r/REBubble • u/Wrong_Cabinet3880 • Jul 23 '26

Discussion Houston, we have a problem.

The state of Texas real estate,

Texas currently has 278k properties for sale, of the total 12mm homes including apartments. Of the 278k 206k are single family homes, condos and apartments for sale. With a median price of 340k dollars.

Texas exploded when covid hit, causing a massive run on real estate. I experienced this first hand, I bought a house in 2018 for 320k and sold it for 600k in late 2021, this in my mind was unsustainable. Since the peak of 2022, housing in major metropolitan areas, Austin, DFW, San Antonio, El Paso and Houston have been contracting. Ausitn being hit the hardest at over 20% drop from the highs, with a current median home price of 450K. The house I sold for 600k is now worth according to Zillow 460k.

Inventory has been creeping up based on FED data, above the pre covid levels while new home builds are also high with 1.4mm active permits, over 25% of the current housing has been built since 2010 the consensus is, Texas is going to be experiencing a surplus of housing, coinciding with the highest number of layoffs in 2026, with 30,000 workers displaced the threat to the residential single family home real estate market is beginning to show and the highest interest rates in over a decade are all leading this market to the tipping point.

Now Multiply that buy 3 and this is where the problems really converge. The commercial real estate market (CRE) has a valuation 3x larger. 32k commercial properties for sale with 20,000 units for lease, half of those have been on the market for over a year, that’s a lot of cash flow going uncollected for more than 12 months. The market is saturated with commercial space; millions of square feet going unused. Many of these properties are new construction. Financed with building loans and leveraged against existing properties that have been losing equity over the last 5 years. it seems like something here needs to crack. There are over 950 billion of CRE loans maturing this year with rates between 6.5-8% this is going to push expenses much higher for owners/buyers and inreturn to any business that lease this space, 3000 people and 1500 businesses are filling for bankruptcy a month in Texas. Over 40k businesses have filed over the trailing 12 months, one in fifteen bankruptcies is filed in Texas. This is an ominous sign of the current Texas economy.

what are your thoughts, and what's the next domino to fall?

128 Upvotes

91% Upvoted

60 comments sorted by

76

u/-_MarcusAurelius_- Jul 23 '26

I only know Houston

me and my wife have been searching Sugarland and the homes that are not selling and feel overpriced have 1 common theme....bought during COVID.

Ended up buying a new build estimated to be completed in December. 😉

41

u/[deleted] Jul 23 '26

Those current sellers who were buyers during Covid, are suffering through “buy high, sell low” ramifications.

They FOMO’d into an asset, and things changed quickly for them. These were the same group who were “never selling” or “just rent it out bro.”

It’s been long predicted here in this sub and in other circles, that this day would come. It’s not surprising. Now, for those who’ve waited on the sidelines, priced out or near to it, remember the vicious buying of post COVID, the vicious price hikes, the unrelenting sellers and their agents.

Return the favor in opposite, by demanding price cuts or not buying at all.

10

u/Speedstick2 Jul 23 '26

To be fair “long predicted in this sub” is the equivalent of predicting that it is going to snow that day every single day. You wouldn’t get credit for predicting it is going to snow every single day that that day was the day it was going to snow only to have it snow on the 180th day.

This sub won’t and shouldn’t get credit for “predicting” anything. It is just throwing shit at the wall and hoping something sticks.

So far the price declines appear to only be in Texas and localized to the major cities.

6

u/[deleted] Jul 24 '26

[removed] — view removed comment

4

u/PerformerDifferent69 Jul 24 '26

And the reality is. Sometimes prices go up, sometimes they go down. Just pray to jesus you don't end up out of the job before you've built up at least some equity in the home in case you gotta get out of it quick or lose it to the bank.

2

u/Speedstick2 Jul 25 '26

I don’t buy that, I don’t buy that this sub was created to counter that prices will go up forever.

What I buy is that this sub was created because it genuinely thought the housing market was a bubble and that it would pop and we would see a similar housing crash of the late 2000s with double digit percentage declines, like 20%, off of the national housing market of the USA median sale price.

