How is the housing market in Texas?
If you are thinking about buying property in Texas, you’ll want to check out the Texas housing market situation before jumping in. With the widespread effects of COVID-19, real estate investors should be diligent in their research on how the Texas housing market has been impacted by the coronavirus pandemic.
Luckily, we do the work for you here at Mashvisor.
In this article, we will cover Texas real estate market trends and give an overall Texas housing market forecast 2021 for real estate investors interested in this market. We will also reveal the best places to invest in real estate in Texas for next year.
Before we dive into the Texas housing market 2021, it’s important to understand what the market currently looks like:
Texas Real Estate Market 2020
Here is Mashvisor’s real estate market data for Texas:
- Median Property Price: $359,739
- Price per Square Foot: $162
- For Sale Listings: 47,007
- Traditional Listings: 33,466
- Airbnb Listings: 30,737
- Price to Rent Ratio: 19
- Monthly Traditional Rental Income: $1,606
- Traditional Cash on Cash Return: 2.7%
- Average Airbnb Daily Rate: $164
- Monthly Airbnb Rental Income: $2,597
- Airbnb Cash on Cash Return: 3.3%
- Airbnb Occupancy Rate: 54%
For the past several years, the Texas housing market has been an excellent choice for investors. Even during the pandemic, Texas investment properties have been generating cash flow and good returns, according to the above data. But will this booming market continue to be profitable?
Texas Housing Market Predictions 2021
1. Texas Property Values Will Increase
The pandemic hasn’t really slowed the increase in Texas property values by much. According to Zillow, values have appreciated by 4.1% over the last year. Though this is lower than the US average of 5.8%, property values are still increasing in the Texas housing market, which is a positive sign. And properties in the Texas housing market 2021 are forecast to see a real estate appreciation of 6.5%.
2. The Renter Population Will Likely Increase
According to our data at Mashvisor, the price to rent ratio in Texas is 19, indicating that as far as affordability is concerned, more people are inclined to rent than buy. Currently, Texas home prices are slightly above average, with the median listing price at $359,739, as opposed to the US average of $345,500. While it is not an overwhelming difference, it could be enough to discourage renters from making the switch to homeownership. With property values and prices set to increase next year, the Texas housing market should see an increase in the renter population. Overall, this is a positive indication for investors, who should see high occupancy rates for rental units.
The Best Places to Invest in Real Estate in Texas in 2021
Take advantage of this 2021 trend and invest in Texas real estate in cities where long term rental properties will provide the highest cash on cash return, according to Mashvisor’s data.
#1. Mesquite
- Median Property Price: $215,251
- Price per Square Foot: $129
- Price to Rent Ratio: 12
- Monthly Traditional Rental Income: $1,480
- Traditional Cash on Cash Return: 5.3%
#2. Garland
- Median Property Price: $260,529
- Price per Square Foot: $136
- Price to Rent Ratio: 14
- Monthly Traditional Rental Income: $1,516
- Traditional Cash on Cash Return: 4.4%
#3. DeSoto
- Median Property Price: $289,619
- Price per Square Foot: $116
- Price to Rent Ratio: 14
- Monthly Traditional Rental Income: $1,760
- Traditional Cash on Cash Return: 3.8%
#4. Eagle Pass
- Median Property Price: $195,175
- Price per Square Foot: $112
- Price to Rent Ratio: 14
- Monthly Traditional Rental Income: $1,139
- Traditional Cash on Cash Return: 3.8%
#5. Arlington
- Median Property Price: $292,463
- Price per Square Foot: $140
- Price to Rent Ratio: 15
- Monthly Traditional Rental Income: $1,599
- Traditional Cash on Cash Return: 3.5%
#6. San Angelo
- Median Property Price: $336,155
- Price per Square Foot: $147
- Price to Rent Ratio: 19
- Monthly Traditional Rental Income: $1,459
- Traditional Cash on Cash Return: 3.4%
#7. Carrollton
- Median Property Price: $336,726
- Price per Square Foot: $163
- Price to Rent Ratio: 15
- Monthly Traditional Rental Income: $1,898
- Traditional Cash on Cash Return: 3.2%
#8. Del Rio
- Median Property Price: $230,084
- Price per Square Foot: $104
- Price to Rent Ratio: 15
- Monthly Traditional Rental Income: $1,257
- Traditional Cash on Cash Return: 3.2%
#9. Richardson
- Median Property Price: $389,728
- Price per Square Foot: $175
- Price to Rent Ratio: 16
- Monthly Traditional Rental Income: $1,983
- Traditional Cash on Cash Return: 3.1%
#10. Beaumont
- Median Property Price: $270,058
- Price per Square Foot: $111
- Price to Rent Ratio: 18
- Monthly Traditional Rental Income: $1,266
- Traditional Cash on Cash Return: 3.0%
See also: Texas Real Estate Market: Where to Buy Long Term Rentals
3. Airbnb Texas Rentals Will Be Profitable for Real Estate Investors
An Airbnb Texas investment property will be profitable in 2021.
When compared to traditional investing, Airbnb is performing well in the Texas housing market. According to Mashvisor’s data, the Airbnb cash on cash returns for many cities in Texas are blowing those for long term rentals out of the water, even in the midst of COVID-19. Although vacation homes in the Texas housing market have not fully recovered from the effects of the pandemic according to Mashvisor’s analysis, hosts are still earning a good rental income and enjoying a high Airbnb occupancy rate.
