Texas Real Estate is Moving From “Boom Psychology” Back to “Fundamentals”—and Fundamentals Still Favor Texas, Even if the Market Feels Slower

 

Texas is still one of the most magnetic housing markets in the country—but the story has changed since the “anything goes” pandemic boom. These excerpts from Tierra Grande (Texas Real Estate Research Center) paint a clear picture:

 

• Texas had a massive run-up in prices from 2020 → 2022
• Then a market cooldown from 2022 → 2025 that looks very different by metro
• Heading into 2026, the big drivers are jobs, population, interest rates, inflation, and energy, with meaningful uncertainty still in the system
• In South Texas specifically, the economy remains closely tied to energy/port/industrial growth, while housing stabilizes and affordability becomes the battleground

Below is a deep, readable breakdown you can use as a true “state of the market” post for your blog.

 

1) The Big Picture: Texas Went Through a Historic Boom — and Then a Controlled Cooldown

During the pandemic-era housing boom, Texas became the epicenter of accelerated demand. The fundamentals were powerful:

 

• Population growth and relocation momentum
• Job growth and corporate moves
• A massive affordability spread vs. many other states (even though affordability later worsened)
• Early-pandemic mortgage rates that juiced purchasing power

But fast-forward: higher rates and affordability constraints slowed the market, and Texas entered a more “normal” housing environment—just at a higher price level than before.

 

The most important concept from these pages is this:

 

 

2) “Boomtown” Texas: What Prices Did From 2020 → 2022

Statewide, the Texas median home price climbed to about $360,000 by summer 2022, roughly 34% higher than 2020 (about $269,000).

 

But “statewide” hides the real story: the boomtown metros were explosive.

 

Takeaway: 2020–2022 wasn’t “normal appreciation.” It was a demand shock, and many markets pulled forward years of price growth into a short window.

 

 

3) The Post-Boom Reality: What Prices Did From 2022 → 2025 (Correction + Long-Run Growth)

This is where the article becomes incredibly useful for homeowners and buyers, because it separates “correction from peak” from “growth since 2020.”

 

The “real” message

 

Some markets (like Austin) gave back a lot of the boom. Others (like Brownsville and Killeen) barely corrected at all. That means Texas is not one market—it’s a collection of markets with different economic engines and supply pipelines.

 

4) Why Affordability Still Feels Tough (Even If Buyers Have More Leverage)

One of the most important paragraphs in the housing page is the practical reality:

 

• Affordability remains a challenge
• But buyers are gaining more leverage because:
  • inventory has risen
  • builders recalibrated and are offering more affordable options
  • “boom momentum” is not the same as 2021 frenzy momentum

So we have a paradox:

 

 

This is exactly what many San Antonio buyers are experiencing: you may not love the payment at today’s rates, but you can frequently negotiate price, concessions, and repairs in ways that were impossible a few years ago.

 

5) The 2026 Forecast Framework: The Forces Shaping Texas

The “Forces Shaping Texas” page lays out the main macro drivers behind the 2026 real estate forecast—and assigns uncertainty levels (low / moderate / significant).

 

Here are the key published ranges shown:

Economic Output (GDP growth, 4Q 2026 annualized)

• U.S.: ~2.0% to 2.8%
• Texas: ~2.4% to 2.9%
• Uncertainty flagged as significant

Jobs (payroll employment change, Dec 2026 vs Dec 2025)

• U.S.: ~0.2% to 1.2%
• Texas: ~1.3% to 1.7%
• Uncertainty: moderate

Population (Texas population change, 2026 vs 2025)

• ~0.7% to 1.2%
• Uncertainty: moderate

Interest Rates (Dec 2026)

• Fed Funds target range: ~3.0% to 3.5%
• 30-year fixed mortgage rate: ~5.0% to 5.6%
• Uncertainty: moderate

Energy Prices (Dec 2026)

• West Texas Intermediate (WTI): ~$57.50
• Henry Hub Natural Gas: ~$4.25
• Uncertainty: significant

Income (nominal change, Dec 2026 vs Dec 2025)

• U.S.: ~5.0% to 5.5%
• Texas: ~5.0% to 5.5%
• Uncertainty: low

Why this matters for housing:

 

Texas housing is heavily influenced by jobs + population. If those remain positive (even at moderate levels), it’s hard to get a true statewide housing collapse. Instead, you tend to see rotation: some metros cool more, some hold stronger, and affordability + rates decide transaction volume.

