The Texas market that most active investors built their underwriting habits in no longer exists. It has not crashed — that is not what happened, and anyone selling you that story is selling something. What happened is slower and more consequential: the market stopped doing the investor’s work for it.
For a stretch of 2021 and 2022, appreciation covered a lot of mistakes. An optimistic ARV got rescued by the market moving up under a six-month rehab. A blown repair budget got absorbed by an exit that came in over comp. That backstop is gone, and it has been gone long enough now that the numbers say so plainly.
Here are the six that matter for anything you buy between now and the end of the year, and what each one should actually change in your model.
1. Inventory: roughly 5.4 months
Statewide month-end active inventory sat at about a 5.4-month supply in June 2026, up modestly from 5.3 months in May, per the Texas Real Estate Research Center at Texas A&M. Inventory growth through 2026 has averaged around 3.2%, broadly tracking sales growth rather than outrunning it.
Six months is the traditional rough line between a buyer’s and a seller’s market. Texas is sitting just under it — genuinely balanced, statewide, for the first time in years.
What it changes: your acquisition funnel gets better and your exit gets more competitive, simultaneously. Do not model only the first half of that sentence.
2. Days on market: 62, and roughly flat year over year
Homes that sold in June 2026 averaged 62 days on market, against 60 a year earlier. Statewide DOM had run 70 days in April and 63 in July. The gap versus 2025 has been narrowing through the year, but the level is meaningfully above where 2021–2022 trained everyone’s instincts.
What it changes: this is the exit assumption, and it is the one that quietly kills pro formas. Sixty-two days to go under contract, plus 30–45 days for a financed buyer to close, is roughly three months from list to funded. Add that to your rehab timeline and count the carrying months honestly:
| Phase | Realistic window |
|---|---|
| Close and mobilize | 2–3 weeks |
| Rehab (cosmetic to moderate) | 6–12 weeks |
| List to contract | ~8–9 weeks at current DOM |
| Contract to funding (financed buyer) | 4–6 weeks |
| Total | 5–7 months |
If your model says four months, it is not a model, it is a hope. Debt service, taxes, insurance, utilities, and lawn care across two extra months on a $250,000 basis is real money — commonly $6,000 to $10,000 depending on your leverage, and it comes straight out of the spread. Our breakdown of hard money fix-and-flip financing walks through what that carry actually costs at typical Texas terms.
3. Prices: 13 consecutive months of softening
Median prices had declined for 13 straight months as of June 2026, a trend that began in June 2025. Statewide, prices were down about 0.9% year over year through April.
These are small percentages. That is the point — this is not a collapse, it is the absence of a tailwind.
What it changes: your ARV must come from recent closed sales, and “recent” now means the last 90 days, not the last six months. In a market that has softened for over a year, a comp from February is describing a different market than the one you will sell into. Investors underwriting off stale comps are the most common source of a deal that looked like it had margin and did not.
Practically: pull closed sales, not active listings. Actives tell you what sellers hope for. In a 13-month softening trend, that gap has been widening.
4. Median seller price cut: about $12,500
Sellers who reduced cut by a median of $12,500 statewide — around 3.6% of the original list price — in the spring 2026 data. In DFW the median cut ran $12,500, about 3%; Austin was steepest at $19,000, roughly 5.4%.
What it changes: on the buy side, this is your evidence that the ask is negotiable and roughly by how much. It also tells you what your own exit looks like if you list optimistically: you will be the seller making that cut, six weeks in, after the listing has gone stale.
Price the exit right the first time. A property that sits and then cuts nets less than the same property priced correctly at launch, and it burns the weeks you were counting on.
5. Mortgage rates: 6.66% on the 30-year fixed
Freddie Mac’s Primary Mortgage Market Survey put the 30-year fixed at 6.66% on August 27, 2026. The Federal Open Market Committee held the federal-funds target range at 3.50%–3.75% at its July 29 meeting on a 9–3 vote, with the three dissenters preferring an increase; the next meeting is September 15–16.
Worth repeating, because it gets confused constantly: the Fed does not set the 30-year mortgage rate. That rate is priced off Treasury yields and inflation expectations, and it can move opposite the policy rate. Our piece on what a Fed decision means for DFW real estate covers that mechanism in more detail.
What it changes: it defines your buyer. At 6.66%, principal and interest on a $300,000 loan is roughly $1,930 a month before taxes and insurance. Your exit buyer is shopping by payment, which means the finished product needs to price where the payment works — not where your spreadsheet needs it to. On rentals, the same rate is your debt constant, and it is why so many Texas holds pencil on cash flow only with meaningful money down.
6. Insurance — the line item that became an underwriting risk
This is the one that has genuinely changed and is still not in most investors’ models.
Texas homeowners’ insurance costs rose about 60% between 2019 and 2024, against roughly 30% nationally, per the Federal Reserve Bank of Dallas — with an 18.7% single-year jump in 2024 before slowing to 4.3% in 2025. Applications to the Texas FAIR Plan, the state’s insurer of last resort, went from 66,512 in 2021 to 121,658 by the first quarter of 2025.
Two distinct consequences for an investor, and they hit at opposite ends of the deal:
During the hold. Vacant and under-renovation properties are not covered by standard homeowners policies. You need builder’s risk or a vacant-dwelling policy, and in Texas those have repriced hard along with everything else. If your carry model still has a $110-a-month insurance line, it is wrong — and on a property with an aging roof, materially wrong.
At exit. If the property is difficult to insure — old roof, prior claims, aluminum branch wiring, a federal-brand panel — your financed buyer cannot close, because no residential lender funds without a policy in force. That does not reduce your buyer pool, it removes a category of it entirely. A roof you deferred to protect the budget can cost you the retail exit you underwrote.
The takeaway is simple and it is new: get an insurance quote on the property before you close on it, the same way you would price the roof. We wrote up the homeowner-side version of this in what a Texas insurance non-renewal costs, and the underwriting logic is the same from either side of the transaction.
What this adds up to
A balanced market is not a bad market for investors. It is a market that pays for discipline instead of paying for participation, which are very different things.
Concretely, for anything acquired this quarter:
- Widen the spread you require. If a slower exit is the base case, the margin has to absorb it. This is not the quarter to take a thin deal because you like the street.
- Underwrite ARV off closed comps from the last 90 days. Not actives, not spring.
- Carry six to seven months, not four. Then check whether the deal still works.
- Price insurance and the roof together. They are one decision in Texas now.
- Plan the exit around the calendar. A property finished in late November lists into the slowest four weeks of the Texas year. Either push to hit a January relaunch or price to move before Thanksgiving — the dead zone is real, and it is expensive to discover in December.
Nothing in that list is exotic. It is the same underwriting that has always worked, held to more honestly than a rising market required.
If you want to see how we price our own acquisitions before they reach investors, how your cash offer is calculated shows the full structure, and how buying from Diamond works explains what you are actually buying when a deal comes to you from us. Deals move through our investor marketplace as we contract them — if you want to be on the list when one fits your box, that is where to start.