The Texas housing market is under pressure from people moving to the state from more expensive areas of the country, like California.
The influx of Californians moving to Texas has contributed to rising residential real estate prices. As a result, many potential buyers find it challenging to attain homeownership due to rising prices in the Lone Star State, reported The Wall Street Journal (WSJ).
Housing affordability is a significant issue in many parts of the country. Still, nowhere is that more evident than in California, where the median listing price of a single-family home is $750,080, per Rocket Homes Real Estate.
The median home price in Texas is over 50% lower than in California, at around $350,000, according to Rocket Homes Real Estate analysis of U.S. Census Bureau data from 2017-2021.
The high cost of housing in California led to 111,000 people migrating to Texas in 2021, according to StorageCafe’s analysis of census and IPUMS data. The number of Californians moving to Texas increased by 80% since 2012.
Home price appreciation in Texas peaked in early 2022 with a 20% year-over-year increase, according to the price index report by the Federal Housing Finance Agency. Despite being less expensive than homes in California, the robust demand for residential housing in Texas is causing the price gap to narrow.
However, as housing demand continues to increase across the state, Texas residents are starting to express concern about the impact on the state’s housing market.
Randy Templeton, a maintenance technician, moved from Illinois to Texas to benefit from the state’s low cost of living. However, when he began his search for a home in San Antonio to purchase and renovate for his family, he was taken aback by the high prices.
“The prices on those fixer-uppers shot up ridiculously,” he said, per WSJ. “And then even if you do find a home that’s for sale, you’re paying twice what you would have paid even just four years ago.”
Overall, Texas added over 9,085,000 new residents between 2000 and 2022, the most significant population increase in the country, per WSJ.
Texas home prices are unlikely to improve in the short term, per the Federal Reserve Bank of Dallas.
Due to a shortage of homes on the market and homeowners unwilling to give up their lower-interest mortgages, home prices may not decline as rapidly as they did in the Great Recession.
Officials in North Texas have been keeping an eye on housing levels to make sure builders are meeting regional needs. Dallas City Council members have been especially aware of the city’s housing shortage.
To ensure builders are building homes fast enough, council members and City officials said they would make permitting a top priority. The City has been turning out residential permits for single-family homes quicker than in previous years, however, overall building permit activity under City Manager T.C Broadnax has been down year over year, possibly due to the common delays and periodic backlogs seen at the City’s Development Services Department.