Americans have always been something of a nomadic people, and populations tend to shift over time. Currently, the Lone Star State is experiencing an influx of residents (also known as semigration). If you’re thinking about moving to Texas, you might be asking yourself: what’s the housing market like there? Would you be better off renting or buying? Let’s take a look at some of the reasons behind this population boom and whether renting or buying is the right decision for you.
The Population Boom in Texas
As previously remarked, the population of Texas has been growing steadily thanks to a substantial number of new residents. How much? Approximately 3.8% in the last decade, taking place mostly in the cities of Austin, Dallas, and Houston.
So why are people moving to Texas in droves? One major reason is the lower cost of living. With the economy in a tentative recovery and families struggling to ends meet, many people are choosing to move away from expensive states like California in favor of someplace more affordable. Texas also offers a good balance between amenities and affordability, making it an appealing destination for entrepreneurs and job seekers.
Texas’ Evolving Housing Landscape
To get a handle on the housing situation in Texas, let’s take a look at a single city, specifically Austin, the capital, which has seen a great deal of growth the past few years. Austin’s real estate market has been running hot, mostly driven by the influx of tech companies. For those looking to make a permanent home in Austin, the median home price in Austin is now around $450,000.
On the other hand, many newcomers might not be ready to commit to long-term housing in Austin, particularly if they’re moving there for work. While rental prices can vary wildly depending on neighborhood and other factors, the typical monthly rent for an apartment in Austin is anywhere from $1500 to $2000 for a two-bedroom.
Think About the Money
When deciding whether to rent or buy, the most important factor is likely to be finances, not only in terms of home price, but also considerations like property taxes and insurance.
In terms of taxes, the news isn’t particularly rosy: the state of Texas rightfully has a reputation for particularly high property taxes, and this will have to be taken into consideration if you’re contemplating buying a home there.
There’s also the matter of homeowners insurance, which you’ll almost certainly need. If you have a mortgage, your lender will inevitably require insurance in order to protect their investment, and going without it even if you own your home outright is courting financial disaster. Like property taxes, the cost of homeowners insurance can vary according to your location and the value of the home in question.
But insurance isn’t just for homeowners — renters insurance is an important thing to consider if you’re thinking of moving into an apartment in Texas. Landlord’s insurance won’t protect you if your possessions are damaged or lost due to disaster, nor will it provide liability protection if someone gets hurt while in your rental unit. And Texas renters insurance is surprisingly affordable, too: per numbers from Ross Martin at The Zebra, your renters insurance could cost you as little as $188 yearly, depending on which company you choose to purchase from. That’s one good reason to shop around and compare quotes before you decide on a policy.
Making the Decision
Now let’s take a good look at the respective benefits of renting vs. owning in Texas.
Benefits of Owning
- Building equity. Owning a home allows you to build equity over time as your home increases in value through renovations or property values going up. This makes it a good long-term investment.
- Stability. When you own property, you aren’t at the whim of a landlord. You can’t be evicted or see your rent double because the owner wants to maximize their profits.
- Tax benefits. Owning a home in Texas can earn you property tax deductions as well as other tax incentives, which can add up to a substantial chunk of change.
Benefits of Renting
- Flexibility. If, for whatever reason, you need to relocate, moving out of an apartment is a lot less intensive than trying to sell your home (and buy another).
- Lower up-front costs. While most landlords will require a deposit and first/last month’s rent up front, that’s a much smaller investment than making a down payment on a home (not to mention the paperwork).
- Maintenance. One of the major perks of renting is you’re not responsible for fixing a leaky roof, broken plumbing, or malfunctioning appliance — that’s the landlord’s job. Of course, this assumes the landlord will take care of those things promptly, which isn’t always the case.
Only you can decide whether renting or buying in Texas is right for you. Consider your finances, your goals, your lifestyle preferences, and the market conditions, and make the most informed decision you can.
