Texan Homebuying History

The real estate market in Texas has been hot for a long time, and there’s no indication that it will slow down any time soon. While real estate markets can fluctuate up and down, a house remains one of the best investments people can make.

Home prices tend to trend upward over time. While mortgage rates have gone up from historic lows during the COVID-19 pandemic, they remain significantly lower than their historical highs from several decades ago. With the help of an experienced and knowledgeable mortgage lender, a home can be a solid investment for countless people. Read on to learn more about how home mortgages have helped people achieve the dream of homeownership.

Why Are Homes In Texas A Reliable Investment?

Homes in Texas are a great investment whether you are buying a property to use as your residence or to rent to others. The Texas economy is doing quite well, and cities and towns across the state are thriving. Compared to many other parts of the country, homes are exceedingly affordable. On top of that, people keep moving to Texas.

Population Growth in Texas

The U.S. Census Bureau estimated the Texas population to be 29,527,941 as of July 1, 2021. This accounts for people moving to Texas, people moving away from the state, births, and deaths. Texas ranked first in the nation for population growth from 2020 to 2021, with an average of 850 new residents per day. Its growth rate during that year was seventh in the country.

The 2020 Census showed that the state gained almost 4 million residents since 2010. Two Texas metro areas led the nation in numerical population growth, according to the Texas Demographic Center (TDC):

• Dallas-Fort Worth-Arlington, which grew by over 1.2 million people from 2010 to 2019

• Houston-The Woodlands-Sugar Land, which added 1.15 million people during that time

Five of the 15 largest cities in the United States are located in Texas:

• Houston (#4)

• San Antonio (#7)

• Dallas (#9)

• Austin (#11)

• Fort Worth (#13)

The TDC estimated that these 5 cities had a combined population of almost 7.1 million in 2019.

Median Home Prices in Texas

The median price for a home in Texas has increased in recent years, but it remains lower than in other high-population or high-demand states. Additionally, the median price is higher in certain Texas cities than in other areas.

The Texas Real Estate Research Center (TRERC) at Texas A&M University has published data on median home prices from 1990 to the present. The median home price in January 1990 was $62,914. In February 2022, the TRERC reports that the median home price was $325,500.

Note that the median home price represents the median amount that buyers are willing to pay. Other data sources show median home value, which might represent something different than price. Median home value estimates for Texas tend to be a bit lower than median home prices, but this mainly shows how eager buyers are to acquire property in Texas.

Home prices are higher in certain Texas metro areas because of demand and other factors. The Texas State Comptroller reports that median home prices in four metro areas grew faster than the state’s median growth rate from 2011 to 2017:

• Sherman-Denison

• Dallas-Fort Worth-Arlington

• Austin-Round Rock

In April 2020, Business Insider published a report, prepared with the help of the real estate website Zillow, on median home prices around the country. The report ranks all 50 states and the District of Columbia. While this data pre-dates the COVID-19 pandemic, it offers an idea of how much median prices can vary around the country.

Texas ranked 28th on the Business Insider list, with a median home price of $207,301. The TRERC’s figure for that month was $249,000. The top five on the Business Insider list were:

1. Hawaii, $636,451

2. District of Columbia, $626,911

3. California, $554,886

4. Massachusetts, $422,856

5. Washington, $409,228

West Virginia had the lowest median home price at $108,236.

Median Mortgage Interest Rates in Texas

Mortgage interest rates dropped to historic lows in 2020 because of the COVID-19 pandemic. They began to climb again in 2021 and 2022, spurred by factors like high demand for homes and rate increases by the Federal Reserve. Despite these increases, mortgage rates remain low compared to historical rates.

Interest rates do not vary from one state to another as much as home prices do, so national numbers are useful when talking about Texas real estate. Freddie Mac has data showing the average commitment rate on 30-year fixed mortgages all the way back to April 1971, when the rate was 7.31%. It shows the rate for February 2022 as 3.76%.

Rates began to rise above 7% in 1973, according to Freddie Mac’s data. The rate first exceeded 10% in November 1978, and it reached its highest point, 17.6%, in February 1982. The last time the average 30-year commitment rate was greater than 10% was in February 1990. It has remained below 5% since 2010.

Why Do People From Out-of-State Invest in Texas Homes?

About half of Texas’ population growth from 2010 to 2020, or around 2 million people, consisted of people who moved here from somewhere else. They moved here for a variety of reasons, including job growth and the cost of living. Investors from other states who buy real estate in Texas do so for many of the same reasons:

• Population growth: As more people move to Texas, demand for housing continues to rise.

• Economic growth: New developments in many parts of the state, along with population growth, drive property values up.

• Few regulations: Texas doesn’t have as many restrictions on land use, development, and other activities as states like New York or California. Landlord-tenant laws in this state also tend to be more favorable to landlords, at least by comparison.

• Low taxes: Unlike some states, Texas has no state income tax.

Learn More About Texas Homebuying

Texas is a great place to own a home, and now is a good time to buy. You might be an experienced homebuyer, or this could be the first time you’ve ever thought about buying a home. You might be a lifelong Texan, or you might be new to our great state.

In any of those cases, an experienced mortgage professional at the Wood Group of Fairway can help you find the perfect home and the best mortgage for your unique situation. We are available to answer your questions and guide you through every step of the process. Contact us today to get started on your free pre-approval!