Texas Real Estate Market: Will it Crash in 2023?

The Texas real estate market has been through significant changes in recent times, causing concern among potential buyers and sellers. With a decrease in the median sale price and a drop in the number of homes sold, it's natural for people to wonder if a crash is on the horizon. Let's take a closer look at the current state of the Texas housing market and what experts predict for the future.

Current Market Conditions: As of April 2023, the median sale price in Texas has decreased by 3.5% year-on-year, and the number of homes sold has dropped by 16.2%. These changes are partly attributed to the recent increase in mortgage rates, which have almost doubled from 5.10% in May 2022 to 6.79% in May 2023.

Moreover, sellers have been slow to list their properties, with the number of listings dropping by a significant 76.99% from December 2023. Homes are also staying on the market for a longer duration, with the median days on the market increasing from 24 days last year to 43 days.

Reasons for Market Shift: The current Texas housing market conditions reflect a national trend of high demand and low supply. After years of steady home price gains, the market has reached an affordability limit for many potential homeowners, leading to a slowdown in sales.

Expert Predictions: Despite the recent downturn, experts do not foresee a crash in the Texas housing market. There are several reasons supporting this view:

Low Months of Supply: With only 2.6 months' supply available as of March 2023, the limited inventory is likely to support stable home prices.

Low Newly Constructed Housing Supply: The supply of newly constructed homes has not returned to pre-2007 levels, and increasing it quickly is a challenge due to regulatory processes.

New Buyers Entering the Market: There's still strong demand for homes, especially from demographics like millennials and Hispanics, contributing to a limited inventory.

Strict Lending Standards: Mortgage lenders now have stricter lending standards, reducing the risk of a housing bubble caused by risky lending practices.

Fewer Foreclosures: Homeowners today generally have more equity in their properties, reducing the likelihood of widespread foreclosures.

Short-Term Outlook
In the second quarter of 2023, experts predict a rise of 8.08% in the median sale price compared to the previous year. While the housing market may experience a slowdown, it is unlikely to crash. Stable mortgage rates and economic conditions, along with the factors mentioned above, will likely contribute to a balanced market.

Long-Term Predictions: 

Over the next five years, home price growth is expected to decrease gradually as mortgage rates rise and demand slows. However, Texas's strong job market and high inbound rate are likely to support a slight upward trend in the housing market during slower periods.

Should You Sell or Buy a Home Now?

Whether you should sell or buy a home in the current Texas market depends on various factors. If you are planning to sell, consider factors like mortgage rates and the potential for higher home prices in the short term. On the other hand, if you're looking to buy, be cautious about making a significant investment during a time of relatively high mortgage rates.

In a slow market, sellers can benefit by pricing their homes competitively and offering incentives to attract buyers. In a hot market, buyers should research the local market, improve their financial standing, and avoid short-term investments.

The Texas real estate market has undergone notable changes in recent times, leading to uncertainty among buyers and sellers. However, expert predictions suggest that while the market may slow down, a crash is unlikely. Factors such as limited supply, strong job market, and stable lending practices are expected to support the market's stability in the coming years. Whether you're buying or selling, it's crucial to consider the current conditions and make informed decisions based on your financial situation and long-term goals.

Hello! I'm Jay Thomas, a REALTOR in Houston, Texas. Chances are you and I share a similar passion, Real Estate! I also have a passion for building businesses, working out, inspiring others, technology, sports, and people. Connect with me on Facebook and Instagram!