Waco is ranked among the top 20 emerging housing markets in the U.S., according to a recent Wall Street Journal/Realtor.com Emerging Housing Markets Index. The ranking uses the same metrics that rental property investors look at, including activity in the overall housing market, anticipated home price growth, economic vitality, and quality of life.1
Homes in Waco are selling above asking prices or are staying on the market for only days. Average sales prices for single-family homes have risen over 22% year-over-year (as of Nov. 2021) while transaction volumes increased by nearly 9%.
The city of Waco is situated halfway between Dallas and Austin, and is less than a three hour drive to San Antonio and Houston.
Located in East Central Texas along the Brazos River, Waco is the county seat of McLennan County. Home to over 270,000 residents in the metropolitan area, the population of Waco has grown by nearly 11% since 2010.2
The diverse economy in the Waco metropolitan area is powered by the industry sectors including advanced manufacturing, aerospace and defense, supply chain management, and health care. Amazon recently announced it is coming to Waco, and SpaceX is opening a second facility.3
Although population growth in Waco hasn’t been as explosive as the larger urban areas in Texas, Waco and McLennan County are on par with most of Texas. Since 2010, the population of McLennan County (where Waco is located) added 25,673 new residents for a growth rate of nearly 11%, according to the most recent census.4
Key population stats:
- The city of Waco is home to nearly 138,500 residents, with 270,868 people living in the Waco metropolitan area.
- The population growth in Waco is growing 0.96% annually.5
- Since the last census in 2010, the population of Waco and McLennan County has grown by 10.9%.
- Waco has added nearly 26,000 new residents since 2010.
- Per capita income in the Waco metropolitan area is $25,448, while median household income in the area is $50,368.6
About 4,700 new workers joined the job market in Waco between November 2020 and November 2021, with the local economy boasting a long list of industrial development. The metro area has seen everything from a new 14-screen movie theater to a $668 million Air Force contract and a promise by Elon Musk to build a second local SpaceX plant.7
Key employment stats:
- The GDP for Waco, Texas is more than $13.8 billion, according to the Federal Reserve Bank of St. Louis, and has grown by more than 53% over the past decade.8
- The unemployment rate in Waco is 3.9% (as of November 2021), according to the BLS.
- Waco is located midway between Dallas and Austin and is in the heart of the Texas manufacturing and technology corridor on Interstate Highway 35.
- Key industries in Waco and McLennan County include advanced manufacturing, aerospace and defense, supply chain management, health care, and professional and financial services.9
- Major employers in Waco include Alcoa Fastening Systems, Allergan PLC, Cargill Inc., H.E.B. Grocery Company, L.P., L-3 Communications Integrated Systems, L.P., Mars Wrigley Confectionery, and Pilgrim’s Pride Corporation, and Sanderson Farms, Inc.10
- Baylor University, McLennan Community College, and Texas State Technical College are the three institutions of higher learning in Waco.
- 86% of the residents in Waco are high school graduates or higher, while nearly 25% hold a bachelor’s degree or an advanced degree.11
- Interstate Highway 35, Texas State Highway 6, U.S. Highway 84, and U.S. Highway 77 are part of Waco’s transportation system.
- Dallas, Austin, Houston, and San Antonio are all within a 1.5 to 3 hour drive of Waco.
- There are four international and seven regional airports within 200 miles of Waco.
- Eight seaports are within 280 miles and two inland ports are within 90 miles of Waco.
- Three major railroad systems serve the Waco metropolitan area, along with UPS, FedEx, and Lone Star Overnight.
Real estate market
The average sales price of a single-family home in Waco has soared by 22.39% (Nov. 2021 vs Nov. 2021) while the months of inventory dipped to 1.2 months. Days on market also declined by over 23% year-over-year, with single-family homes selling in just 63 days.12
Key market stats:
- The Zillow Home Value Index for Waco is $195,369 as of November 2021.13
- Home values in Waco, Texas increased by 25.5% last year and by nearly 76% over the past five years.
- The median list price of a home in Waco is $239,000 based on the most recent report from Realtor.com (November 2021).14
- The median listing price per square foot of a home for sale in Waco is $144.
- Popular neighborhoods in Waco include North Lake Waco, Mountainview, and Landon Branch, where median listing prices range between $284,900 and $274,900.
- Of the 25 neighborhoods in Waco, Highway 84 West is the most expensive with a median listing home price of $428,000 while Carver is the most affordable with a median listing home price of $115,000.
Strong renters’ market
Waco came in at number 18 on the Emerging Housing Market Index developed by the Wall Street Journal and Realtor.com, up from 44th place just two quarters ago. People working from home and a stable economy are helping to drive the demand for housing in Waco. Rising homes prices affect the rental market, with landlords offsetting price increases by raising the rent.15
Key market stats:
- The median rent for a 3-bedroom home in Waco is $1,400 (as of January 2022), according to Zumper.16
- Rent prices in Waco have increased by 17% year-over-year.
- Of the 111,836 housing units in the market, single-family homes in Waco make up 73% of the total.17
- Nearly 54% of the housing units in Waco are occupied by renters.
Historic price changes & housing affordability
The Home Price Index (HPI) and the Housing Affordability Index (HAI) are two of the many data points real estate investors use to help analyze housing trends in a real estate market.
Real estate investors can find information about changing housing prices and housing affordability from the Freddie Mac House Price Index Report. According to the most recent report from Freddie (October 2021):19
- October 2016 HPI: 165.9
- October 2021 HPI: 279.5
- 5-year house price appreciation: 68.5%
- One-year change in home prices: 23.8%
- Monthly change in home prices: 1.7%
In addition to reviewing the change in home prices, investors may also use the home affordability index (HAI) to anticipate the potential demand for rental property in Waco, Texas.
The HAI compares median household income to median home values to measure how affordable housing is. HAI uses 100 as a base point where people with the median household income can normally qualify to purchase a median price home. The greater above 100 the HAI is in a real estate market the more affordable homes are, and vice versa.
Based on the most recent HAI data through July 2021, the housing affordability index for Waco is 133.20
Quality of life
Although home to just over 270,000 people in the metropolitan area, Waco boasts all of the big city advantages without the big city hassles. According to the City of Waco, you won’t find heavy traffic, long commutes, or a high cost of living within their borders.21
Key quality of life stats:
- The cost of living in Waco, Texas is 15% below the national average, one of the nation’s lowest costs of living.22,23
- Waco receives a B+ overall rating from Niche.com, with high scores for weather, commuting, and public schools.24
- Residents of Waco enjoy great weather, year-round recreation, and sports venues like popular hike-and-bike trails and Little League baseball.
- The Brazos River walk is a seven-mile route on both sides of the river with multi-use walking and jogging trails.
- Lake Waco Reservoir lies along the western border of Waco and is home to the 416 acre Cameron Park with playgrounds, picnic areas, and a cross-country running track.
Get out the map
Where to begin your search? Roofstock created a heat map of Waco, Texas based on our Neighborhood Rating, a dynamic algorithm that enables you to make informed investment decisions by measuring school district quality, home values, employment rates, income levels and other vital investment criteria.
DARK GREEN: 4-5 star neighborhood
LIGHT GREEN: 3.5-4 star neighborhood
YELLOW: 2.5-3 star neighborhood
ORANGE: 2 star neighborhood
RED: 1 star neighborhood
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