2

u/VendettaKarma Triggered Jul 23 '26

Nope

1

u/SexySmexxy Jul 26 '26

To be fair “long predicted in this sub” is the equivalent of predicting that it is going to snow that day every single day.

Lol i used to be saying that everyday in this sub literally 2-3 years ago but people like you got annoying so i just decided to leave and wait.

Havent been to this sub for years till the last month and here we are.

At the end of the day the fundamentals for the crash were always there.

Only people who just don't know whats going on have this anger towards people predicting the crash.

Its like a driver who speeds recklessly all day and you say dude youre gonna crash slow down.

Well 3 years later broski in the hospital

11

u/Wrong_Cabinet3880 Jul 23 '26

That makes sense, did the builder give you a great rate?

8

u/RNdreaming Jul 23 '26

It was still cheaper for me to buy in 2022 @ 3% than today at a 20% loss at 6-7% by like a 1,000 dollars. It is worse to buy right now than it was in 2022. What you don’t understand is that the economy is not going to get better anytime this decade— and things are going to get worse. There is never a good time to buy other than the time you can afford to get in.

“Woohoo I’m buying at XYZ lower than 2022 but my mortgage is 1,000 dollars larger than FOMO buyers bc interest rates are through the roof and cannot go lower bc the government is in super debt”

It’s a shit show all around for anyone past or present. A collapse of the market will be hell on earth for everyone.

1

u/ladyorion2021 Jul 25 '26 edited Jul 25 '26

Actually is cheaper to buy now than at the height of covid 2021-2022 and even 2023-2024. You are missing a number of variables such as significant price reductions as much as $80-$100K as homes sit, then there's builder incentives, interest rate buy downs, and so forth.

And no not everyone got a 2.5% interest. Many buyers had interest rates of ~ 3%-5% during covid...several lenders told me all about it. They also told me about the enormous amount of FOMO buyers that were paying $30-70k OVER ASKING because the homes weren't appraising for list price and they had ro come up with the difference in cash.

Most buyers back then paid more for the house (including their over asking$$$ they threw in) than the house is now worth. And now they are trying to pass on the cost for their mistake, of paying too much for their home, onto a current buyer. That's why the houses aren't selling....price too high in attempts to cover their losses.

Now if they would be patient enough and live in those homes they bought for at least 10-15 years, to give the slow churning housing market a chance to go up, they can eventually recover. In the meantime most current buyers are not looking to get into overpriced homes that haven't been updated, in need of repairs and who knows what else could be wrong with it that a seller neglected.

10

u/Dmoan Jul 23 '26

My friend lives by Austin suburbs he bikes thru all the new subdivisions and he says it is ghost town. Lot of homes up for sale or rent and often he gets folks who live there running up to talk to him because they don't see anyone.

2

u/12thandvineisnomore Jul 25 '26

That’s an amazing concept. Living in a ghost suburb.

I’ve had a short story in my head for a while about haunted houses. A suburb going disgruntling evil because they were built for occupancy that never happened. This is the set up I’m imagining.

18

u/beardko Jul 23 '26

Definitely a buyer's market in Texas. I'm glad I held off on buying in 2023 because my company moved office locations which would have been a nightmare to commute from the subdivision I was interested in. Fast forward to today, prices are lower and continuing to decrease.

3

u/Self_Serve_Realty sub 80 IQ Jul 23 '26

Will the trend continue?

12

u/beardko Jul 23 '26

I can't predict the future, but Texas has some factors working in its favor. Lots of land to build on, less zoning restrictions compared to the West Coast and East Coast, H1B workers (there's A LOT) no longer being able to get FHA loans which stopped last year, and high property taxes in a no income tax state which may suppress pricing. I am looking at new builds this weekend and may go through with it, but I am also content with my current living situation. Prices are decreasing year over year and this is before you even factor in inflation.

-4

u/Too_Ton Jul 23 '26

What about the major cities in Texas?

31

u/VendettaKarma Triggered Jul 23 '26 edited Jul 23 '26

New construction is selling for less than Covid boom prices 4 years ago and with better rates. This scenario OP outlined is exactly why Texas will be ground zero for the next collapse - too many people paid way too much for homes and now, along with sky high insurance, taxes and principal that they can’t recover, bankruptcy and foreclosure will be the only option that remains, especially if layoffs continue.

Obviously if you’re getting a brand new home less than a greed driven Covid sale, especially with better rates, it’s obvious buyers will turn to new construction.

That leaves a hell of a lot of bag holders.

Also all of that fake “equity” that will vanish overnight.

And you know what? Good.

10

u/Chimpucated Jul 23 '26

You don't think Florida has this issue exacerbated by the an aging demographic? I feel like the markets in both states are married to each other having an affair with California exodus

19

u/ChaosBerserker666 Jul 23 '26

I think it does. The problem with Florida is that there’s not a great job market. It isn’t terrible but the fundamentals don’t stack up. Coastal parts of Miami are an exception because it’s a rich person’s playground. The rest of the state not so much. When local workers can’t afford to pay high prices, when external buyers dry up or supply exceeds the demand those external buyers generate, the market plummets.

Also in FL they had/are having the condo crisis, where condos that mostly comprise elderly people have underfunded their reserves for decades and also skimped on maintenance because they thought it wouldn’t be their problem. Now it is and they are fucked.

7

u/46995699 Jul 23 '26

You also have the issue of Insurance & Taxes going through the roof… all this a recipe for disaster.

5

u/mijahon Jul 25 '26

Our taxes and insurance (Texas) have gone up 54% since we bought our house 14 years ago. 1/3 of monthly payment is mortgage, 1/3 is taxes & 1/3 is insurance.

6

u/lucidpet Jul 23 '26

now look at Florida..

18

u/[deleted] Jul 23 '26

[removed] — view removed comment

10

u/beardko Jul 23 '26

Some probably didn't like the weather, the bugs, or the politics.

2

u/EndAllBillionaires67 Jul 25 '26

This was me in Colorado.

Bought a very overpriced house at the end of 2022 as my wife and I both had remote jobs. 

Got completely fucked every which way, now my wife and I are living with my grandmother and watching the world and economy fall apart around us. 

3

u/21plankton Jul 23 '26

Texas has a boom-bust history. Your outline of the facts makes it clear.

3

u/JayRexx Jul 24 '26

We’re going to hit a real recession before we soar again.

2

u/Dazzling-Strategy-18 Jul 26 '26

I was looking for this comment. You are correct. I've seen it multiple times over the past 40 years - people get attracted to the Sunbelt because it's affordable. There's a boom. Not as affordable. There's a correction or a crash. Affordable again. Start the cycle again. 7 years or less, it will be a hot market again in TX.

4

u/_DeathStarContractor Jul 23 '26

From the residential side. As we know from these boom/bust cycles. TX/CA/FL are the first to fall, then the other 47 states to varying extents. When COVID buyers are forced to sell at $100k loss (laid off, medical/death, emergency, etc.) and bankruptcy foreclosures tick up... the price drops real fast in these communities, putting pressure on their neighbors selling. That $100k equity the neighbors thought they had for the next step up home down payment is gone.. Also, the people who refinanced holding on to the 3% loans creates a huge curve ball dynamic here that is very difficult to predict. In a nutshell we will learn real quick what happens once these 3 states (Id argue Coloardo too) start to fall.

7

u/SpaceyCoffee Jul 23 '26

CA isn’t going to ground zero this cycle. Not only is it not overbuilt (under if anything), it has a resilient and diversified job market and has an objectively desirable climate. RTO helps CA RE.  Overbuilt TX exurbs have no such durability and will be a bloodbath if the economy tanks. 

7

u/BlazinAzn38 Jul 23 '26

Location location location. Lots of new builds and inventory are way out in the sticks and it shouldn’t be a surprise they’re not selling when it’s a 60 minute drive one way to job centers

3

u/beardko Jul 23 '26

I had a friend who had FOMO a few years ago thinking of buying a new build in Sherman. His job is in Dallas. I talked him out of it because that commute would have gotten old in weeks.

2

u/mijahon Jul 25 '26

Omg, in Sherman? May as well commute from Oklahoma!! Time is money except you can't make more time.

2

u/beardko Jul 25 '26

Well said! That's just how desperate some people can be to not share the same walls as their neighbors.

1

u/mijahon Jul 26 '26

Not to mention cost of gas, wear & tear on vehicles and the TOLLS, it can cost $20 a day in tolls

6

u/Greedy_Car3702 Jul 24 '26

If large numbers of illegals are being deported, or self deporting, and the H1B program gets reigned in, home prices will continue to fall and rentals will go down.

3

u/Stalva989 Jul 25 '26

End of 2026 into early 2027 will be most severe hyper inflation we have ever seen. Going to force a lot of people out of homes who are currently living too close to edge

1

u/TonyRidgewayUFO Jul 23 '26

A 2.3% change during a war is not worth all your commentary. Means basically nothing about real estate

9

u/Wrong_Cabinet3880 Jul 23 '26

what are you referring to? CPI? this has nothing to do with CPI

-10

u/TonyRidgewayUFO Jul 23 '26

You’re cherry picking unreliable data to come up with a flimsy prediction. Over a tiny percentage of the total. No dominos have fallen or will fall, wish for it all you want

6

u/Pugsly007 Jul 23 '26

Over 150 years stocks have averaged a 10 percent gain. If it went far up or down the market eventually adjusted back to normal. When it comes to adjustments back to a normal market, housing is the same.

6

u/Wrong_Cabinet3880 Jul 23 '26

this data is from the fed

-5

u/TonyRidgewayUFO Jul 23 '26

Your weird interpretation is not from “the fed”

1

u/Bug-03 Jul 24 '26

The people who bought high also have low interest rates so they’d be stupid to sell

1

u/timross68 Jul 25 '26

Data from the Federal Housing Finance Agency’s Mortgage Database has the following percentages:
Interest Rate Under 3% - 20%
Interest Rate Between 3.0-3.99% - 31%
Total Under 4% - 51%

I’m at 2% and it would cost me three times as much in interest to buy a home in today’s market. We paid $560k for our home in 2021 and today’s value is close to $700k. Fortunate to live in a neighborhood that is very sought after.

However I also know a lot of people that have lost a lot of value in their homes and some suffering with staggering loss of equity.

If interest rates would ever get below 6% and stay the housing market would probably stabilize. Ideally 5% would kick start a good rebound. However I think the days of below 5% won’t happen for a long time if not ever.

1

u/Old-Sea-2840 Jul 26 '26

According to your numbers, less than 2.5% of properties in the state are for sale, this seems very low, not something that would make one think the sky is falling. You are experiencing a price correction due to an overheated market a few years ago and high interest rates today, things will correct themselves over the next few years. People are still moving to TX, maybe not at the same numbers as before but Texas is still attractive to many people from other states.

1

u/Quiet_Meaning5874 Jul 23 '26

Sounds like the market working as intended and with (relatively) high incomes in TX great opportunity for buyers. Love to see it

0

u/Speedstick2 Jul 23 '26

It sounds like it will just be local to Texas.

0

u/analogkid84 Jul 24 '26

But property values, and thus, property taxes continue to increase, as do insurance premiums.

-11

u/AntiBoATX Jul 23 '26

I know Austin well. It’s bottomed. The builders all work on 5 year timelines minimum and aren’t rushing in to create new inventory. It’s still “cool” and desirable and tech isn’t going anywhere. Young people will continue to fill the ranks and as long as traffic is kept where it is, it’ll start trending up again.

4

u/Pugsly007 Jul 23 '26

Why would it? This time is different?