Top 5 Residential Real Estate Investment Markets in Texas

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By Trent Seigfried Updated May 24, 2024
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Edited by Michael Yessis

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Tyler is home to the best residential real estate investment market in Texas.

The 75708 zip code in Tyler presents the greatest opportunity for investors among the 3,808 individual real estate markets in Texas we evaluated. We looked at property values, population trends, and six other metrics for each market. We used that data to calculate each market's InvestScore.

Top 5 Texas residential real estate markets

RankCity InvestScore Affordability Property value appreciation
1Tyler1002.152.48%
2Wichita Falls99.72.362.04%
3Elsa99.52.6109.95%
4Graham98.32.763.43%
5Merkel98.12.343.39%
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1. Tyler

We've identified the 75708 zip code in Tyler as Texas's best real estate investment market. Here's why.

πŸ”Ž Key data about Tyler

Data pointValueRank in state (of 3,808 markets)
Zip code75708N/A
InvestScore 100Highest
Typical property value $166,942[1]138th lowest
Five-year appreciation 52.48%[2]293rd highest
Household income $79,864[3]330th highest
Affordability ratio 2.125th most affordable
Five-year population growth 31.7%[4]62nd highest
Unemployment rate 4.7%[5]431st lowest
Property taxes $1,378[6]74th lowest
Educational attainment 7.3%[7]920th highest
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Tyler (zip code 75708) is the best residential real estate investment market in Texas. It has the 293rd highest property value appreciation among markets we evaluated, with a 52.48% appreciation of the typical property over the last five years.

Tyler is the 25th most affordable market among the 3,808 Texas markets we evaluated, with an affordability ratio of 2.1.

2. Wichita Falls

The 76309 zip code in Wichita Falls is Texas's second-best residential real estate investment market.

πŸ”Ž Key data about Wichita Falls

Data pointValueRank in state (of 3,808 markets)
Zip code76309N/A
InvestScore 99.72nd highest
Typical property value $121,458[8]47th lowest
Five-year appreciation 62.04%[9]93rd highest
Household income $52,250[10]727th highest
Affordability ratio 2.338th most affordable
Five-year population growth 9.9%[11]300th highest
Unemployment rate 4.1%[12]324th lowest
Property taxes $2,359[13]348th lowest
Educational attainment 23.9%[14]478th highest
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The 76309 zip code in Wichita Falls features a typical property value of $121,458, the 47th lowest in the state.

Property values have appreciated 62.04% over the past five years, the 93rd highest increase among evaluated markets in the state. Wichita Falls homes have an affordability ratio of 2.3, the 38th most affordable in the state.

3. Elsa

The 78543 zip code in Elsa comes in at No. 3 in our ranking of residential real estate investment markets in Texas.

πŸ”Ž Key data about Elsa

Data pointValueRank in state (of 3,808 markets)
Zip code78543N/A
InvestScore 99.53rd highest
Typical property value $119,868[15]45th lowest
Five-year appreciation 109.95%[16]2nd highest
Household income $46,624[17]824th highest
Affordability ratio 2.662nd most affordable
Five-year population growth -3.1%[18]724th highest
Unemployment rate 1.9%[19]35th lowest
Property taxes $1,322[20]61st lowest
Educational attainment 7.6%[21]918th highest
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With a typical property value of $119,868, Elsa's 78543 zip code features the 45th lowest property values in the state.

Elsa homes have an affordability ratio of 2.6, the 62nd most affordable among the markets we evaluated.

4. Graham

The 76450 zip code in Graham ranks No. 4 among Texas's residential real estate investment markets.

πŸ”Ž Key data about Graham

Data pointValueRank in state (of 3,808 markets)
Zip code76450N/A
InvestScore 98.34th highest
Typical property value $194,518[22]227th lowest
Five-year appreciation 63.43%[23]77th highest
Household income $71,563[24]77th highest
Affordability ratio 2.783rd most affordable
Five-year population growth 0.9%[25]592nd highest
Unemployment rate 1.6%[26]16th lowest
Property taxes $2,427[27]363rd lowest
Educational attainment 22.5%[28]506th highest
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Property values in Graham's 76450 zip code have seen the 77th highest increase among evaluated markets in the state, with an appreciation of 63.43% over the past five years.

