Everything’s Bigger in Texas Including the Real Estate Market

May 19, 2018
Posted in Insights
May 19, 2018 DCT Capital Fund

Texas has one of the broadest range of real estate markets in the United States. This is partly due to Texas’s large oil industry. Like most industries oil can be divided into several different markets including exploring, pumping, processing, and financing, all of these markets take place in different areas of Texas, making it a great place to invest.

Houston is one of the most difficult markets to understand in Texas, largely because the effects of recent flooding have yet to be determined. However, inexpensive housing has always had a strong pull for immigrants and we see no reason for that attraction to stop. If construction continues to take place in flood-prone areas, this trend of inexpensive houses will continue and have continued attractions. The risk of future flooding could also build a stronger rental market. Not that Houston is a stranger to the rental market. Over 40% of Houstonians are renters.

Before the recent flooding, the Houston market moved slowly, because of the shale oil boom. Lower-priced oil may be good for the large local oil processing industry, but it also depresses worldwide demand for new exploration and oil field expertise. Houston is the capital of such exploration and field expertise.

Dallas has also been affected by lower oil prices because it’s a source of financing for the oil industry. Dallas’s local economy is strong because it provides business services and financing for the Texas economy even outside of oil. If you are looking to invest in real estate, you should consider the home prices before committing to an investment. Home prices in Dallas were nearly unaffected by the 2008 crash and have been climbing by 10% a year recently, but the market could soon become overpriced; however, this does appear to be several years out.

If you’re going to buy in this market, our best advice is to buy now! In addition, renting is likely to grow and maybe a good real estate investment.

Fort Worth is one of the best long-term investment opportunities in Texas. The home prices in Fort Worth are also rising by 10% a year but aren’t nearly as close to being overpriced as those in Dallas. Job growth and population growth have remained stable in Fort Worth.

San Antonio is another market we see potential in. The population growth has been strong and hasn’t overwhelmed the area’s real estate market. Job growth has been good, and tourism is a more important to the area than oil. However, you should consider the long-term risk posed by the large military presence that could shrink rapidly and affect the market.

Austin is the real estate market we are most wary of because it seems to be a victim of its own success. Home prices are high and are on their way to a boom and bust. While rapid population growth has led to doubled home prices in the last ten years, and the population growth has created a large number of jobs, the higher housing costs have significantly dampened Austin’s growth.

Real Estate Investing can be a tricky game, but through close market research, good investment and choices can be made. Texas is a great market for research because it largely represents the many investment opportunities presented in the United States. Many more Texas markets have potential, but the five above are the current largest markets.