For more than a decade, Texas occupied a special place in the American real estate narrative. It was the antidote to coastal excess: affordable homes, no state income tax, business-friendly regulation, and room to grow. Moving to Texas wasn’t just a lifestyle choice — it was a financial upgrade.

That story, however, is no longer clean.

Home prices across Texas have risen sharply since 2020. Property taxes are among the highest in the country. Insurance costs are climbing. Infrastructure is strained. And yet, demand hasn’t collapsed. In some markets, it continues to rise.

So why are buyers still coming — even as Texas stops being cheap?

The answer lies not in affordability, but in relative value, structural migration, and capital psychology.

Texas Isn’t Cheap Anymore — By the Numbers

The idea that Texas offers bargain housing no longer holds up under scrutiny.

Median home prices in metros like Austin, Dallas–Fort Worth, and parts of Houston have more than doubled since the mid-2010s. Austin, once the poster child of affordability, experienced one of the most aggressive price booms in the U.S. during the pandemic era. Even after a correction, prices remain far above pre-2020 levels.

But the bigger shock for new buyers often isn’t the purchase price — it’s the carrying cost.

Texas compensates for the absence of a state income tax with high property taxes. In many counties, effective property tax rates exceed 2%, sometimes approaching 3%. Add rising home insurance premiums — driven by extreme weather, construction inflation, and insurer pullbacks — and the monthly cost of ownership can rival or exceed that of supposedly “expensive” states.

In other words, Texas homes may still list for less than coastal equivalents, but they no longer feel cheap to own.

Relative Affordability Still Works — For Some

Despite these realities, Texas remains attractive — because real estate decisions are rarely made in isolation.

For buyers coming from California, New York, or the Northeast, Texas still offers a relative bargain. Selling a modest home in Los Angeles or the Bay Area often unlocks enough equity to purchase a larger property in Texas outright — or with minimal financing.

This creates a powerful asymmetry:

• Local buyers feel priced out

• Incoming buyers feel like they’re getting a deal

As long as that imbalance exists, demand persists.

Texas doesn’t need to be cheap in absolute terms. It only needs to be cheaper than where the buyers are coming from.

Migration Isn’t Slowing — It’s Changing Shape

One of the most misunderstood dynamics in the Texas housing market is migration.

The early pandemic wave was loud and visible: tech workers, remote professionals, and high-income households relocating en masse. That phase has cooled. But migration hasn’t stopped — it has normalized.

Today’s inflows are quieter and more structural:

• Corporate relocations

• Logistics and manufacturing expansion

• Medical and defense-related employment

• Population growth from domestic and international sources

This isn’t speculative demand chasing appreciation. It’s employment-driven housing demand. People aren’t buying because they expect prices to double — they’re buying because they’re staying.

That kind of demand is far more resilient.

Investors Haven’t Left — They’ve Adapted

Another reason demand remains elevated is investor behavior.

While small-scale speculative investors have pulled back, institutional capital hasn’t exited Texas. It has simply recalibrated. Single-family rental operators, private equity funds, and long-term yield-focused investors still view Texas as viable — not because homes are cheap, but because population growth supports rent demand.

Even as rent growth slows, Texas metros continue to absorb new residents faster than housing supply can adjust. That imbalance protects occupancy rates, even when margins compress.

Texas is no longer a fast-flip market. It’s a long-hold market — and that still attracts capital.

Psychology Matters More Than Fundamentals

Perhaps the most important reason demand persists is psychological.

Texas has become a default option in the American housing imagination. When buyers think about leaving high-cost states, Texas is still one of the first places they consider — alongside Florida and a handful of Sun Belt alternatives.

That brand power matters.

Even as affordability worsens, the perception lags reality. Many buyers don’t fully grasp tax and insurance costs until after they commit. Others accept them as the price of escape from states they view as economically or politically restrictive.

In real estate, perception often moves markets before data does.

Where the Stress Is Actually Building

None of this means Texas real estate is risk-free.

The stress isn’t evenly distributed.

The most vulnerable segments are:

• Overbuilt suburban developments

• Investor-heavy neighborhoods with weak rent growth

• Luxury new construction priced for peak optimism

• Markets dependent on continued in-migration to justify valuations

In these areas, price stagnation — not collapse — is the likely outcome. Sellers may hold listings for months. Concessions may quietly expand. Nominal prices may hold while real returns erode.

The risk in Texas isn’t a dramatic crash. It’s a long period of underperformance masked by population growth headlines.

Demand Is Rising — But It’s More Fragile Than It Looks

Texas real estate demand hasn’t disappeared because the forces supporting it haven’t disappeared. But those forces are no longer overwhelming.

Affordability is deteriorating. Carrying costs are rising. Migration is more selective. And buyers are more cautious than they were during the boom years.

Texas is no longer the obvious arbitrage it once was. It’s becoming a normal market — and that transition is uncomfortable.

The irony is that Texas doesn’t need to be cheap to stay relevant. It only needs to remain less broken than the alternatives.

For now, that’s enough to keep demand alive. But it’s no longer enough to guarantee easy returns.