/housing-market
- https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-Insight
- https://www.neighborhoodscout.com/tx/real-estate
- https://www.niche.com/places-to-live/search/best-places-to-buy-a-house/s/texas/
- https://www.fhfa.gov/DataTools/Tools/Pages/Four-Quarter-Heat-Map.aspx
- https://www.fhfa.gov/AboutUs/reportsplans/Pages/Fannie-Mae-Freddie-Mac-Reports.aspx
- https://www.jec.senate.gov/public/index.cfm/republicans/tx/
