Relatively cheap housing, low taxes, lax COVID-19 restrictions and an influx of large tenants turned Texas housing markets into hot spots after the pandemic began in March 2020.
There weren’t many metro areas that rivaled the boom in Austin. The booming tech sector brought wealth from the West Coast and pushed home prices higher in a very short period of time.
While Houston, Dallas and San Antonio didn’t experience the same rate of appreciation, they benefited from the same momentum that pushed Austin to the moon.
But the momentum in Texas has stalled. Over the past six months, home prices have fallen in all four metropolitan areas as the price stability that characterized the post-pandemic years has largely loosened.
This variable is clearly visible in the data that appears Altos Research, and it’s very visible in Austin. The annual average price change in “baby San Jose” turned negative at the end of 2022. By May 2023, the annualized decline was 13.2%.
Prices in early 2024 turned positive again. But since then, they have settled into a pattern of annual declines in the 4.5% range.
One doesn’t have to dig through the weeds of real estate market data to find out why. Year-over-year inventory growth in Austin tripled and quadrupled for most of 2023. Inventory growth peaked at a staggering 345.8% in April 2023.
It played out in Houston, San Antonio and Dallas, though not to the same extent as in Austin.
Dallas experienced the highest annual inventory of the three largest metros in Texas. It topped April 2023 at 189.7%, slightly outpacing San Antonio’s 188% year-over-year increase in May 2023. Houston had the highest property growth rate at 135% over the same period.
In 2024, inventory gains have been stable. In June, growth in Dallas remained at about 85%. Austin’s increase has dropped from 28% in August to 14% today, while Houston (+30%) and San Antonio (+23%) continue to see moderate growth.
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