The Texas real estate market has some unique advantages that make it stand out when compared to other U.S. states. With no state income tax, a business-friendly environment, and a low cost of living, Texas offers an enticing option for homebuyers. But how exactly does it stack up against top housing markets like California, Florida, and New York? We’ll analyze key data points to see where the Lone Star State shines—and where it falls short.
How Does the Texas Real Estate Market Compare to Other States?
Texas Housing Market Overview
Texas has one of the fastest-growing populations in the nation, gaining over 3 million new residents between 2010 and 2020 according to Census data. This surge in migration is largely driven by the thriving job market centered in metropolitan areas like Dallas, Houston, Austin, and San Antonio.
Major tech companies including Oracle, Tesla, Samsung, and Hewlett Packard Enterprise have recently relocated their headquarters to Texas. The state also boasts a booming energy sector. This business and employment growth inevitably fuels demand for housing.
Let’s look at a few key metrics to see how the Texas real estate market is performing:
- Home Values: The median home value in Texas is $211,000 as of August 2022, according to Zillow data. This is well below the national median of $325,000.
- Home Prices: Texas has one of the fastest-growing home prices in the U.S., with values up 17% year-over-year. The median home price is $359,000 as of August 2022.
- Inventory: Homes are selling fast in Texas, with housing inventory down 33.4% year-over-year. There are just 3.3 months of supply based on the current sales pace.
- Affordability: Texas ranks #8 out of 50 states for most affordable housing markets. Just 20.3% of average wages go towards mortgage payments here.
So in summary, home values are relatively low but prices are rising quickly in Texas. Like most of the country, inventory is tight but affordability remains decent compared to other major markets.
How Texas Compares to California Real Estate
California is known for having some of the most expensive real estate in the country. When comparing Texas vs California property values, incomes, and affordability, Texas comes out on top.
The median home value in California is $799,000, nearly 4 times higher than Texas. The median home price is $834,000 in California versus $359,000 in Texas. And perhaps most telling—the percent of household income spent on mortgage payments averages 39.5% in California, indicating highly unaffordable prices for buyers.
A major driver of the extreme housing costs in California is the lack of new construction. Bidding wars and all-cash offers are common, causing prices to consistently outpace wage growth. Strict zoning regulations limit new buildings. Simply put, demand dramatically exceeds supply.
Texas real estate follows more traditional economic trends. Appreciation is occurring due to true growth, including 500,000 new residents annually. However, a steady construction pace and lack of state income tax make it feasible for middle-class families to afford a home.
How Texas Compares to New York Real Estate
New York is another state with notoriously high housing costs, especially in and around New York City. The median home value in New York is $379,000. The median listing price for homes is a whopping $710,000 as of August 2022.
The median household income in Texas is $63,826. In New York, it’s just $71,117 – barely higher despite much more expensive home prices. New Yorkers pay a huge premium on housing. Saving for a down payment and managing mortgage payments requires major financial sacrifices.
Once again, limited housing inventory combines with tremendous demand to drive up prices in New York. And proximity to New York City certainly doesn’t help affordability. Commuting from outer boroughs or the suburbs is often required for first-time homebuyers.
Texas real estate follows the same lack of inventory pattern, but once again benefits from faster construction and population growth centered in multiple metros. Cash investors swooping in to buy properties sight unseen isn’t an issue in Texas like it is in New York. All of these factors contribute to Texas housing remaining reasonably affordable relative to income.
How Texas Compares to Florida Real Estate
Texas and Florida make an interesting comparison, as both have no state income tax and attract flocks of new residents each year. They also face similar risks like hurricanes and flooding. So let’s analyze how housing stats stack up between the states:
- Florida median home value: $306,000
- Texas median home value: $211,000
- Florida median home price: $425,000
- Texas median home price: $359,000
While home values are higher in Florida, home prices tell a different story. Sale prices are lower in the Sunshine State compared to Texas presently. This indicates Florida has more supply available relative to demand.
In terms of affordability, mortgage payments account for 25.4% of average wages in Florida. That’s higher than the 20.3% figure seen in Texas.
Hurricane risk increases property insurance costs significantly in Florida. Lastly, Texas has major job centers in Houston, Dallas, Austin, and San Antonio metros. Florida's economies rely more on tourism and retirees. The economic diversity of Texas may position it for stronger long-term growth potential.
Which U.S. State Has the Best Housing Market?
Determining the best housing market in the U.S. depends on your criteria. If affordability is most important, then Texas, Ohio, Iowa, and other midwest states offer the most value adjusted for incomes. Low home prices here make it feasible to buy property.
Examining criteria like 10-year home price growth, projected appreciation, and positive net migration rates can highlight states that represent strong investment potential too. Idaho, Utah, Arizona, Florida, and Tennessee all fit that bill. Job growth in tech hubs and popularity with retirees is driving rapid price gains.
Ultimately there is no one-size-fits-all answer, as priorities around affordability, lifestyle, and investment upside vary by buyer. While Texas ranks well by many measures, don’t overlook up-and-coming secondary markets when determining the optimal area to buy real estate.
Is Texas a Good Real Estate Market?
