Last updated on February 4th, 2024 at 03:28 pm

Spoiler alert

Chances are there won't be a housing crisis (homes prices and home values just haven't fallen much at all) in Texas anytime soon. 

  1. Inventory is very low and sellers aren't forced to sell their homes.
  2. The unemployment rate in the Texas is low
  3. Housing starts are low
  4. Foreclosures in Texas are well below averages

a housing crash defined

The Texas housing market has been consistently robust over the years, but like all real estate markets, it is subject to fluctuations and changes.

The current state of the market and the overall economy can have a significant impact on the chances of a housing market crash in Texas.

In terms of housing inventory, major cities in Texas like Dallas, Houston, San Antonio, and Austin are facing low levels of supply, with high demand for homes. 

This can lead to increased prices, which could make homeownership less accessible to many residents.

During a housing crash, house values will plummet as sellers flood with market with new homes for sale.

It just seems we aren’t anywhere near a housing bubble today!

What causes a housing crisis

housing market crash is usually occurs for several reasons.

These can include an increase in interest rates, a rise in employment, lower incomes, and simply too many homes on the market.

As of 2023, the economy and job market are stable, and interest rates are at now falling, so there is no immediate indication of a housing market crash in Texas.

Some say a recession is on the horizon, but experts say it is highly unlikely this will cause a housing crash!

However, it’s important to note that real estate markets are unpredictable, and unexpected events or changes in the economy could impact the housing market

It’s also worth keeping an eye on the overall state of the housing market, as well as the inventory levels in the major cities, to gauge if any signs of a crash are emerging.

History of property values declining in Texas

In the past, Texas has experienced a housing market crash in the 1980s, as well as during (the Great Recession) the 2008 financial crisis. However, the state’s housing market has proven to be resilient and has recovered quickly from these downturns.

The Texas housing crash was most severe in the major metropolitan areas such as Dallas, Houston, and Austin.

Austin, TX Real Estate Data

If any city in Texas will experience some sort of crash it will be Austin. Home values here had some of the highest increases, percentage-wise in the USA the last few years.  Lets look at some of the data from (Austin Board of Realtors) Abor.

  • Median home price fell 4% to $525,250 compared to 2021
  • Average days on the market increased from 47 to 73 days. 
  • New listings down 24% or 488
  • Months of inventory up 1.6 months to 2.1 months.
  • The number of pending sales has dropped (31%) to 539 year over year.
4% isn’t indicative of a housing crash. In Spain in 2008, home prices crashed between 30-40%. 
houston market data comparing January 2022 to January 2023
Image: Courtesy of HAR

Existing home sales in Houston, TX

Existing homes sales of single-family homes can tell you a lot about the current health of the housing market.

According to Har, existing home sales in January declined 36.8 percent from a year ago. In Houston, inventory has grown to 2.7 months. That means it would take 2.7 months to exhaust all of the housing in Houston, TX.

Nationally we are at 2.9 months. The real estate market is not in a crisis by any means. 

fastest growing cities in Texas by home price
Image Source: Refin

Current market data in San Antonio

Days on market is a big indicator of the health of a housing market. 

This number represents how long it would take to sell all the houses. 

Many professionals believe that 6 months represents an neutral market where neither the seller or buyer has an advantage. 

According to Sabor, the current DOM in San Antonio is 66 days. And there are 4.4 months of inventory.  

This means it would take 4.4 days to sell all the housing inventory.  This isn’t indicative of an environment that is going to experience a housing crash.

Additionally the close to original list price is 93.5%.

This means that sellers are only lowering their price on average 6.5% from their original list price.

A crash usually requires forced selling and we don’t see anything like that in San Antonio or any major city in Texas.

San Antonio housing market data

Housing Price increasing during the pandemic

The Texas housing market experienced a significant boom during the COVID-19 pandemic, as many people across the country chose to move away from densely populated cities in search of more space and a higher quality of life. 

This led to increased demand for homes in Texas, particularly in the suburbs, which resulted in rising prices and bidding wars for properties was extremely common, exacerbated by the low interest rates.

In addition to the low mortgage rates, an influx of out-of-state house buyers further contributed to the boom. 

Despite these challenges, the overall trend in the Texas housing market remained positive, with many housing experts predicting continued growth in the coming years.

chart of mortgage rates

How mortgage rates affect sales

Inflation was just one of the causes of the increase in housing prices across the nation. 

In response, the Fed started raising interest rates which had an affect upon mortgage rates, thereby making housing less affordable.

Anytime mortgage rates increase, real estate prices stall or decline,  and the number of sales will decline. 

Current property inventory in Texas by city

Typically if a housing crash is on the precipice, we might see a rise in inventory on the market. This indicates a rise in existing home sales. We clearly don’t see this in the marketplace. 

In fact, inventories in the major cities in Texas are well below pre-pandemic levels.  

Market crashes will usually have high inventories.  That is not occurring today!

According to Redfin, there are slightly over 105,000 homes for sale (Dec 22). It is still a sellers market!

Many realtors say that 6 months of housing inventory is healthy. This means it takes 6 months to sell all homes on the market.

Inventory across Texas (and the nation) continues to decline

If there were to be a market crash coming soon, the housing supply would need to be increasing!

San Antonio housing inventory chart
Image Source: Fred
Image Source: Fred
Image Source: Fred
houston housing inventory
Image Source: Fred
current housing inventory in Texas
Image Source: Redfin

What are the current foreclosure rates in Texas

Foreclosure rates can be a warning sign of a potential housing crash, as they indicate a rise in homeowners who are struggling to keep up with their mortgage payments and are at risk of losing their homes.

An increase in foreclosures can lead to an oversupply of homes on the market, which can drive down prices and lead to a drop in property values.

In the market crash that started as a result of the 2008 Great Reccession, foreclosure rates did rise [close to 3 million at its peak] dramatically.

Although foreclosure rates are rising compared to 2020 and 2021 [remember that lenders weren’t able to foreclose due to laws] they are increasing in 2022. 

We can safely say that the average is still extremely low. Can that change?  Sure.

USA foreclosure rates
Image: Courtesy of Attom

Final Take-aways

IWhile the Texas housing market has shown resilience in the face of past economic downturns, changes in the market can occur. 

The current low inventory levels and stable economy are positive indicators for the housing market in 2024 and heading into 2025, but it’s always wise to prepare for unexpected events.

According to the Federal Reserve, interest rates are going to go lower in 2024.. This means affordability is going to be better for homebuyers!

Staying on top of the news can keep you informed of housing market trends in the market.