Home LoansMortgage

Best Cities for Homeownership in Texas

When it comes to rising home values, homeowners in Texas generally have it good compared to homeowners in many other parts of the country.

Texas used to be a hotbed of affordable housing — and compared to many other parts of the U.S., it still is. But in 2011 housing prices began to outpace the rest of the country. According to the Federal Reserve Bank of Dallas, when adjusted for inflation, median real estate prices in the state went above $200,000 at the end of 2015. Last year, the median value reached $232,900, according to Texas REALTORS.

To see which Texas communities are now the best places to own a home, researchers at LendingTree reviewed U.S. Census data for 66 metro and micro areas in Texas in both 2013 and 2017. We looked at how they compared in some of the measures homeowners value the most. These include local changes in home values, unemployment rates, average commute times and overall housing costs for expenses such as mortgages, taxes, utilities and insurance.

Key findings

  • The Fredericksburg micro area is the best place in Texas for homeownership. It has the highest median home value ($270,900), low unemployment (5%), robust home value appreciation (14.93%) and modest increases in housing costs from 2013-2017 (2%).
  • The Midland metro area is the second-best place for homeownership in Texas. It has a high median home value ($210,500), the lowest unemployment of all the cities surveyed (3.5%), a short average commute time (19.5 minutes) and a large increase in home values from 2013-2017 (32.39%).
  • The Raymondville micro area is the worst place for homeownership in Texas. It has the lowest median home value ($68,000), high unemployment (14.5%) and depreciating home values from 2013-2017 (-2.30%).

The best cities for homeownership in Texas

1. Fredericksburg micro area

Fredericksburg topped our rankings with an overall homeowner score of 72.1. This micro area offers a taste of small-town Texas living, with San Antonio, the closest large city, 70 miles away. Between 2013 and 2017, homes here appreciated in value by nearly 15%, but housing costs increased just 2%. In 2017, a Fredericksburg home had a median value of $270,900, the highest of all cities surveyed. The unemployment rate, meanwhile, was a relatively low 5%.

2. Midland metro area

Midland is a bustling metro area located near the New Mexico border. The median home value in Midland came in at $210,500, the second highest on our top 10 list. Homes here appreciated more than 32% between 2013 and 2017, but housing costs grew almost 21%. Still, In 2017, the unemployment rate in Midland was 3.5%, the lowest on our list, most likely due to diverse opportunities in the oil and gas industries, as well as in government and higher education.

3. San Angelo metro area

Between 2013 and 2017, the median home value in San Angelo in central Texas rose almost 22%, while housing costs grew 11.72%. Home values, however, stayed relatively low, with a median of $140,600 in 2017. That same year, San Angelo had an unemployment rate of just 3.8%, the second lowest for our top 10 cities. The city still has remnants of its frontier-fort past but now includes large employers, such as Goodfellow Air Force Base and Shannon Health System. With a total homeowner score of 69.7, it tied with Brenham, the micro area described below.

4. Brenham micro area

Located between Houston and Austin, Brenham is close enough for day trips to both cities but offers a more affordable cost of living. From 2013 to 2017, the median home value rose a healthy 17%, landing at $181,900 in 2017. At the same time, housing costs actually decreased by 5.51%. The downside: In 2017, Brenham had the highest unemployment rate of any top 10 city on our list (6.2%). Its total homeowner score of 69.7 tied with third-ranked San Angelo.

5. Abilene metro area

Abilene is near the center of Texas, and while it’s far from other cities, homes here grew in value almost 26% in the five years before 2017, outpacing a 8.45% rise in housing costs. However, home values were still relatively low, at $126,900. In 2017, the area had an unemployment rate of 4.4%, with jobs in agriculture, manufacturing, education and at Dyess Air Force Base. The average Abilene resident spends less than 18 minutes per day commuting.

6. Kerrville micro area

Kerrville is southwest of Fredericksburg, the top pick on our list. But in 2017 home values in Kerrville were much lower, with a median value of $178,100, almost $100,000 less than in Fredericksburg. Between 2013 and 2017, homes here appreciated in value about 13%. At the same time, housing costs showed a slight decrease. If those trends continue, Kerrville might become even more of a sweet-spot city for homeowners. The only caveat: In 2017, unemployment in Kerrville was a relatively high 6%.

7. Brownwood micro area

This micro area is near Lake Brownwood and its varied recreational options, but the closest big city is Abilene, some 80 miles away. Brownwood has a long agricultural history and now offers very affordable housing, with a median home value of just $115,300 in 2017. Unemployment then was relatively low, too, just 4.3%, and a typical resident had to travel a mere 17 minutes to get to work. The good news for homeowners looking for appreciation: Between 2013 and 2017, the median home value here rose 14.27%.

