Texas is having a bit of a moment — more than a moment, actually. The state where everything is bigger is having a big boom in terms of real estate. In fact, GOBankingRates recently named Texas as the number one most undervalued state to buy or invest in property in 2024. Texas has a lot to offer when it comes to culture, history, economic growth and more. But not everywhere in Texas is a great place to shop for real estate.
Some towns in Texas are having a tough time keeping up with the rest of the state, due to factors calculated by GOBankingRates, such as a low livability index, small populations and significant drops in the average home price from year to year. GOBankingRates reached out to a few real estate agents to find out what are the five worst Texas cities to buy property in the next five years.
Before we jump in, her are five reasons why you might regret buying a Texas home.
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Medina
This tiny, unincorporated town is located 12 miles northwest of Bandera, Texas and it feels out there with nothing but agriculture for miles and miles. In 1989, the Texas Department of Agriculture declared Medina as the Apple Capital of Texas. That said, it might not be the place you want to buy property.
The town of Medina has seen home values decline dramatically, according to Danny Johnson, founder of Danny Buys Houses Texas.
“Much of this has to do with the situation with Medina Lake,” Johnson said. “The lake is a reservoir for the farmers in the Medina Valley. This means the lake is constantly being drained to water crops.
“The lake levels have been very low for a long time which causes problems for local real estate values,” he said. “I had a second home on this lake and was happy to sell (with full disclosure about the lake levels) when the lake was nearly full. Glad I did.”
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Mustang Ridge
According to Mustang Ridge Realty, this town — 10 miles from Bergstrom International Airport, with portions of the city in both Caldwell and Travis County — was “incorporated into a city by Alton Brooks Laws Jr. and Charles Laws in 1985 in order to avoid being in The City of Austin ETJ and their regulations.”
With a population of 861 in the 2010 census, Mustang Ridge is ready for expansion and growth, but its removal from the larger metropolitan areas around it keeps it small and not a great investment when it comes to buying property.
“With a lower than average livability index and such a steep decline in average home price in one year, it is obvious that Mustang Ridge is not a desirable place to invest your money in real estate,” Johnson said.
New Hope
New Hope, Texas has a tiny population and according to Johnson, that’s because the U.S. Census Bureau estimated “the 2015 population to be 639, however 2016 voter [rolls] show 476 registered voters, according to the town’s official website.
This small population “affects the real estate values because, unless you have an abundance of hope, it does not take much for supply and demand to be affected,” Johnson said.
Burton
“I wouldn’t buy houses in Burton, Texas as an investment over the next five years due to its very low livability index,” Johnson explained.
It’s not just the low livability, but the population as well. Before the 2010 census was conducted, Burton changed its status from a town to a city, though the 2020 census reported only 294 residents live within the city limits.
“High crime and low employment keep this from being a place many people want to move to,” Johnson said. “If you have a vacant house you want to sell or rent, you could face difficulty and have to drop your asking price or rents.”
McDade
High property taxes are taking their toll on McDade, Texas in Johnson’s professional experience.
“Paying out big money every year to own an investment property in place with a low livability index does not sound like a good time or wise investment,” he explained.
“For this reason and the reason of not having a middle school, I would not buy houses in McDade any time soon,” Johnson said.
Methodology: For this study, GOBankingRates analyzed housing markets across cities in Texas to find the places you should avoid buying. GOBankingRates started by using the Zillow Home Value Index to find the [1] January 2023 average single-family home value for every city in Texas, [2] January 2024 average single-family home value for every city in Texas, [3] overall Texas state January 2024 average single-family home value and the [4] overall U.S. national January 2024 average single-family home value all sourced from Zillow Home Value Index for Single Family Homes. Using the home values from each city, the year-over-year change in USD and percentage can be calculated, as well as the differences from the Texas average and national average. To qualify for this study, the year-over-year change in home value had to be negative, the home value had to be inflated over the state average and the home value had to be inflated over the national average. For each city left on the list, the livability index was sourced and all the cities with a livability below 70 were kept as they represent the places with the poorest quality of life. The year-over-year change in home value was scored and weighted at 1.50x, the difference from the Texas state average was scored and weighted at 0.75x, the difference from U.S. national average was scored and weighted at 0.75x and the livability index was scored and weighted at 0.75x. All the scores were summed and sorted to show the 2024 housing markets to avoid buying a home in Texas. All data was collected and is up to date as of May 21, 2024.
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This article originally appeared on GOBankingRates.com: 5 Worst Texas Cities To Buy Property in the Next 5 Years, According to Real Estate Agents