A recent article from the New York Times recently asked the question, “Will Real Estate Ever Be Normal Again?” Perhaps unsurprisingly, much of the story focused on Austin, one of the hottest real estate markets in Texas.
But it’s not just the capital of Texas that’s experiencing a housing boom. Through October 2021, the typical value of a mid-priced home in Texas has increased by more than 20%, according to Zillow. People from coast to coast are coming to the Lone Star State to live, work, and invest in the Texas real estate market.
Keep reading to learn why Texas might be the ideal place to invest in a rental property in 2022.
>>Explore Roofstock's Texas Investment Properties here.
Why invest in Texas rental property?
Spanning across more than 268,000 square miles and with a population of over 29 million residents, Texas is the 2nd largest state in the U.S. (after Alaska) and the 2nd most populous (after California). People and businesses across the country are moving to Texas for a better quality of life and lower cost of living.
Over the past few years, companies such as the CBRE Group, McKesson Corp., and Charles Schwab are just a few of the businesses that have relocated to Texas. High tech companies like IBM, Dell, Amazon, Apple, Tesla, and Google all have a major presence in Texas, and Samsung recently announced plans to build a $17 billion semiconductor factory in the tiny town of Taylor near Austin.
As more employers and workers move to the state, housing prices in Texas are on the rise. The most recent report from the Texas Real Estate Research Center at Texas A&M University (September 2021) notes that the homeownership rate decreased amid reduced housing affordability.
As the report notes, there’s more demand for homes in Texas than there is supply, pushing annual median home price growth into the double-digit territory. When people can’t afford to own, they rent instead. That may be why 38% of the housing units in the state are occupied by renters, with single-family homes making up the majority of the housing inventory in the state.
Real estate investors here already know there isn’t a statewide law that places limits on how much a landlord can increase the rent when the lease is renewed. In fact, according to Texas landlord-tenant law, state law only allows cities to establish local rent control ordinances in certain cases.
The following statistics come from Data USA, Census Reporter, the Bureau of Labor Statistics (BLS), Texas Real Estate Research Center, the Federal Reserve, U.S. Census Bureau, and Zillow based on the most recent information available as of December 2021:
Texas state statistics
- GDP: $1.78 trillion
- Major industries are agriculture and mining, energy, technology, finance, construction, and commerce
- State income tax: 0%
- Population: 29,145,505
- 10-year growth: 15.9%
- Employed population: 13,100,000
- 1-year growth: 2.97%
- Unemployment rate: 5.4%
- Number of households: 9,985,126
- Median household income: $64,034
- 1-year growth: 5.62%
- High school grad or higher: 84.7%
- Bachelor’s degree or higher: 30.8%
- Median age: 35.1
- Age group 20-49 years: 41%
Texas housing market
- Housing units: 11,283,892
- Renter occupied: 38%
- Zillow typical middle price tier home value: $267,523
- 1-year change: 20.5%
- 5-year change: 57%
- Property tax rate: 1.80% average
Texas real estate markets
There are over 1,700 cities in Texas with populations ranging from 2.3 million to less than 100 residents. According to the Emerging Trends in Real Estate 2022 report from PwC and the Urban Land Institute, Texas is home to 4 of the top 12 markets with the best home building prospects.
Here are 9 of the largest, mid-sized, and smaller markets in Texas to consider for investing in real estate. The statistics used below are from the most recent information on Data USA, Census Reporter, BLS, Zillow, RENTCafé, and Zumper as of December 2021.
Large metro real estate markets in Texas
Houston
Located in southeast Texas near the Gulf of Mexico, Houston is the 5th most populous metropolitan area in the country. The economy is driven by the energy and technology industries, and the city is home to companies such as Phillips 66, Haliburton, Cybersoft, and HostGator. Summers are hot and humid, winters are mild, and Houston is home to every major sports franchise except the NHL.
- Population: 2,304,580
- 10-year growth: 10.0%
- Employed population: 1,140,000
- 1-year growth: -0.87%
- Unemployment: 5.4%
- Zillow home value: $238,591
- 1-year change: 17.9%
- Housing units: 987,158
- Renter occupied: 39%
- Median rent 3-bedroom: $1,846
- 1-year change: 10%
- Median household income
- 1-year growth: $52,450
- Median age: 33.4
San Antonio
San Antonio is located in south central Texas, south of Austin and west of Houston, and is the 2nd most populous city in Texas and the Southern U.S. The economy is diverse and driven by the energy, manufacturing, military, financial services, health care, and government sectors. Climate is semi-arid with hot summers and cool winters. The River Walk is a popular tourist destination, and the city is home to the NBA San Antonio Spurs.
- Population: 1,434,625
- 10-year growth: 0.98%
- Employed population: 745,940
- 1-year growth: 8.0%
- Unemployment: 4.3%
- Zillow home value: $239,817
- 1-year change: 20.1%
- Housing units: 548,473
- Renter occupied: 36%
- Median rent 3-bedroom: $1,695
- 1-year change: 15%
- Median household income: $53,751
- 1-year growth: 9.46%
- Median age: 33.6
Dallas
Nicknamed the “Big D,” Dallas is located in northern Texas near Fort Worth, and is the 3rd most populous city in Texas. Major economic sectors in the metro area include telecommunications, information technology, financial services, transportation, and defense. Summers are hot and humid, and winters are cool and mild. Dallas is home to 5 major professional sports teams, and is considered the cultural center of North Texas.