 

6) “Grading the 2025 Forecast”: Why 2026 Comes With More Humility

The forecast page explains something that’s easy to miss: forecasting is hard, and 2025 was especially messy due to policy shifts, geopolitical events, inflation progress, and rate dynamics.

 

A few key notes pulled from that page:

 

• Their 2025 call was essentially a “sideways year.”
• They note inflation tracked closer to expectations in many ways
• But mortgage rates didn’t fall as much as hoped, and that matters more to housing activity than almost anything else
• They emphasize evaluating “consistency” between economic variables (growth, inflation, rates, etc.)

Then they make an important modeling assumption for 2026:

 

2026 Forecast Underlying Assumptions (in plain English)

• No new major macroeconomic developments
• Existing policies (trade, tax, immigration) still matter
• But no dramatic new shifts that completely change the trajectory
• Geopolitical events don’t escalate in a way that materially changes the outlook

In other words, the forecast is built on “steady but uncertain,” not on a shock scenario.

 

7) Economic Outlook: Policy Uncertainty Was a Real Headwind — But 2026 Shows Signs of Recovery

The economy page ties 2025 softness to:

 

• heightened interest rates
• policy uncertainty
• slower activity and labor-market stagnation signals

It also highlights how the Fed’s direction (rate decisions + balance sheet strategy) influences broader financial conditions, which eventually touch mortgage rates, business investment, and housing demand.

 

The tone is not doom-and-gloom. It’s more like:

 

 

8) South Texas Regional Outlook: What It Means for San Antonio and the Surrounding Gravity

The South Texas regional forecast page reinforces what many Texans intuitively know:

 

• The region is shaped by energy, petrochemical activity, ports/logistics, and industrial expansion
• Those engines create employment and support demand for housing
• Constraints like infrastructure and water availability can shape how fast growth can sustainably continue
• Residential real estate is expected to be relatively stable, with affordability and supply dynamics becoming more important than runaway appreciation

Even if your day-to-day business is in San Antonio, South Texas growth drivers still matter because they influence:

 

• inbound migration patterns
• job stability
• investor demand
• regional construction activity and labor availability

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9) Practical Guidance: What This Means If You’re Buying, Selling, or Investing in 2026

If You’re a Buyer

The advantage you have now: leverage.

 

Not every listing is negotiable—but compared to peak frenzy years, many buyers can negotiate:

 

• concessions to buy down the rate
• repair requests and credits
• price adjustments (especially on stale listings)

Smart move: focus less on “timing the bottom” and more on:

 

• payment comfort + long-term hold plan
• negotiating power (terms matter)
• choosing neighborhoods with durable demand drivers

If You’re a Seller

The market rewards strategy again.

 

In a frenzy, you could be sloppy and still win. In a normalized market:

 

• Correct pricing matters more
• Presentation matters more
• Marketing + exposure matter more
• condition and showing readiness matter more

Smart move: treat your home like a retail product:

 

• pre-inspection / pre-list prep
• professional photography
• pricing aligned to today’s comps (not 2022 memories)
• be ready to negotiate intelligently (especially around rate buydowns)

If You’re an Investor

This environment is less about fast appreciation and more about:

 

• acquisition discipline
• cash-flow math at realistic rates
• market selection (some Texas metros are holding better than others)
• avoiding “rent won’t matter” assumptions

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10) The Bottom Line: Texas Is Resetting — Not Collapsing

From these pages, the clearest conclusion is:

 

• Texas experienced a historic run-up (2020–2022)
• The state then entered a multi-year normalization (2022–2025)
• 2026 is framed as steady growth with real uncertainty, heavily influenced by rates, jobs, and population
• Different metros will behave very differently—because their economic engines and supply conditions differ

If you want one sentence to sum it up for your blog: