2025 Year in Review: Texas Real Estate Market Trends & 2026 Predictions

What a year 2025 has been for Texas real estate.

Here's what happened, what it means, and where the market is headed in 2026.

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The Big Story: Investors Dominated

Investors purchased 30% of all single-family homes in 2025—the highest share in 14 years.

Traditional buyers, squeezed by 6-7% mortgage rates and high prices, stepped aside. Cash investors filled the gap.

Key investor trends:

• Small investors (1-10 properties) controlled 85% of investor-owned housing
• Cash purchases hit 32.8% of all transactions
• Institutional buyers retreated; local investors thrived

What it means: Wholesalers had unprecedented buyer demand in 2025.

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Texas Market Performance

DFW Metroplex

What happened:

• Median price: $435,000 (up 2% from 2024)
• Days on market: 42 days (up from 39 in 2024)
• Inventory: Up 23% year-over-year
• Cash transactions: 35-38% in suburbs

Trend: Market cooled but remained investor-friendly. Suburbs outperformed urban core.

Houston

What happened:

• Median price: $385,000 (flat from 2024)
• Inventory growth: 18% year-over-year
• Cash transactions: 38.8%
• Insurance costs rose significantly (impacting affordability)

Trend: Insurance crisis created opportunities for cash buyers who could absorb costs.

Austin

What happened:

• Median price: $550,000 (down 3% from peak)
• Inventory surge: 35% year-over-year
• Price cuts common: 20% of listings reduced price
• Tech layoffs slowed demand

Trend: Market correction created buyer opportunities after years of overheating.

San Antonio

What happened:

• Median price: $330,000 (up 3%)
• Strong rental demand (military bases)
• Best cash flow market in Texas
• Lower competition than other metros

Trend: Steady, consistent performance. Best for buy-and-hold investors.

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Flipping in 2025: Profits Compressed

Fix-and-flip data from ATTOM:

• Average purchase price: $260,000
• Average sale price: $325,000
• Average gross profit: $65,000
• Average ROI: 25.1% (lowest since 2008)

Why profits fell:

• Higher acquisition costs
• Rising renovation costs (labor + materials)
• Longer time on market
• Buyer resistance to high prices

Who still made money:

• Investors with strong contractor networks
• Those who bought well below market
• Markets with strong fundamentals

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Foreclosures Returned

After years of artificially low foreclosure activity, they're back:

• Q3 2025: 101,513 foreclosure filings (up 17% year-over-year)
• Bank repossessions: Up 33%
• Texas led nation with 9,736 foreclosure starts

Why:

• End of pandemic protections
• Rising insurance costs (Florida, California, Texas)
• Adjustable-rate mortgage resets
• Inflation squeezing homeowners

What it means: More distressed inventory = more opportunities for investors and wholesalers.

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Wholesale Market Thrived

Despite (or because of) market challenges, wholesaling boomed:

• Average assignment fees: $10,000-$15,000
• Strong buyer demand from investors
• Off-market deals in high demand
• Platforms like PropPipeline grew significantly

Why wholesaling worked:

• Traditional buyers sidelined = less competition
• Investors needed deal flow
• Cash buyers moved fast
• Motivated sellers increased

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First-Time Buyers Struggled

The American Dream got harder:

• Median first-time buyer age: 38 (up from 35 in 2023)
• Only 7% of buyers were first-timers in 2025
• 63% of Gen Z buyers earned $75K+ (homeownership for high earners only)

Impact: Properties that would've gone to first-timers went to investors instead.

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What We Learned in 2025

Lesson #1: Cash Is King

With 32.8% of transactions all-cash, financing became a disadvantage. Cash buyers won deals, closed faster, negotiated better.

Lesson #2: Fundamentals Matter

Markets with job growth, population growth, and strong rents (DFW, San Antonio) outperformed.

Lesson #3: Small Investors Beat Institutions

Wall Street retreated. Local investors with 1-10 properties thrived.

Lesson #4: Off-Market Deals Win

MLS inventory increased, but best deals came off-market through wholesalers and direct-to-seller marketing.

Lesson #5: Margins Require Discipline

With profits compressed, only disciplined investors (accurate ARV, tight budgets, strong contractors) made money flipping.

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2026 Predictions

Mortgage Rates

Prediction: Stay in 6-7% range
Impact: Continued advantage for cash buyers

Why: Fed unlikely to cut aggressively; rates remain elevated by historical standards but stable.

Home Prices

Prediction: Modest growth 2-4% nationally, varies by market
Impact: Appreciation continues but slowly

Texas-specific:

• DFW: 3-5% growth (strong fundamentals)
• Houston: 1-3% growth (insurance headwinds)
• Austin: Flat to 2% (correction stabilizing)
• San Antonio: 3-4% growth (steady demand)

Investor Activity

Prediction: Remains elevated at 25-30% of transactions
Impact: Continued strong buyer demand for wholesale deals

Why: Traditional buyers still priced out; investors have capital and see opportunity.

Foreclosures

Prediction: Increase another 10-15% in 2026
Impact: More distressed inventory available

Why: Economic pressures persist; no new protections coming.

Inventory

Prediction: Continues rising 10-15%
Impact: More selection for buyers, more negotiating power

Why: New construction delivering; some sellers forced to sell despite rates.

Wholesaling

Prediction: Remains strong but more competitive
Impact: Wholesalers need better marketing, stronger buyer relationships

Why: More people entered wholesaling in 2025; competition increased.

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Opportunities in 2026

For Flippers:

✅ Focus on distressed properties (foreclosures, pre-foreclosures)
✅ Buy in emerging submarkets (path of progress)
✅ Keep renovations moderate (buyers want value, not luxury)
✅ Build strong contractor teams (speed = profit)

For Buy-and-Hold Investors:

✅ San Antonio and secondary markets offer best cash flow
✅ Focus on C+ neighborhoods (strong rent-to-price ratios)
✅ Buy now, benefit from appreciation over 5-10 years
✅ Consider BRRRR to recycle capital

For Wholesalers:

✅ Build larger buyer lists (competition increasing)
✅ Focus on motivated seller marketing
✅ Use platforms like PropPipeline for deal flow
✅ Specialize in distressed/foreclosure opportunities
✅ Provide value (accurate comps, inspection reports)

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Risks to Watch in 2026

Risk #1: Economic Recession

If unemployment rises significantly, demand could drop sharply.

Risk #2: Insurance Crisis Worsens

Rising insurance costs in Texas could impact affordability and values.

Risk #3: Interest Rates Spike

If Fed must fight inflation again, rates could reach 8%+.

Risk #4: New Construction Oversupply

If builders deliver too much inventory, prices could drop.

Risk #5: Investor Exodus

If returns compress further, investors may exit market.

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The Bottom Line

2025 was an investor's market—and 2026 looks similar.

Cash buyers, wholesalers, and disciplined investors thrived. Traditional buyers struggled.

Keys to success in 2026:

• Focus on fundamentals
• Buy with discipline
• Keep cash reserves
• Build strong teams
• Stay educated on market trends

PropPipeline will be here connecting investors, wholesalers, and cash buyers across Texas—helping you find and close deals in whatever market conditions 2026 brings.

Here's to a profitable 2026!

Join PropPipeline and start the new year strong.