• The Texas real estate market has cooled after the frantic activity during the pandemic.
• In boomtowns like Austin, real estate prices are falling as fewer people move to the state.
• Some say they are upset about rising housing costs and the general cost of living on the Lone Star.

Texas wasn't quite what it was cracked up to be, according to Peter Hoholick, a California native who moved to Austin in 2021 amid rumors that a cheaper, more relaxed lifestyle was on the horizon.

The move fell short of Hoholick's expectations. The weather was “miserable”, the humidity and temperatures in the south were in the triple digits in summer. The cost of living was comparable to California, although he said the pay was lower.

The tense, conservative political climate broke him. When Roe vs. Wade was overturned, Hoholick made the decision to return to California. His quality of life has improved “significantly,” he said in an interview with Business Insider.

“I was young and stupid at that point,” Hoholick said of his short stay in Texas — about 13 months. “I would never consider moving back.”

He is not alone. Although some cities still attract many long-distance movers, more Americans are enamored with the Lone Star State as interest in moving to Texas has waned while interest in relocating has increased. The change in attitudes is an indicator of the state's housing market, which has boomed during the pandemic.

The weather is hot and the political climate is too tense for some, but the main reason the battle for Texas may be over is simply that life there is much more expensive than it used to be, real estate experts and brokers in the state told BI.

The negative sentiment is already evident in the state's migration and housing data. According to the U.S. Census Bureau, while Texas gained 668,000 residents between 2021 and 2022, it also lost nearly half a million people, with 494,077 people leaving the state that year.

This small exodus appears to be taking place in what were once Texas' most popular boomtowns. Dallas has seen a slight decline in population in recent years, with the city losing around 5,000 people from mid-2020 to mid-2023, according to census data.

According to an analysis by moving company PODS, Austin is now the fifth-most moving-out city in the U.S. year-to-date, although the city is no longer among the top 10 most populous cities in the U.S.

Real estate agents in Texas also say there is a much cooler climate for buying and selling a home due to weaker demand. Average home prices in Texas have fallen about 7% from their peaks in mid-2022, according to data from Redfin. The decline is an outlier compared to the broader U.S. housing market, where prices are still hovering around record highs.

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In 2022, homes went up for sale in Texas in a matter of days, but now it takes sellers months to find a buyer, according to James Willoughby, an Austin-based real estate agent.

In some cases, Willoughby says, he has encouraged sellers to reduce prices by 20 to 30 percent. According to Redfin, more than a third of homes in Texas saw prices drop in August.

“We had such an avalanche of buyers moving here from elsewhere and not as many people selling. So we got into the madness that we got into a few years ago,” he said of the Texas real estate market during the pandemic, adding that he has seen a “pretty large number of people” leaving the state over the past year wanted.

William Wheeler, an Amarillo-based real estate agent, says the number of clients looking to move out of Texas is “pretty much equal” to the number of clients looking to move in.

“We have made a lot of price cuts, more price cuts than normal,” he added.

Daryl Fairweather, Redfin's chief economist, said price declines suggest real estate markets like Austin and Dallas are likely nearing a bottom, although she noted the trend isn't uniform across the state.

“The boom cycle is kind of coming to an end,” Fairweather said.

Dwindling affordability

When the pandemic hit, Americans flocked to Texas in search of cheaper housing compared to other metropolitan areas, Fairweather says.

While brokers say prices are falling faster than in other parts of the country, they are also down from a higher peak following the housing frenzy that occurred during the pandemic.

In March 2020, the average home price in Texas was $253,600, about 20% lower than the national average at the time of $303,577.

Since then, Texas home prices have risen 37%, with the average price in August at $348,300, Redfin data shows.

Similar to states like Florida, Texas has faced many extreme weather events in recent years, causing home insurance premiums to skyrocket.

According to a report from LendingTree, premiums in Texas increased 55% from 2019 to March 2024, with the average homeowner in the state paying $4,647 per year.

“This difference in affordability made it worthwhile for people to move across the country and start a new life in Texas. “But now because property prices are so high, it’s just not as attractive,” Fairweather added.

A generally higher cost of living combined with a weakening job market could also influence waning interest in the state, she said.

According to the Bureau of Labor Statistics, consumer prices in the Dallas, Fort Worth and Arlington areas have increased 25% over the past five years.

Meanwhile, Texas-based job postings on Indeed are down 28% from their 2021 peak.

Samuel Cobb, an East Texas resident looking to leave the state, said the cost of living has “skyrocketed” since the pandemic. He and his wife barely save anything and can barely eat in restaurants, he added.

“We couldn’t live there anymore, couldn’t go back there, couldn’t afford to get a job there or anything, so they just kicked us out,” he said of Austin. “Right now we’re basically struggling to afford to live anywhere.”

Current and former Texas residents who spoke to BI also frequently cited the extreme heat and political atmosphere as key reasons for leaving. But those issues are insignificant compared to things like economic growth and housing affordability, Fairweather said, which she described as two of the biggest factors that could determine whether the Texas real estate market rebounds.

However, Hoholick is pretty sure he will never return to the state in the long run. He recalled turning down a recruiter earlier this year for a position that would double his current salary, even though the job was based in Austin.

“I couldn’t afford to go back there at any cost,” he said.

Even Cobb, who hasn't left Texas yet, doesn't think he'll come back after he leaves. His only problem is selling his house, which has been on the market for over two months.

“We made the decision to move in August or July, and now we're like, what the hell do we do now? We want to get there. We're tired of the heat in Texas, tired of politics in Texas. ” he said. “So we definitely feel stuck right now.”