The data makes a compelling case for Texas being one of the better real estate markets right now for both buyers and investors. Key advantages like:
- Strong job and economic growth
- No state income taxes
- Home prices appreciate near the national average
- Below average cost of living
- New construction prevents shortages
All point to Texas having a healthy, stable housing market. Growth comes from organic demand, not bubbles or speculation. And major metro areas provide buyers with lifestyle and employment options other than just Dallas.
Texas does face some challenges, like drought, flooding, underfunded schools, and increasing property taxes. Home insurance rates have also risen. But on the whole, Texas presents an attractive place to buy real estate at today’s prices.
Why is Real Estate in Texas so Cheap?
Given the advantages and growth potential, prospective buyers may wonder – why is housing in Texas so reasonably priced compared to other states? There are a few core reasons:
No State Income Tax
The lack of state income tax motivates people to move to Texas and gives residents greater buying power. For a median-priced home in Houston, you’d save $105,000 over 10 years in income taxes vs Los Angeles.
Land Availability
Texas has an abundance of open land, especially compared to dense coastal cities. This gives builders more lot options and the ability to scale up new construction. Limited space severely constrains supply in states like California.
Pro-Business Policies
Texas government has implemented policies tailored to support business growth. Corporations are incentivized to relocate and expand here. More new companies and jobs directly spur housing demand.
cheaper Cost of Living
Goods, services, energy, and more remain reasonably priced in Texas, which balances out housing costs. Savings in non-housing expenses make owning a home here more affordable.
The combination of these factors allows housing supply to better keep pace with demand in Texas compared to other parts of the country. More new residents can be accommodated without substantial price hikes.
Is Texas a Good State to Buy a House?
For the reasons outlined above, Texas remains one of the best states to buy a house in today. Favorable home prices coupled with a strong job market and affordable cost of living are hard to beat.
Of course, low housing costs alone don’t make a good real estate investment. Doing thorough research before buying is critical anywhere:
- Get pre-approved for a mortgage and understand maximum budgets
- Consult local market reports to identify appreciating neighborhoods
- Work with an experienced real estate agent familiar with the area
- Inspect any property personally before making an offer
- Evaluate factors like school districts, crime rates, and rental demand
But with prudent research and planning, Texas has all the key ingredients – economic momentum, population growth, and affordable inventory – that typically precede long, steady home value appreciation cycles.
Is it Better to Buy a House in Texas or Florida?
Texas and Florida are both seeing droves of new residents relocate from high-cost, high-tax states. At first glance, their real estate markets look quite similar. But looking closer, Texas has some relative advantages that give it an edge over Florida currently:
- More diversified job market – Major industries like tech and energy drive the Texas economy, while Florida relies heavily on tourism. This impacts market stability long-term.
- Younger demographics – Florida's population skews older, while Texas attracts younger families seeking work. This equals better demand drivers.
- Steady property tax rates – Texas caps property tax hikes, while Florida has no limits resulting in fast-rising tax bills.
- Lower home insurance costs – Florida hurricane exposure spikes premiums compared to Texas.
- Greater upside potential – Home prices in many Texas metros remain comparatively low for now, signaling growth upside.
The bottom line is both states are compelling places to buy, but current fundamentals favor Texas. Better demographics, jobs, and long-term affordability give it an advantage.
Can a Non-U.S. Citizen Buy a House in Texas?
Yes, a foreign citizen who resides in the United States can legally buy real estate in Texas. There are two main options:
Cash Purchase – Foreign buyers can purchase a home with all cash through an entity like an LLC. No credit or income documentation is required. The LLC buys the property instead of the individual.
Mortgage – Non-permanent resident aliens can qualify for a mortgage with a valid visa, taxpayer ID, and social security number. Common programs used are the FHA, VA, and USDA loans. A 20% minimum down payment is typically required.
Purchasing property in the U.S. has tax implications as well. Consult with an accountant experienced in foreign real estate investors for guidance on issues like FIRPTA and marking repatriated assets to market.
Beyond that, buying process logistics are largely the same for a foreign buyer as domestic. The main idea is to ensure that funds to close originate from a documented source. Real estate represents an attractive vehicle for foreign investors to gain exposure to the U.S. housing market.
Can I Get Permanent Residency if I Buy Any Property in the USA?
Unfortunately, simply buying a home in the United States does not directly grant the foreign owner permanent residency or a green card.
To obtain EB-5 immigrant investor status and eventual U.S. permanent residency, a substantial minimum capital investment is required:
- Invest at least $900,000 in a high-unemployment or rural area
- Invest at least $1.8 million in any other area
In addition, the investment must create or preserve at least 10 permanent full-time jobs for qualified U.S. workers. Real estate speculation doesn't qualify - the capital needs to fund business enterprises promoting job growth.
The EB-5 Immigrant Investor Program provides a path to live permanently in the U.S. for foreign nationals willing to invest substantial money and help stimulate the American economy. If interested in pursuing this program, it’s advisable to work with an immigration attorney to navigate the process.
While Florida presents another option for those fleeing high-tax states, Texas arguably has better economic diversity and upside potential in its housing market currently. Foreign buyers are also welcome to purchase real estate in Texas, either with all cash or via a mortgage program.
Overall Texas provides a great blend of low home prices along with a robust job market, making it one of the top states for families and individuals looking to buy right now. Prudent buyers who research neighborhoods and work with experienced agents can feel confident about investing in Texas real estate.