- Population: 1,304,379
- 10-year growth: 8.9%
- Employed population: 681,944
- 1-year growth: 0.06%
- Unemployment: 4.2%
- Zillow home value: $287,282
- 1-year change: 19.6%
- Housing units: 589,260
- Renter occupied: 43%
- Median rent 3-bedroom: $2,300
- 1-year change: 18%
- Median household income: $55,332
- 1-year growth: 5.98%
- Median age: 32.9
Medium-sized real estate markets in Texas
Austin
Located north of San Antonio and west of Houston, Austin is the capital of Texas and the 4th most populous city in the state. Austin is a center for technology companies like Amazon, Apple, Facebook, Google, and Tesla, earning the nickname Silicon Hills. Summers are very hot and winters are mild and cool. Housing values in Austin have soared by more than 40% over the past year, which may be why renters occupy nearly 50% of the housing units in Austin.
- Population: 961,855
- 10-year growth: 21.7%
- Employed population: 577,370
- 1-year growth: 2.24%
- Unemployment: 3.4%
- Zillow home value: $606,319
- 1-year change: 40.6%
- Housing units: 442,388
- Renter occupied: 48%
- Median rent 3-bedroom: $2,300
- 1-year change: 17%
- Median household income: $75,413
- 1-year growth: 5.41%
- Median age: 33.9
Fort Worth
Fort Worth is the 2nd largest city in the Dallas/Fort Worth Metroplex and the 5th most populous city in Texas. Major companies such as American Airlines, GM Financial, and Wells Fargo are located in Fort Worth, helping median household incomes to grow by nearly 12%. Summers in Fort Worth are hot and humid, and winters are cool and mild. Fort Worth is known as the “City of Cowboys and Culture” and is home to Stockyards Station and the world’s first indoor rodeo.
- Population: 918,915
- 10-year growth: 24.0%
- Employed population; 445,986
- 1-year: 4.73%
- Unemployment: 4.2%
- Zillow home value: $276,047
- 1-year change: 24.1%
- Housing units: 346,502
- Renter occupied: 32%
- Median rent 3-bedroom: $1,945
- 1-year change: 18%
- Median household income: $65,356
- 1-year growth: 11.8%
- Median age: 32.8
El Paso
El Paso is the 2nd largest city in the southwest behind Phoenix, and the 6th most populous in Texas. Located in the Rio Grande River Valley along the U.S.-Mexico border, El Paso – along with Las Cruces, New Mexico and Ciudad Juárez in Mexico - form the Borderplex metropolitan area with a population of nearly 2.5 million. The economy is driven by the international trade, energy, military, and government service sectors. Fort Bliss is the largest employer in El Paso, and dozens of major companies such as AT&T, Boeing, and Raytheon have offices in the city.
- Population: 678,815
- 10-year growth: 4.6%
- Employed population: 298,329
- 1-year growth: 0.24%
- Unemployment: 5.3%
- Zillow home value: $175,761
- 1-year change: 19.5%
- Housing units: 250,077
- Renter occupied: 29%
- Median rent 3-bedroom: $1,390
- 1-year change: 13%
- Median household income: $48,542
- 1-year growth: 7.8%
- Median age: 32.9
Smaller real estate markets in Texas
Killeen
Killeen is located between Austin, Dallas, and San Antonio. Known as a military boom town, Killeen is home to the United States Army post of Fort Hood, with over civilian 58,000 employees. Housing in the market tends to be in short supply, which may be one reason why rents have increased more than 20% over the past year.
- Population: 370,647
- 10-year growth (10-year): 19.5%
- Employed population: 178,977
- 1-year growth: -0.07%
- Unemployment: 4.9%
- Zillow home value: $190,870
- 1-year change: 25.9%
- Housing units: 181,019
- Renter occupied: 31%
- Median rent 3-bedroom: $1,250
- 1-year change: 22%
- Median household income: $54,370
- 1-year growth: 1.27%
- Median age: 32.1
Lubbock
Lubbock is considered the economic center of Northwestern Texas, and is located midway between Dallas/Fort Worth and Albuquerque, New Mexico and is one of the largest cotton-growing regions in the world. Texas Tech University is the largest employer in Lubbock, with the undergraduate enrollment of over 33,000 helping to make the real estate market attractive for student rentals.
- Population: 257,141
- 10-year growth: 12.0%
- Employed population (1-year): 161,320
- 1-year growth: 2.88%
- Unemployment: 3.8%
- Zillow home value: $181,832
- 1-year change: 14.8%
- Housing units: 136,238
- Renter occupied: 43%
- Median rent 3-bedroom: $1,315
- 1-year change: 5%
- Median household income: $54,598
- 1-year growth: 9.25%
- Median age: 31.2
Plano
Located north of Dallas, Plano is part of the Dallas/Fort Worth Metroplex. Although small in size, some of the most recognized companies in the U.S. are headquartered in Plano, including Frito-Lay, Keurig Dr Pepper, and Toyota Motor North America. Both housing values and rent growth in Plano have increased by more than 20% year-over-year.
- Population: 259,841
- 10-year growth: 9.9%
- Employed population: 154,610
- 1-year growth: 1.33%
- Unemployment: 5.1%
- Zillow home value: $451,258
- 1-year change: 25.2%
- Housing units: 116,860
- Renter occupied: 28%
- Average rent 3-bedroom: $2,300
- 1-year change: 21%
- Median household income: $93,321
- 1-year growth: 0.33%
- Median age: 39.4
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