8. Dumas micro area

Dumas, in the Texas Panhandle, has been attracting new businesses lately. In 2017, it had a local unemployment rate of about 4%. Home values here rose a median of almost 22% from 2013-2017, while homeownership costs rose 11%. Still, in 2017, home values were low, just $122,600, while the average commute time was under 17 minutes.

9. Andrews micro area

Andrews is near Midland, the second-highest-ranking city on this list. Both agriculture and oil and gas development remain the city’s main economic standbys, and the unemployment rate in 2017 was a low 4.5%. Home values here shot up almost 41% between 2013 and 2017 but remained low at $155,000. Unfortunately, homeownership costs shot up, too, growing 26.38% during the same period, the highest for any top 10 city on our list.

10. Snyder micro area

In 2017, the median home price for Snyder was a mere $110,500 — the lowest of any community on our top 10 list. Homes in this small town northwest of Abilene have not appreciated in value as much as they have in other parts of Texas, growing just 8.44% from 2013 to 2017. During the same time, however, housing costs actually decreased almost 2%. Residents here had the shortest average commute time of any top 10 city on our list, just 16.6 minutes a day. Snyder had an overall homeowner score of 66.1.

Homebuying tips for Texas

The recent spurt in Texas home values isn’t necessarily over, but buyers may have to both scale back their overall expectations and learn how to spot pockets of opportunity. Here’s why:

From 2015 to 2018, the Texas housing market broke records for both home sales and median prices, according to Texas REALTORS. Still, increases in both sales and prices last year were more moderate. Sales, for example, grew just 1.7% due to housing inventory shortages and rising interest rates. Meanwhile, the median sales price of $232,000 reflected just a 4.4% rise from 2017. By contrast, median prices rose annually in the range of 6.2% to 7.7% from 2015 to 2017.

Despite the slowdown in price increases, housing affordability is a growing concern in Texas, mostly because wage growth hasn’t kept up with price appreciation. According to a report from the Real Estate Center at Texas A&M University, housing affordability in Texas is still better than in many other states, but the gap is closing. Meanwhile, inventory levels for entry-level homes under $200,000 are especially low.

If you are a first-time homebuyer looking for a reasonably priced starter home in Texas, you may be able to take advantage of a city or state assistance program to get an affordable loan or help pay a down payment or closing costs. Help is available from the following:

It’s also a good idea to shop around for a mortgage. The lower you can get your interest rate, the lower your monthly mortgage payment will be. This — combined with a down payment of at least 20% — may help you find the Texas home that works for both your lifestyle and budget.

Methodology:

The methodology for this study was simple and straightforward.

1: Collect metropolitan statistical areas (“MSAs”) and micropolitan statistical areas from the U.S. Census Bureau using 2017 population data.
2: Each MSA and micropolitan statistical area was ranked on a scale from 66 (Best) to 1 (Worst) for five different metrics. Those metrics are:

  • Median Home Value (66-Highest Value, 1-Lowest Value)
  • Unemployment Rate (66-Lowest Rate, 1-Highest Rate)
  • Average Commute Time (66-Shortest Time, 1-Longest Time)
  • Median Home Value Appreciation (2013-2017) (66-Greatest Appreciation, 1-Smallest Appreciation)

Median Change in Yearly Housing Costs (2013-2017) (66-Smallest Cost Change, 1-Greatest Positive Cost Change) — The formula for this metric is:

(((Monthly Housing Costs for 2017 *12)+(Real Estate Tax for 2017))/ ((Monthly Housing Costs for 2013 *12)+(Real Estate Tax for 2013))-1)
3: An average score was then calculated for each MSA based upon the scores received for each metric.
4: The MSAs and micropolitan statistical areas were then ranked on a scale of 1 (Best) to 66 (Worst) based on their average scores.
5: All metrics were ranked equally.

Data:

All data were obtained from the U.S. Census Bureau. More information on where the data came from is provided below:

2017 Median Home Value, Monthly Housing Costs, Real Estate Taxes

  • Filtered for all MSAs
  • Then filter for Financial Characteristics for housing units with a mortgage – 2013-2017 American Community Survey 5-Year Estimates

2017 Unemployment Rate and Median Commute Time

  • Filtered for all MSAs
  • Then filter for Selected Economic Characteristics – 2013-2017 American Community Survey 5-Year Estimates

2013 Median Home Value, Monthly Housing Costs, Real Estate Taxes

  • Filtered for all MSAs
  • Then filter for Financial Characteristics for housing units with a mortgage – 2013-2017 American Community Survey 5-Year Estimates
 

Compare Mortgage Loan Offers