By Mark Sprague, Independence Title’s Director of Information Capital
The media has lately played up the idea that Texas metros have lost value, with some areas reported to be leading the nation in losses.
But no, overall Texas real estate has not lost value over the last five years. In fact, the state has seen significant appreciation since 2020. While some specific areas experienced minor price decreases in 2024 and 2025 as the market cooled from the pandemic frenzy, the overall values remain well above pre-pandemic levels.
Real estate is a great long-term investment. It should not be viewed as a short-term, month, or year investment. This analyst looks at investments for a minimum of 5 years – otherwise, it is a speculative investment. In finance, speculation is the purchase of an asset with the expectation that it will become more valuable in a short period. That does not define real estate, which is a longer-term hold based on how real estate markets perform.
Like all investments, there are peaks and valleys in real estate markets. The good news about Texas real estate is that, in the long term, we don’t have enough housing to accommodate our past and projected population growth. From 2020 to 2024, the US population grew by 8.6 million, with nearly 25% of that growth occurring in Texas. By 2050, the estimated growth will be another 8.6 million, just in Texas.
If we look at statewide price growth, home values across Texas have increased substantially over the past five years:
- In March 2020, the median home price in Texas was approximately $253,600.
- By early 2025, the median sales price had risen to around $331,000.
- Some data from late 2024 shows that typical home values in many counties were 40-60% higher than in December 2019.
Texas Metro Price Surges (Last 5 Years, circa 2020-2025)
- Austin (Austin-Round Rock-Georgetown): Prices surged dramatically, with reports showing nearly 90% growth over a 5-year period ending around March 2022, and around 43% between 2019 and 2023.
- Dallas County: Saw over a 40% price increase over the 5 years leading up to late 2024.
- Brownsville-Harlingen: Experienced one of the biggest gains, up 73% between 2019 and 2023.
- Statewide/General Trends: Texas median home prices rose about 40% between 2019 and 2023, with sharp increases in 2021-2022 followed by some price softening (around 1.5% statewide drop) in 2023.
Obviously, this indicates a strong overall increase in value during the period.
What we have seen over the last 3 years, through 2025, is the market cooling. While the long-term trend is upward, the market has shifted toward more balanced conditions since the rapid appreciation years of 2020 through 2022. Here are a few details:
- We saw appreciation slow in 2024 after rates were raised in 2023; home values across Texas dipped slightly by an average of 0.08%. Raising rates was necessary due to inflation rates in the 9% range.
- The first quarter of 2025 saw only a minimal year-over-year price increase of 0.3% statewide, while inventory rose sharply.
- Homes are taking longer to sell, and the market is generally calming, moving from a strong seller’s market toward a more balanced one.
- Compare this to the late 80s, when Texas and the oil patch lost close to 90% of their values. We witnessed bank failures (1980–1994), where 1,617 FDIC-insured commercial/savings banks failed or were declared insolvent. The S&L industry went away, with over 1,200 failures from 1989 through the early 1990s. (Statewide, it took 15 to 19 years for real estate to get back where it was.) As in most downturns historically, it was caused by ‘easy credit,’ zero-down, etc., and non-traditional asset-to-loan programs. History shows us that market busts historically are caused by easy credit.
- Reality check: There is a difference between taking a loss and being underwater (owing more on your mortgage to your lender than the house is worth). There are fewer homes underwater in Texas today than in 2019, before the pandemic surge.
- Texas metros historically have appreciated by 3-3.5% annually over the last 50 years, though recent decades (especially post-2011/2019) saw significantly higher, sometimes double-digit, growth driven by low inventory and in migration, with some areas like Austin seeing cumulative jumps of over 350% (1998-2022). General appreciation across Texas is moderate, but rapid, localized booms have occurred in major cities. Anything over the average is a bonus. From this analyst’s eyes, double-digit annual appreciation is concerning. Historically, if markets have annual double-digit appreciation, there will be a correction. Perhaps it won’t be as great as the appreciation, but there will be a correction.
