As the old saying goes: “Everything is bigger in Texas.” It’s safe to say that Texans take pride in taking things to the extreme—and being the second largest state with regard to both population and geographic area certainly is extreme from a real estate investment perspective. With an aggregate land area in the region of 270,000 square miles, the amount of diversity in the state is seemingly endless. There’s options for all kinds of tastes, from large metropolitan centers with bustling nightlife attractions to small towns featuring laid-back living. With beaches, rustic horizons, leading universities and a flourishing cultural scene, it’s easy to see why the state has drawn a significant amount of new residents over the past couple of years.
Distilling the Data
Texas boasts tremendously consistent economic expansion that is directly tied to its diverse industrial base that encompasses agriculture, mining and energy sectors. In light of developments in the oil industry, the state has been remarkably successful in diversifying its economic profile by incorporating technology, financial and health service corporations to collectively strengthen the regional economic resiliency.
Estimates put the total net worth of the Texas economy at approximately $1.6 trillion and it is projected to continue growing substantially well into the future. With more than 50 Fortune 500 companies calling the Lone Star State home, the area will continue to attract youthful, upwardly mobile age groups—all of which will be on the hunt for housing options.
The majority of major population shifts in American cities are attributable to economic considerations. With a stable economy and plethora of employment opportunities, Texas will continue to be one of the key relocation destinations in the country. The U.S. Census Bureau reported that Texas added 2.3 million new residents over the past five years, with the population anticipated to top 31 million by 2022.
Home prices in a number of the major U.S. metropolitan areas have made it virtually impossible for the majority of families to buy property in these competitive real estate markets. That’s certainly not the case in Texas, where housing affordability is closely correlated with median household incomes. Potential homebuyers also get another benefit as Texas is one of the eight states that foregoes collection of state income taxes—providing more buying power to those on the house hunt. What’s more, winters are relatively mild and fair weather is seen most days, with the state enjoying 232 clear days per year—nearly eight months of sunshine and warm temperatures.
Top Texas Cities for Real Estate Investing
The Texas housing market has been stellar year after year, bouncing back after the initial pandemic shut down due to a combination of the aforementioned economic factors. The average home price for the state is a robust $289,500 with the average valuation at $187,000. Home prices have been trending upward at a rate of 6.7% in 2020. Texas real estate prices are expected to grow by another 4.1% this year as well. Here’s a break-down of some of the hottest Texas cities for real estate investors looking to capitalize on the favorable market conditions.
Houston remains one of the top destinations for Texas newcomers due to the high availability of jobs across a number of diverse industries in addition to an abundance of affordable housing options. The population of the Houston metro area is estimated at 6.9 million with an average household income of $63,100. The unemployment rate is slightly higher of the statewide average of 3.6%, coming in at 4.4%. The economic framework of the region includes energy, aeronautics, health services, and transportation, which are bolstered by the nearby Port of Houston—one of the country’s most active industrial ports. The Houston area also serves as the corporate headquarters of 26 Fortune 500 and 49 Fortune 1000 companies. The real estate market is stable, with an average home price of approximately $240,000 and the average monthly rent is $1,310—which makes it one of the most affordable metropolitan areas in the nation. Real estate investors will discover significant opportunities to acquire properties with high potential return on investment in one of the most desirable locations in both the state and the country.
The Dallas metro area is a well-known corporate hub akin to Chicago and Atlanta in terms of economic strength. It continues to evolve in a positive manner by constantly redeveloping the downtown area to bring foot traffic back to boost local businesses. The median home price is around $450,000 with valuations rising by nearly 10% annually. A resilient economic base, consistent job growth and all the amenities to support the kind of lifestyle that appeals to millennials collectively solidify the Dallas area as one of the best real estate investment options. It’s one of the most competitive housing markets with very little fluctuations in inventory levels—meaning your rehab projects will likely not linger long on the market.
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