Home Prices Are Dropping in Key Texas Markets

At LBC Capital, we help homebuyers take full advantage of shifting market conditions. With home prices declining across Texas—especially in cities like Austin, Dallas, Houston, and San Antonio—your mortgage buying power may be stronger than you think. Understanding how lower home values impact your ability to qualify for a loan, reduce your monthly payment, and build long-term equity is essential in today’s evolving real estate landscape.

Texas has been known for fast-growing housing markets, particularly in the post-2020 years. However, that trend is now shifting. This new environment offers fresh opportunities for homebuyers who act strategically with the guidance of mortgage professionals like LBC Capital.

Austin Sees the Most Significant Decline

Austin’s housing market has seen the steepest drop in home values among major Texas cities. Recent data shows that nearly 90% of homes in the Austin metro area have declined in value over the past year. The median home price has fallen from over $600,000 at its peak to around $496,000. This correction follows years of aggressive appreciation fueled by remote work trends and in-migration from higher-cost states.

Similar Trends in Other Texas Cities

While Austin’s decline is the most pronounced, Dallas, Houston, and San Antonio are also experiencing softening prices. Inventory levels are up, and demand has cooled slightly due to higher interest rates. However, for qualified buyers, this is not a setback—it’s a chance to enter the market under more favorable terms. LBC Capital helps clients navigate these shifts to make smart, well-timed mortgage decisions.

How Lower Prices Improve Mortgage Buying Power

You Can Afford More for the Same Monthly Payment

When home prices fall, you get more house for the same monthly budget. For example, a buyer who could only afford a $500,000 home last year may now qualify for a home that previously listed for $550,000, thanks to falling prices. That improvement means better neighborhoods, larger properties, or newer homes—all within your reach without increasing your monthly payment.

LBC Capital ensures buyers understand how price reductions can stretch their buying power, helping them identify homes that fit both lifestyle and budget.

Lower Prices Lead to Smaller Loans

A lower purchase price directly reduces the total amount you need to borrow. This means lower monthly mortgage payments, less paid in interest over the life of the loan, and improved chances of qualifying under lender guidelines. For many buyers, this opens the door to a 15-year loan instead of a 30-year loan, reducing overall interest expenses and building equity faster.

Easier to Make a Larger Down Payment

When prices drop, the same down payment amount goes further. For example, a 10% down payment on a $600,000 home is $60,000. On a $500,000 home, it’s just $50,000. If you still put in $60,000, your loan amount decreases, and your equity position improves. This may help you avoid private mortgage insurance (PMI) or secure a lower interest rate.

LBC Capital works with buyers to calculate optimal down payment strategies, ensuring they’re in the best position to meet lender requirements and reduce long-term costs.

More Inventory Gives Buyers Greater Control

Negotiation Power Shifts Toward Buyers

With more homes on the market and fewer bidding wars, buyers now have room to negotiate. You may be able to ask sellers for closing cost assistance, price reductions, or home repairs before closing. This added leverage strengthens your overall buying power and can save thousands during the purchase process.

LBC Capital’s team helps clients leverage these market shifts to reduce upfront costs and improve affordability.

Sellers Are More Willing to Offer Concessions

In today’s slower market, sellers are often more flexible. In Austin and other Texas cities, sellers may cover appraisal gaps, offer rate buydowns, or include appliances and upgrades at no extra charge. These benefits make your total cost of ownership lower—even if the list price doesn’t change significantly.

Better Mortgage Options in a Buyer’s Market

Qualifying Is Easier with Improved Loan-to-Value Ratios

A lower purchase price improves your loan-to-value (LTV) ratio—the percentage of the home’s value that you’re borrowing. A better LTV ratio often means better loan terms and fewer restrictions. For example, an LTV under 80% usually eliminates PMI, which can save you hundreds each month.

LBC Capital guides clients through these scenarios, helping them understand how each decision affects long-term affordability.

Down Market Reduces Risk for Lenders

Lenders are more comfortable underwriting loans when the property’s value relative to the loan is favorable. In a cooling market, that means your application may be stronger simply because you’re buying at a lower price. Your loan becomes less risky for lenders, potentially unlocking better rates or faster approvals.

Considerations Before You Buy

Equity May Fluctuate in the Short Term

While lower prices boost affordability, it’s important to understand that real estate values may continue adjusting. If prices fall further after your purchase, you could be temporarily underwater—owing more than your home is worth. This situation is less of a concern if you plan to stay in the home long term, but it’s something to factor in.

LBC Capital helps buyers assess market risks based on timing, location, and financing options.

Not All Markets Move the Same Way

Austin’s housing market is declining faster than others, but not all Texas markets are alike. Some suburbs or smaller towns may be holding their value, while others may be experiencing more volatility. Neighborhood-level trends matter, and LBC Capital works closely with clients to analyze specific areas to maximize their investment.

Mortgage Qualification Still Depends on Financial Strength

Even with lower prices, you must still meet lender requirements. Factors like credit score, debt-to-income ratio, and employment history continue to influence your ability to qualify. Lower home values make buying easier, but they don’t replace the need for a strong financial foundation.

At LBC Capital, we help you prepare a complete mortgage application and improve your approval odds with the best possible terms.

Use Lower Prices to Your Advantage

Falling home prices in Austin and other major Texas cities are reshaping the mortgage landscape. Buyers today have more power, more options, and more flexibility than in years past. Lower prices improve your loan terms, reduce upfront costs, and enhance long-term affordability—especially when paired with a smart strategy.

LBC Capital is here to help you make the most of these opportunities. From pre-approval to closing, we provide expert guidance, personalized service, and competitive loan solutions tailored to your needs. If you’re ready to explore the advantages of today’s market, talk to LBC Capital and unlock your mortgage buying power.