Texas Housing Market Sours After Homeowners Are Given Bad Advice
The Texas housing market is facing growing challenges after a wave of former Airbnb properties flooded the market, making it harder for sellers to compete.
According to Galveston real estate agent Tom Schwenk, many investors who tried to capitalize on the opportunities the short-term rental market were mistakenly advised and purchased houses in less popular tourist destinations. These homeowners, he said, are now struggling to sell their properties.
'Galveston is a lovely place,' Schwenk told the Houston Chronicle, 'but we're not the Hamptons.'
Surging inventory across the Texas housing market signals a steep decline in competition. While the shift may give buyers an edge with potential price drops, it poses new challenges for homeowners and investors trying to sell or lease their properties.
The number of new home listings in Galveston has risen to 828 in the first quarter of 2025 from just over 500 last quarter, according to the Chronicle's analysis of data from the Houston Association of Realtors (HAR).
In its most recent housing market update, HAR described the supply of homes in the Greater Houston market as 'great news for prospective buyers,' with nearly 33,000 available on the market, the highest point since June 2011. The trend continues across the state, with the number of listings surging to 123,237 in April from 95,156 last year.
However, the oversupply has created challenges for sellers and those seeking to rent out homes purchased during a COVID-19 pandemic-era buying frenzy, Tom Schwenk, the owner/broker of Coldwell Banker TGRE, told the Chronicle.
According to real estate brokerage Redfin, homes in Galveston are on the market for an average of 105 days before purchase, up from 83 days last year. But the oversupply has not yet translated into a sharp drop in median home prices across Texas, which would signal the market entering 'correction territory.'
Shae Cottar, regional director for brokerage platform LPT Realty,wrote in early April: 'Lower mortgage rates are giving Houston homebuyers a sense of optimism, but many are still proceeding with caution. It's important to acknowledge that current economic headwinds, including the impact of new tariffs, are putting downward pressure on interest rates. These lower rates, coupled with growing inventory and moderating home prices, create an opportunity for both buyers and sellers.'
Jef Conn, chairman of Texas REALTORS, told Ramsey Solutions in January: 'We have seen listings taking longer to sell, so homes need to be market-ready and priced well in order to attract an offer. Buyers generally have more choices and a little more time to make decisions than a few years ago.'
Marco Santarelli, founder of Norada Real Estate Investments, wrote on Sunday: 'The dramatic increase in inventory, coupled with clear signs of prices dropping and underlying overvaluation, strongly indicates that the Texas housing market is undergoing a significant correction. It's a necessary adjustment after a period of unsustainable growth. While the exact magnitude and duration of the downturn remain to be seen and could be influenced by broader economic factors like the energy sector, the direction is clear: the Texas housing market is cooling down, and prices are finding a new level.'
House prices could soon react to the surge in inventory, according to real estate expert Nick Gerli, whose analysis suggests that homes are overvalued by about 17.7 percent across Texas, and he predicted home prices to drop by 4.0 percent over the next 12 months.
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