Investors Are Scooping Up Discounted Townhomes in Texas—and They’re Cashing In on Surging Rents

Prices for townhomes and condominiums in Texas dropped in 2025 compared with a year before, even as rents increased, offering investors a chance to cash in—if they act quickly. 

Nationally, the price of a typical attached home—a category that includes townhouses and condos—dipped less than 1% year over year. In the Lone Star state, however, values dropped by more than 4%, signaling a sharper market correction, according to a new report from real estate analytics firm Cotality. 

The cooling prices on attached properties did not go unnoticed by Texas investors last year, marking a major shift from 2019, when detached, or single-family, homes were more in demand.  

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

"The eight-point spread is a clear departure from historical norms, even accounting for the fact that investors have an affinity for attached properties because of their lower entry points and maintenance efficiencies," says the report. 

Texas investors' preferences diverge even more from the national average, with investors accounting for about 30% of attached-home sales across the U.S.

Why are investors buying up townhomes?

The outsized investor interest in attached properties in Texas is directly tied to the state's rental market.

"The goal of investors is to buy low and sell high, so the surge in investor activity in the townhome/condo market in Texas is a signal that they think that particular segment has bottomed out and will likely appreciate in value in the coming years," says Realtor.com® senior economist Jake Krimmel.

Cotality’s rental trends data shows that while townhome and condo prices in Texas are falling faster than the national average, rents are outpacing the U.S. norm. 

From 2024 to 2025, rents across the U.S. edged up by 1.58% while home prices stayed virtually flat. 

In Texas, however, rents climbed 2.56% year over year as home prices plunged 4.03%, creating an opportunity for investors to boost returns. 

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

"Investors are capitalizing on a unique window to acquire assets at 2022 prices but lease them at 2025 rates," explains the report.

But this low home price-high rent dynamic is not expected to last. 

V-shaped home price trajectory

Cotality's home price index forecast suggests that sales prices in the Lone State state will begin climbing this year. The report describes the trajectory as a "V"-shaped recovery, with the bottom representing a narrow window for investors to capitalize on elevated rents.

Attached home prices in Texas are expected to grow at an annual rate of 3.2% through 2030. 

That outlook echoes the findings of the Realtor.com 2026 housing forecast, which shows home price growth this year across Texas’ largest metros, including Houston, Dallas, Austin, and San Antonio.

For investors who entered the market last year and snapped up underpriced townhomes and condos, the projected market recovery is likely to 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 the Realtor.com investor report midyear update published in November. The typical investor spent $251,000 on a home, which was $74,000 below the state’s median sale amount. 

"If the forecasts hold, they will secure high rental yields today and ride the capital appreciation wave as the market normalizes," reads the report.

Krimmel says data suggests that demand for rental housing in Texas is here to stay, even if rent prices are not expected to see dramatic upswings.

"As long as interest rates stay high, as expected, more households will continue to rent in Texas," says the economist.

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

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