Houston’s housing market is following a path distinct from the sharper downturns seen in Austin, Boston, and other major metros. Mark Lee, Co-Founder and Partner at Absolute Properties, points to the city’s economic diversification and steady population growth as key factors that have prevented the severe corrections seen in other markets.
Lee observes that housing market performance has become increasingly local. While some cities are experiencing rapid price drops and sluggish sales, Houston has seen only modest declines and a slower sales pace.
“Real estate is local right now. In some areas, the market is still good. In some areas, it’s not. It’s not like before, when the whole nation was on fire a few years ago,” Lee says.
Houston’s ability to attract new residents and create jobs is providing a buffer against national housing headwinds. The city continues to draw people from other states, attracted by lower living costs, abundant employment opportunities, and an economy diverse enough to offer stability beyond any single sector.
Lee explains that population growth and job creation are fundamental drivers of Houston’s housing market. The city’s economy was once dominated by oil and gas. It now includes significant employment in shipping, healthcare, and related industries. The Texas Medical Center, one of the world’s largest medical complexes, offers thousands of jobs less exposed to energy price volatility.
“Our economy is more diversified: oil, medical, shipping, and now a lot more good restaurants and stuff. A lot of people are moving to Houston,” Lee says.
The broader economic base has made Houston more resilient during downturns. In previous decades, heavy reliance on oil led to severe real estate downturns when energy prices fell. Today, the city’s mix of industries cushions the impact of sector-specific slowdowns.
Historically, Houston has avoided the sharp real estate crashes that have hit other markets. Lee believes the pattern will continue. Prices are likely to remain stable or decline only slightly, rather than collapse as in Phoenix or Las Vegas in 2008.
“Houston’s been relatively insulated from crashes,” Lee says.
Several factors contribute to this resilience. Houston’s home prices have long been lower than those in coastal cities, reducing the risk of speculative bubbles. Permissive zoning and abundant land supply allow for quick adjustments to changing demand, preventing sharp price spikes. Houston’s large and diverse population creates a broad base of buyers, so weakness in one segment or neighborhood rarely affects the entire market.
Houston’s stability stands in contrast to Austin, where home prices have dropped more sharply in recent months. Austin’s market soared during the pandemic, fueled by tech sector expansion and migration from California, but that momentum has faded as tech hiring slowed and some workers left the city.
“In Austin, it has declined a lot,” Lee says.
The divergence between Houston and Austin underscores how local economic fundamentals now drive housing outcomes. Although both cities are in Texas, Austin’s reliance on technology makes it more vulnerable to downturns in that sector, while Houston’s diversified economy has proved more durable. Across the country, some markets are holding up while others see significant declines. Lee notes that investors who rely solely on national trends risk making poor decisions. The pandemic-era patterns of widespread bidding wars and inventory shortages no longer apply.
The direction of mortgage interest rates will be the most important factor for Houston’s market in the coming year, Lee says. With rates recently falling below 6%, he expects more buyers to enter the market, providing support for home prices.
“Once interest rates go below 6%, a lot more buyers will be able to buy a home,” Lee says.
Lower rates make monthly payments more affordable, which is especially important given the gap between home prices and household incomes. Lee believes that if rates remain low and incomes continue to rise, Houston should see a gradual increase in sales activity. He does not expect a return to the double-digit price gains of the pandemic boom. Instead, Lee anticipates a period of stability or modest appreciation, giving incomes time to catch up and improving affordability.
Absolute Properties has responded to localized market dynamics by broadening its geographic reach. Originally focused on southwest Houston, the firm now operates throughout the metro area. The expansion has included deals in nearby cities and out-of-state transactions, including a recent closing in Oklahoma.
Geographic expansion helps the firm find new opportunities and serve sellers in areas where other cash buyers are less active. Renovation and resale projects remain concentrated near the Houston base, where the team can oversee construction and manage timelines more closely.
“We’ve kind of expanded, but originally it was just mainly southwest Houston,” Lee says.
As the national market fragments, real estate operators who understand their local economic drivers, population trends, and affordability constraints have a clear advantage. In Houston, the combination of economic diversification and strong population growth is keeping the housing market comparatively steady. Markets dependent on a single industry or speculative demand are proving more volatile and vulnerable to downturns.
Looking ahead, Houston’s experience suggests that markets with broad-based economies and steady in-migration will continue to outperform cities tied to narrow economic sectors. Buyers, sellers, and investors who pay attention to local realities are better positioned to navigate the next phase of the housing cycle. National narratives are giving way to city-by-city outcomes.
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