Though there have been no new notable changes in Airbnb laws in Texas, investors should carefully look at local Airbnb regulations. While the state as a whole does not impose any restrictions, it is known for having vast differences in Airbnb regulations at the city level.
Related: Is Airbnb a Good Investment Considering All the Regulations?
The Best Places to Invest in Airbnb Texas in 2021
#1. Mesquite
- Median Property Price: $215,251
- Price per Square Foot: $129
- Average Airbnb Daily Rate: $139
- Monthly Airbnb Rental Income: $2,498
- Airbnb Cash on Cash Return: 7.6%
- Airbnb Occupancy Rate: 59%
#2. DeSoto
- Median Property Price: $289,619
- Price per Square Foot: $116
- Average Airbnb Daily Rate: $290
- Monthly Airbnb Rental Income: $3,238
- Airbnb Cash on Cash Return: 6.8%
- Airbnb Occupancy Rate: 52%
#3. San Angelo
- Median Property Price: $336,155
- Price per Square Foot: $147
- Average Airbnb Daily Rate: $134
- Monthly Airbnb Rental Income: $4,518
- Airbnb Cash on Cash Return: 6.7%
- Airbnb Occupancy Rate: 70%
#4. Abilene
- Median Property Price: $289,093
- Price per Square Foot: $139
- Average Airbnb Daily Rate: $178
- Monthly Airbnb Rental Income: $2,814
- Airbnb Cash on Cash Return: 6.5%
- Airbnb Occupancy Rate: 58%
#5. Lewisville
- Median Property Price: $348,045
- Price per Square Foot: $168
- Average Airbnb Daily Rate: $148
- Monthly Airbnb Rental Income: $2,911
- Airbnb Cash on Cash Return: 5.3%
- Airbnb Occupancy Rate: 73%
#6. Carrollton
- Median Property Price: $336,726
- Price per Square Foot: $163
- Average Airbnb Daily Rate: $171
- Monthly Airbnb Rental Income: $3,053
- Airbnb Cash on Cash Return: 5.2%
- Airbnb Occupancy Rate: 62%
#7. Denton
- Median Property Price: $386,803
- Price per Square Foot: $157
- Average Airbnb Daily Rate: $98
- Monthly Airbnb Rental Income: $3,012
- Airbnb Cash on Cash Return: 4.8%
- Airbnb Occupancy Rate: 63%
#8. Richardson
- Median Property Price: $389,728
- Price per Square Foot: $175
- Average Airbnb Daily Rate: $173
- Monthly Airbnb Rental Income: $2,801
- Airbnb Cash on Cash Return: 4.3%
- Airbnb Occupancy Rate: 62%
#9. Arlington
- Median Property Price: $292,463
- Price per Square Foot: $140
- Average Airbnb Daily Rate: $156
- Monthly Airbnb Rental Income: $2,230
- Airbnb Cash on Cash Return: 4.2%
- Airbnb Occupancy Rate: 55%
#10. Garland
- Median Property Price: $260,529
- Price per Square Foot: $136
- Average Airbnb Daily Rate: $150
- Monthly Airbnb Rental Income: $2,131
- Airbnb Cash on Cash Return: 4.2%
- Airbnb Occupancy Rate: 62%
Related: 10 Most Profitable Airbnb Locations for Cash on Cash Return
4. Texas Will Not Experience a Real Estate Market Crash in 2021
For years, Texas has experienced extremely high population growth. From 2000 to 2018, Texas acquired 7.4 million people. Due to economic growth and opportunity, 60% of the state’s population growth has been attributed to migration. The pandemic has slowed migration, though its effects on natural population growth are yet to be seen.
Oil and tech are some of the largest industries in Texas’ economy, which have been fueling the state’s economic success leading into 2020. Due to a recent slip in oil prices, this surge in economic growth has begun to taper off. However, Texas is still experiencing modest growth at what is likely a sustainable rate.
Texas ranked number 7 for states with the fastest rates of job growth in 2020, with a growth rate of 1.6%. Compared with 2019, which had a growth rate of 2.3%, job growth has slowed down, as would be expected during the coronavirus pandemic. However, it has certainly not come to a complete halt, and the economy should continue to fare well in 2021.
In addition, looking at the job market in Texas, we see that the unemployment rate decreased from 13.5% in April to 8.3% in September according to the Bureau of Labor Statistics. This is a sure sign that Texas has taken successful measures to sidestep an economic downturn.
As seen in Realtor’s Market Recovery Index, all the major metros in the Texas housing market have passed the benchmark for recovery from the COVID-19 pandemic as well.
Due to these factors, it’s safe to say that Texas will likely not experience a real estate market crash in 2021.
5. Due to Low Inventory, Real Estate Investors Will Have to Act Fast
A common trend across the US, the housing inventory in Texas is at a 3.5 year low.
Does this mean that Texas will be a seller’s market in 2021?
Not necessarily. It could still be a buyer’s market, due to fair home prices and only moderate demand. However, investors looking to get into the Texas housing market will have to act quickly, as the inventory is not currently plentiful.
Your best chance for successfully investing in the Texas housing market is using real estate investment tools to get an edge over the competition. With Mashvisor, investors quickly and accurately conduct real estate investment analysis, so they can buy the best properties faster.
To learn more about how our real estate investment software will help you make faster and smarter real estate investment decisions, click here.
Ultimately, the Texas housing market will be an excellent choice for investors looking for high cash on cash returns moving into 2021.