The Texas land market is an attractive place for buyers. Its strong job outlook, favorable weather and affordable housing make it a great investment. However, rising interest rates have slowed the market recently, and experts believe it’s important to keep an eye on the market for further signs of weakness.

The white-hot land market has cooled significantly. In fact, according to the Texas Real Estate Research Center, land sales fell 26 percent from the frenzied pace of 2021 and 2022. However, price gains remained robust and the average tract size continued to increase in 2022 compared to 2021.

In addition, mortgage rates are continuing to rise, which has increased the cost of homeownership. Many buyers have decided to wait and see how higher rates will affect the market before making a buying decision.

In August, Texas’ residential real estate market showed signs of resilience. Home sales improved month over month, but they still remain 8 percent lower than the previous year. The months of inventory (MOI) also dropped slightly, suggesting that the market is stabilizing.

Zillow forecasts a significant growth in home prices in Waco, with an expected increase of 2.5% by September 30, 2024. This prediction is a sign of a healthy real estate market in the city, and it could mean more opportunities for homeowners and investors. Other cities in the state are also predicted to experience a robust growth in home prices.

The statewide outlook for texas land markets remains stable, but the recent Federal Reserve rate hike has been taking its toll on activity and pricing. According to the Texas Land and Market Latest Developments report, prices were up statewide in 2022, but the total number of transactions declined substantially compared to last year.

As of August, the statewide MOI was 3.2 months. This was an improvement over the previous month, but it is below the long-term average of 4.4 months.

Aside from the statewide trends, individual markets show varying degrees of strength and stability. For example, the Texas Panhandle saw a modest increase in sales and price increases, while the West Texas and North Texas regions experienced steep declines.

Despite the challenges, the overall Texas land market continues to be an attractive investment for buyers. The future looks bright for Texas, but it’s important to monitor the situation closely for any further signs of weakness. Fortunately, the Republicans are likely to retain control of both the House and Senate in 2023 and 2024, which will diminish the risk of tax changes that would be unfavorable for real estate owners. Nonetheless, the state will need to address some key issues in order to continue its economic growth.