Is Buying in Texas a Good or Bad Idea?

Texas homebuyers have been facing an uphill battle with frozen interest rates and stagnating inflation since their rise and hover beginning in 2022, and as a result of the building Texas is seeing increased supply and not enough demand to keep up.

High Interest Rates: It was the end of the first quarter in 2020 when interest rates began to plummet and with the low cost of loaned capital, buyers from all walks of life decided that it was time to “buy up” while prices and interest rates were so low. With this sort of menatlity, like the boom of GameStop, everyone dumped their inexpensive new money (interest rates were as low as 2.65% in Jan. ‘21 in some instances) into real estate and it didn’t take long for real estate prices to start to soar far beyond anything Texas has seen before. During this time it was common place for an offer over $100k over asking price to be rejected to another buyer who was willing to pay even more. This went on strong for nearly two years before interest rates began to rise, and then the late adopters and laggards joined the game in an attempt to have their piece of what seemed like a once in a lifetime opportunity. With all of the new money circulating in the country and home prices and the cost of every other good and service began to rise, which put more pressure on the powers that be to increase interest rates to slow inflation and allow the economy to level out. Since March of 2022 rates have been incrementally going up and, as of today are hovering around 6.75%, nearly triple what they were in the beginning of January 2021. As a result of all the buying that was going on in the country, Texas’ already low supply of homes dwindled even further and has since began to spring back.

Growing Supply: In order to quell the demands of the homebuyers during 2020-2022, builders began creating new developments all over Texas and could hardly keep up with the domestic and foreign demands in the industry. Besides the major uptick in interest in real estate from locals, Texas was also becoming one of the new tech hubs of the country with thousands of people relocating here with their jobs and some who were taking advantage of the low cost of living in Texas respective to their own state of origin. Since this major influx of homeowners has began to slow, builders have found themselves with a very negative outlook on getting the homes that they have built off their books. In 2020 Houston had a housing inventory of about 2 months, which is one third of what was considered a healthy inventory at the time, and as of June 2025 Houston’s inventory was at a 5.4 months and climbing. While it may be tempting to thing that the rising inventory is a good thing, as it offers buyers more options, it is also a bit troublesome, because data is showing that while more homes are being listed, they are taking longer to close, which could mean a general slowdown of all real estate sales and potentially a loss of value in homes that were bought at the height of the buying frenzy of the 2020-2022 boom.

Prediction: Multiple areas in the state are experiencing a dip in sales price and this is largely in part to the high supply, high interest rates, and low demand caused by an exodus of locals to more affordable neighboring states like Oklahoma and Arkansas. Over the past 2 and a half years Austin has seen a -20.9% price decrease, -6.2% in San Antonio, -3% in Dallas, and less than -1% in Houston. That being said, there are predictions that by June 2026 Austin will see a price decrease of 7% and Dallas is predicted to decrease by 10%-12%. While it looks like Houston’s home prices have remained pretty stable, it may be the next in line to see some price corrections.

Conclusion: It is clear that Texas has not been the low-cost state that it once was prior to 2020, and the good news for homebuyers in Houston is that home prices may correct themselves and allow for more affordable purchases within the next few years.

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