Investors are buying up discount townhomes in Texas, cashing in on rising rents

Prices for townhomes and condos in Texas fell in 2025 from a year earlier even as rents rose, offering investors a chance to make money — if they act quickly.

Nationally, the price of a typical detached home – a category that also includes townhouses and apartments – fell less than 1% year over year. However, in the Lone Star State, values ​​fell more than 4%, signaling a sharper market correction, according to a new report from a real estate analysis agency Cotality.

Cooldown prices for attached properties did not go unnoticed by Texas investors last year, marking a major shift from 2019, when there was more demand for detached or single-family homes.

By 2025, nearly 2 in 5 attached home sales in Texas involved investors, compared to just under 32% for detached homes.

“The eight-point spread is a marked departure from historical norms, even taking into account the fact that investors have an affinity for neighboring properties due to their lower access points and maintenance efficiency,” the report said.

Investor preferences in Texas diverge even more from the national average, with investors accounting for approximately 30% of U.S. attached home sales.

Why do investors buy townhomes?

Excessive investor interest in attached properties in Texas is directly related to the state’s rental market.

“Investors’ goal is to buy low and sell high, so the surge in investor activity in the Texas townhome/condo market is a signal that they believe that particular segment has bottomed out and is likely to increase in value in the coming years,” says Realtor.com® senior economist Jake Krimmel.

Cotality’s rent trend data shows that while Texas townhome and condo prices are falling faster than the national average, rents are higher than the U.S. norm.

From 2024 to 2025, U.S. rents rose 1.58%, while home prices remained essentially flat.

However, in Texas, rents rose 2.56% year over year while home prices fell 4.03%, giving investors the opportunity to boost their returns.

According to Realtor.com’s analysis of housing data, the average sales price of a condo in Texas was just over $300,000 in 2025, which was about $24,000 cheaper than a single-family home.

“Investors are taking advantage of a unique window to acquire assets at 2022 prices but lease them at 2025 rates,” the report explains.

But this dynamic of low house prices and high rents is not expected to continue.

V-shaped house price trajectory

Cotality’s home price index forecast suggests that sales prices in the Lone State will begin to rise this year. The report describes the trajectory as a “V”-shaped recovery, with the bottom representing a narrow window for investors to take advantage of higher rents.

Home prices in Texas are expected to grow 3.2% annually through 2030.

This outlook mirrors the findings of Realtor.com’s 2026 real estate forecast, which shows home price growth this year in Texas’ largest metro areas, including Houston, Dallas, Austin and San Antonio.

For investors who entered the market last year and purchased underpriced townhomes and condos, the expected market recovery will likely boost returns.

In the second quarter of 2025, the share of investor homebuyers in Texas reached 13.4%, up 0.9% from a year ago, according to Realtor.com’s mid-year investor report, released in November. The average investor spent $251,000 on a home, which was $74,000 lower than the state’s average sales amount.

“If forecasts hold, they will secure high rental yields today and ride the wave of capital growth as the market normalizes,” the report said.

Krimmel says data suggests demand for rental properties in Texas will continue, even if rents aren’t expected to rise dramatically.

“As long as interest rates remain high as expected, more Texas households will continue to rent,” the economist said.

Cotality also notes that Texas may not be the only market where investors could benefit from purchasing discount townhomes to rent out.

Price-sensitive states such as Florida, Arizona, North Carolina and South Carolina could be the next destinations for increased investor interest.