Investors Snap Up Discounted Townhomes in Texas—and Move in at Rising Rents
Texas townhome and condo prices are falling in 2025 compared to last year, as taxes are rising, giving investors a chance to cash in—if they act fast.
Nationally, the price of a typical attached home—the category that includes townhouses and condos—has fallen less than 1% year over year. In the Lone Star region, however, prices fell more than 4%, reflecting a sharp market correction, according to a new report from real estate analytics firm Cotality.
Cooling prices in attached buildings were not seen by Texas investors last year, marking a big change from 2019, when detached, or single-family, homes were in high demand.
By 2025, nearly 2 in 5 attached home sales in Texas involved investors, compared to less than 32% of detached homes.
“The eight-point spread is a clear departure from historical norms, even accounting for the fact that investors relate to attached properties because of their low entry points and efficiency,” the report said.
Texas investor preferences differ even more than the national average, where investors account for nearly 30% of attached home sales across the US.
Why do investors buy townhomes?
Investor interest in foreclosed properties in Texas is directly linked to the state’s rental market.
“The goal of investors is to buy low and sell high, so the increase in investor activity in the townhome/condo market in Texas is a sign that they think a segment is over and will likely appreciate in value in the coming years,” said Realtor.com® chief economist. Jake Krimmel.
Cotality rental trends data shows that while townhome and condo prices in Texas are falling faster than the national average, rentals are exceeding the US average.
From 2024 to 2025, rents across the US increased by 1.58% while home prices remained low.
In Texas, however, rents rose 2.56% year-over-year as home values fell 4.03%, creating an opportunity for investors to maximize returns.
According to an analysis of real estate data by Realtor.com, the median condo price in Texas in 2025 was just over $300,000, which was about $24,000 cheaper than a single-family home.
“Investors are using a unique window to acquire property at 2022 prices but lease it at 2025 prices,” the report explained.
But this downward trend in house prices and rents is not expected to last long.
A V-shaped home price curve
Cotality’s home price index forecast suggests that sales prices in the Lone State will begin to rise this year. The report describes the route as a “V” shaped acquisition, the bottom of which represents a small window for investors to get higher rents.
Attached home prices in Texas are expected to grow at an annual rate of 3.2% through 2030.
That view is consistent with the findings of Realtor.com’s 2026 housing forecast, which shows home price growth this year in all major Texas cities, including Houston, Dallas, Austin, and San Antonio.
For investors who entered the market last year and snapped up low-priced townhouses and condos, the perceived market recovery is likely to boost returns.
In the second quarter of 2025, the share of real estate investors in Texas reached 13.4%, up 0.9% from last year, according to Realtor.com’s mid-year investor report published in November. The average investor spent $251,000 on a home, which was $74,000 below the state’s median sales price.
“If forecasts hold, they will ensure high rental yields today and rise at a faster rate as the market normalizes,” the report said.
Krimmel says the data suggests the demand for rental housing in Texas is here to stay, even if rents aren’t expected to see dramatic increases.
“As long as interest rates remain high, as expected, many households will continue to rent in Texas,” said the economist.
Cotality also notes that Texas may not be the only market where investors can benefit from buying discounted townhomes to rent.
Price-sensitive states such as Florida, Arizona, North Carolina, and South Carolina may emerge as the next areas to increase investor interest.