Texas during the Great Recession of 2007-2009
The main reason that Texas did so well in the recession of the early 2000s is that it fully escaped the “housing bubble” trap that did so much damage in the “Sand States” of California, Florida, Arizona, Nevada, and other states. One key factor was Texas’s liberal, market-oriented land use policies and regulations. This helped keep land prices low when profligate lending increased demand. More importantly, home builders kept building, and the houses were affordable. By contrast, places with highly restrictive land use policies (California, Florida, and other places) saw prices rise to unprecedented heights, making it impossible for builders to supply sufficient new housing at affordable prices (overall, median house prices have been 3.0 times or less median household incomes where there are liberal land use policies).
Worldwide, the Great Recession was the deepest economic decline since the Great Depression. This downturn hit average households very hard nationally. According to Federal Reserve Board “flow of funds” data, gross housing values declined for nine consecutive quarters through the first quarter of 2009. The previous modern record is a single quarter. From the peak to the trough, household net worth fell by a quarter, more than 1.5 times the previous record decline.
Texas largely escaped the economic distress across the nation, especially in its principal competitors, California and Florida, from 2007 to 2009. By virtually all measures, Texas has performed better in gross domestic product growth, employment, unemployment, personal income, state tax collections, and consumer spending. This is in part due to much less mortgage distress in Texas. At the bottom of the economic trough, the Brookings Institution’s Metropolitan Monitor ranked the performance of the 6 largest Texas metropolitan areas among the top 10 in the nation. The latest Metropolitan Monitor still ranks each of our six metropolitan areas in the highest performance category.
Throughout the past decade, Texas has experienced much smaller home price increases than in California, Florida, and many other states. During the bubble, California house prices increased at a rate 16 times that of Texas, while Florida house prices increased 7 times as much as Texas’s. As a result, after the bubble burst, subsequent house price declines were far less severe – or even non-existent – in Texas. Texas experienced its own housing bubble in the late 1980s, but even then, overall prices did not exceed the Median Multiple of 3.0 (the median house price divided by the median household income).
Unlike Texas, all markets with steep house price increases had more restrictive land-use regulations. This association between more restrictive use regulations and higher house prices has been noted by a wide range of economists, from liberal Nobel Laureate Paul Krugman to conservative Hoover Institution fellow Thomas Sowell. It is even conceded in ‘The Costs of Sprawl —2000’, the leading academic advocacy piece on more restrictive land-use controls, that 7 of its 10 recommended strategies could lead to higher house or land prices.
Comparing Texas and California during this period, Texas housing remained affordable, unlike California. California’s housing affordability – in relation to income – largely tracked that of Texas (and the nation) until the early 1970s. After CA adopted more restrictive land-use regulations, prices started to escalate. Other factors have had little impact in The Golden State. Construction cost increases have stayed near the national average in California. Other factors, like underlying demand as measured by domestic migration, have been lower in California than in Texas.
So where are we now?
Texas real estate has maintained historical appreciation except for the double-digit surges in the last 5 years. The surge in Texas values was caused by the pandemic-induced economic depression, a stalled economy, and supercharged lower rates. Growing up, I heard my grandfather say, “I’ll never see 3% interest rates in my lifetime.” Unfortunately, he passed before the COVID-19 economic meltdown, when we saw those unimaginably low rates. Hopefully, you get the point: rates below the 50-year average of 7.7% are a sign of a less robust economy.
Many homeowners view their homes as a savings account. But unlike a savings account, its appreciation is not annualized. That is a sign of a healthy local and regional economy. Watching values go up seems to be most homeowners’ dream. But watching it monthly or annually is a speculator’s mentality. It’s your shelter, your home, your family’s sanctuary.
If you bought since 2022, appreciation and values have been slower. What does that mean? Trying to sell with commissions, closing costs, and a profit is a lot harder. But as I said earlier, a 5-year or longer hold period is historically recommended.
Also, realize you lose value on the sale. (Purchasing it at the right price is also a helpful factor.) What is meant by that? Don’t overpay. Don’t overvalue. Try to stay close to the median value in the neighborhood. Not all improvements bring the expected value … and so much more. Listen to the experts, the Realtors who know the neighborhood, the schools, the market, etc.
Has Texas real estate lost value? No. But if you bought in the last 3 years, don’t expect returns like those of those who bought 5+ years ago.
As somebody who has tracked and forecast this regional market for 50+ years, nothing stays the same. The good news is that I’d rather invest in Texas than anywhere else.
