Falling home prices and fed-up residents show the Texas housing boom is slowing

• The Texas housing market has cooled after a frenzy of activity during the pandemic.
• Boomtowns like Austin are seeing home prices drop, while fewer people are moving to the state.
• Some say they have soured on the Lone Star amid rising housing costs and overall costs of living.

Texas was not all what it cracked up to be, according to Peter Hoholick, a native Californian who moved to Austin in 2021 on rumors that a cheaper, more laid-back lifestyle was in store.

The move fell short of Hoholick's expectations. The weather was "miserable," with southern humidity and temperatures trailing into the triple-digits during the summer. The cost of living was comparable to that of California, though the pay, he felt, was lower.

The tense, conservative-leaning political climate is what broke him. When Roe v. Wade was overturned, Hoholick made the decision to head back to California. His quality of life has "vastly" improved, he told Business Insider in an interview.

"I was young and dumb at this point in time," Hoholick said of his brief stay in Texas — around 13 months. "I would never entertain the idea of moving back."

He isn't alone. Though some towns still attract a good deal of interstate movers, a growing number of Americans have soured on the Lone Star State, with interest in moving to Texas cooling, while interest in moving out has risen. The shift in attitudes is an indicator for the state's housing market, which boomed during the pandemic.

The weather is hot and the political climate too charged for some, but the biggest reason the scramble for Texas may be over is simply because living there is way more expensive than it used to be, real estate experts and realtors in the state told BI.

The downbeat feelings are already evident in the state's migration and housing data. While Texas gained 668,000 new residents between 2021 and 2022, it also lost nearly half a million people, with 494,077 people moving out of state that year, according to the US Census Bureau.

That small-scale exodus appears to be taking place in what used to be Texas' most popular boomtowns. Dallas has seen a slight population decline over the past several years, with the city losing around 5,000 people from mid-2020 to mid-2023, Census data shows.

Austin, meanwhile, is the fifth most moved-out of city in the US year-to-date, according to an analysis from the moving firm PODS, with the town no longer considered among the top 10 most populous cities in the US.

Texas realtors also say it's a much cooler climate for buying and selling a home, thanks to weaker demand. Median home prices in Texas have fallen around 7% from their highs in mid-2022, according to data from Redfin. The decline is an outlier compared to the broader US housing market, which is still prices hovering around record highs.

In 2022, homes for sale in Texas were being scooped up in a matter of days, but it's now taking months for sellers to find a buyer, according to James Willoughby, a real estate agent based in Austin.

In some instances, Willoughby says he's encouraged sellers to slash prices by 20%-30%. According to Redfin, more than a third of homes in Texas saw a price drop in August.

"We had such an avalanche of buyers moving here from elsewhere and not that many people selling. That's how we got into the craziness that we got into several years ago," he said of the Texas housing market during the pandemic, adding that he's seen a "fair amount of people" looking to move out of the state in the past year.

William Wheeler, an Amarillo-based real-estate agent, says the number of clients who are looking to move out of Texas is "pretty equal" to the number of clients looking to move in.

"We have done a lot of price reductions, more price reductions than normal," he added.

Price cuts suggest that housing markets like Austin and Dallas are likely approaching a bottom, according to Redfin's chief economist Daryl Fairweather, though she noted that the trend wasn't uniform across the state.

"The boom cycle's kind of coming to a close," Fairweather said.

Waning affordability

When the pandemic struck, Americans flocked to Texas in search of cheaper living relative to other metropolitan areas, Fairweather says.

While agents say they're seeing prices come down faster than other parts of the country, they're also coming down from a higher peak after the housing feeding frenzy that took place during the pandemic.

In March 2020, the median home price in Texas was $253,600, around 20% lower than the national median of $303,577 at that time.

Since then, home prices in Texas have shot up 37%, with the median price clocking in at $348,300 in August, Redfin data shows.

Similar to states like Florida, Texas has been in the path of many extreme weather events in recent years, sending home insurance rates skyrocketing.

Premiums in Texas have soared 55% from 2019 through March 2024, with the average homeowner in the state paying $4,647 a year, according to a report from LendingTree.

"That difference in affordability made it worthwhile for people to move across the whole country and start a new life in Texas. But now, because home prices are so high, it's just not as attractive," Fairweather added.

A higher cost of living broadly, combined with a weakening job market, could also be influencing the cooling interest in the state, she said.

Consumer prices in the Dallas, Fort Worth, and Arlington areas have risen 25% over the last five years, according to the Bureau of Labor Statistics.

Job postings based in Texas on Indeed, meanwhile, have dropped 28% from their highs in 2021.

Samuel Cobb, an East Texas resident who's looking to move out of the state, said the cost of living had "blown up" since the pandemic. He and his wife hardly save anything, and are rarely even able to dine out at restaurants anymore, he added.

"We were no longer able to live there, couldn't get back there, couldn't afford to get jobs there or anything else, so they just pushed us out," he said of Austin. "We are basically struggling to afford to live anywhere at this point."

Current and former Texas residents who spoke with BI also frequently cited the extreme heat and political atmosphere as key motivations to leave. But those issues are minor relative to things like economic growth and housing affordability, Fairweather says, which she described as two of the biggest factors that could determine if the Texas housing market picks back up.

Hoholick, though, is fairly certain he'll never return to the state long-term. He recalled turning down a recruiter earlier this year for a job that would double his current salary, though the position was based in Austin.

"I could not stomach moving back there for any price tag," he said.

Cobb, who hasn't moved out of Texas yet, also doesn't see himself coming back once he leaves. His only problem is selling his home, which has been on the market for over two months.

"We made a decision in August or July to move, and now we're like, now what the crap we're going to do? We want to get there. We're tired of the Texas heat, tired of Texas politics," he said. "So we're definitely feeling stuck right now."