Where to Buy Investment Properties in Texas in 2023 (2024)

In one of our latest articles, Longleaf Lending co-founder Matt Weidert talked about 5 Strategies for an Uncertain Real Estate market. While it might be time to exercise caution and consider proactive strategies in the coming year, let’s take a look at some of the latest numbers and trends in Texas Real Estate.

According to Texas Realtors third-quarter report released November 2022, the median Texas home price is up at $345,000, up 11.3% compared to the same period last year. Rental prices are soaring as well.

MarketWatch recently released that in 2023, Texas is projected to invest $2,859 billion into real estate, representing about 8% of all investments across the United States. The report also predicted that Texas can expect to see an increase in property investment return percentage. In 2023, the state will see an average of 9% return on investment—a big jump from the 2020s 6% average and 2021’s 5% average.

The question is — where is the best place to buy investment properties in Texas?

In the annual Emerging Trends in Real Estate report sponsored by the Urban Land Institute and PricewaterhouseCoopers, Dallas-Fort Worth ranked 2nd place in the nation’s hottest real estate markets in 2023 for investment and development. Austin came in at 4th, San Antonio at 12th, and Houston which ranks 14th in the top markets forecast for 2023.

The report “provides an outlook on real estate investment and development trends, real estate finance and capital markets, property sectors, metropolitan areas, and other real estate issues throughout the United States and Canada.”

It is based on surveys and interviews with real estate industry professionals.

To get a clearer view, let’s crunch some numbers.

Whether you’re hunting for turnkey properties, fix-and-flips, or properties with BRRRR potential, this market update will help you decide where to look.

Houston

Check out our in-depth post to learn about Houston investment property for 2023.

The Houston housing market is on a gradual rise, with home prices up 6.8% compared to last year. Homes in Houston receive 3 offers on average and sell in around 25 days. The average sale price of a home in Houston was $312K last month and The average sale price per square foot in Houston is $165, up 11.5% since last year according to Redfin.

But the real estate market is still ripe with opportunities. According to Houston.org, inventory for single-family homes has increased to a 2.8-month supply, meaning it would take 2.8 months to exhaust the supply of houses at the current demand, up from 2.7 months in September and a low of 1.3 months in March. October’s reading was the highest level since July of ’20 when inventory hit 2.9 months.

Combine limited housing with population growth, and you have a recipe for increased rental prices. In May, single-family home rentals rose 24.8% year over year, according to the Houston Association of REALTORS® (HAR) May 2022 Rental Market Update. It could be a good time to pick up a single- or multi-family rental property in Houston.

Dallas–Fort Worth–Arlington

Check out our in-depth post about investing in Dallas real estate in 2023.

Check out our in-depth post about investing in Fort Worth real estate in 2023.

Housing supply in the Dallas–Fort Worth area is even tighter than in Houston, with only a 1.9-month supply of inventory.

This housing shortage coupled with Texas’ booming economic growth landed Dallas on Forbes list of hottest housing markets in Texas.

Dallas-Fort Worth home prices rose 20.2% from August 2021 to 2022, down from about 25% annual growth in July, according to the S&P CoreLogic Case-Shiller Index.

According to the Texas Real Estate Research Center at Texas A&M University and North Texas Real Estate Information Systems, the median price of a single-family home in Dallas-Fort Worth was $404,000 in August, up 13% year over year.

That said, the median monthly rent for a 3-bedroom home is $2,295 per month, according to Roofstock, and rental prices have increased 4% year-over-year. So if you stumble on a promising rental property in Dallas, snatch it up.

San Antonio

Check out our in-depth post about investing in San Antonio real estate in 2023.

Unlike the housing market in other Texas cities, prices in San Antonio have not quite peaked. According to Redfin, average sale price of a home in San Antonio was $280K last month, up 4.2% since last year.

San Antonio’s rapidly-growing population is fueling the housing shortage, making it one of the best places to invest in Texas. San Antonio is known as one of the most stable markets for rental activity in the U.S., according to the San Antonio Business Journal. The rental market is strong, and Wallethub even ranked it as one of the best cities in the U.S. for renters.

Austin

Check out our in-depth post about investing in Austin real estate in 2023.

Out of Texas’ big four cities, Austin has seen the most explosive growth in home prices, in recent years. According to Realtor, the average sale price of a home in Austin was 625K in October 2022, up 11.6% since last year while the average sale price per square foot in Austin is $353.

WalletHub ranks Austin as one of the fastest-growing cities in the United States. And as big tech companies like Apple, Samsung, and Tesla move into the city, home values climb.

It’s also a promising time to own rental property in Austin. The influx of highly paid tech employees competing for housing will push rental prices up. If you stumble on a good deal, the potential rental income could make Austin the best place to buy a rental property in Texas.

Ready to invest in Texas real estate?

The Lone Star State is overflowing with real estate investment opportunities. With a low cost of living, a strong job market, and no income tax, people are flocking in and driving up property values.

But competition is fierce, and if you find an opportunity, you have to jump on it.

At Longleaf, we offer various types of real estate loans and can help fund your project in as little as two days. We are a Texas-based, direct lender and know these markets well.

For more information, check out our loan products or give us a call at 979-200-2823.