The Texas housing market is poised for a period of moderate slowdown and price corrections in several metropolitan areas over the next two years, according to a report by Norada Real Estate Investments. This shift marks a transition from the robust growth experienced during the pandemic, driven by significant in-migration and low mortgage rates, towards a more balanced market. While not indicative of a crash, the projected price declines reflect a cooling demand coupled with increased housing inventory.
The report forecasts price drops in 51 Texas metro areas by January 31, 2025, and 31 areas by October 31, 2025. Austin, the state capital, is projected to see a 1.8% decline by January 31 and a further dip to -0.4% by October 31. Other notable declines by January 31 include Big Spring (-3.7%), Pecos (-3.5%), Sweetwater (-2.6%), Zapata (-2.6%), Alice (-2.4%), Vernon (-2.2%), and Plainview (-2%). By October 31, deeper declines are anticipated in some areas, with Pecos projected to experience a -9.5% drop, Big Spring at -8.1%, Zapata at -7.2%, Alice at -7.5%, and Sweetwater at -6.9%. These figures highlight the anticipated market correction in areas that witnessed significant price appreciation during the pandemic.
The slowdown in the Texas housing market aligns with broader national trends, particularly in states like Florida, which also experienced a surge in housing demand and construction during the pandemic. As migration patterns normalize and mortgage rates remain elevated, housing demand has softened, leading to increased inventory and downward pressure on prices. This creates potential opportunities for buyers who can now leverage greater negotiating power and a wider selection of properties, particularly in suburban and rural areas where new construction has been concentrated.
Experts agree that Texas, alongside Florida, represents a key market to watch for price adjustments. Redfin economist Chen Zhao emphasizes the potential for buyers in these “weaker Sun Belt markets” to secure favorable deals and enjoy greater choice compared to markets with tighter inventory. Nick Gerli, CEO of Reventure App, specifically predicts price declines in Texas and Florida, particularly in areas with high levels of new construction. This suggests that the current market dynamics favor buyers, potentially leading to a shift in negotiating power.
Marco Santarelli of Norada Real Estate Investments notes that while a slowdown is anticipated, the Texas housing market is not expected to crash. He points to the state’s strong economic fundamentals, including population growth, job market stability, and continued housing demand, as factors that will prevent a dramatic downturn. The projected price declines are viewed as a market correction rather than a sign of systemic weakness. This perspective suggests a relatively stable outlook for the Texas housing market, even with the anticipated price adjustments.
While some areas will experience more significant price declines, the overall outlook for the Texas housing market remains stable. The projected slowdown and price corrections are viewed as a return to a more balanced market following a period of exceptional growth. Texas’ strong economic fundamentals, including robust job growth and continued in-migration, are expected to cushion the market against a severe downturn. This evolving market landscape presents both challenges and opportunities for buyers and sellers, emphasizing the importance of careful market analysis and strategic decision-making.