Graham's affordability ratio of 2.7 makes it the 83rd most affordable among the 3,808 markets we evaluated.

5. Merkel

The 79536 zip code in Merkel rounds out our top five residential real estate investment markets in Texas.

πŸ”Ž Key data about Merkel

Data pointValueRank in state (of 3,808 markets)
Zip code79536N/A
InvestScore 98.15th highest
Typical property value $155,796[29]108th lowest
Five-year appreciation 43.39%[30]555th highest
Household income $67,788[31]555th highest
Affordability ratio 2.334th most affordable
Five-year population growth 33.3%[32]59th highest
Unemployment rate 1.8%[33]24th lowest
Property taxes $1,260[34]50th lowest
Educational attainment 13.1%[35]787th highest
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Property values in Merkel's 79536 zip code rose 43.39% over the last five years, ranking the city 555th highest among evaluated markets in Texas.

Merkel homes have an affordability ratio of 2.3, the 34th most affordable among the markets we evaluated.

How we rank residential real estate markets in Texas

We evaluated 3,808 markets on eight metrics, and then assigned an InvestScore based on their weighted and combined rankings. Each market corresponds to a specific zip code in Texas.

What is InvestScore?

InvestScore is a score on a scale of 0 (worst in state) to 100 (best in state) that estimates the residential real estate investment potential of a given market. It takes into account a suite of key data points for each city.

  • Typical property value: This measures the typical home value in this zip code, according to the Zillow Home Value Index. It reflects the typical value for homes in the 35th to 65th percentile range, including all homes, with the numbers smoothed and seasonally adjusted. We prefer lower property values, which indicate both more room for growth and a greater ease of purchase. We assign a weight of 20% to typical property values.
  • Property value appreciation: This measures how much property values have increased in the area over the past five years, according to the Zillow Home Value Index. We prefer a higher appreciation, as it indicates better returns on housing. However, past performance isn't indicative of future results. We assign a weight of 20% to property value appreciation.
  • Median household income: This is the inflation-adjusted median household income in the zip code, according to U.S. Census American Community Survey data. We prefer a higher household income, as it indicates local residents have more income to spend on housing. We assign a weight of 10% to median household income. We assign a weight of 10% to median household income.
  • Affordability ratio: This is the ratio of the typical home value to the median household income in the area. A lower ratio is better because it means more households can afford a home, which indicates higher demand. We assign a weight of 15% to the affordability ratio.
  • Population growth: This is how much the area's population has grown over the past five years, according to U.S. Census estimates. Higher is better, as it indicates residents are moving into the area at a rapid clip. We assign a weight of 10% to population growth.
  • Unemployment rate: This is the unemployment rate in the area, according to U.S. Census data. We prefer a lower rate, as it indicates the availability of steady employment in the area, meaning residents will find it much easier to afford homes. We assign a weight of 15% to unemployment rate.
  • Property tax: This is the median real estate property tax paid in the area, according to U.S. Census estimates. We assign a weight of 10% to property tax.
  • Educational attainment: This is the percentage of residents in the area that have obtained a bachelor's degree or better, according to U.S. Census estimates. We prefer a higher rate because it indicates  local residents who have higher earning potential and thus should be able to afford homes. We assign a weight of 15% to educational attainment.

Disclaimer: The information contained in this article isn't intended as, and shall not be understood or constituted as, financial advice. The information in this article isn't a substitute for financial advice from an investment professional or real estate agent who is aware of the facts and circumstances of your financial situation or the specifics of any individual property.

Article Sources

[1] Zillow – "Zillow Home Value Index". Updated March 31, 2024.
[2] Zillow – "Zillow Home Value Index, difference over last five years". Updated March 31, 2024.
[7] U.S. Census – "U.S. Census Table S1501 - Educational Attainment 2018-2022". Updated 2018-2022.
[8] Zillow – "Zillow Home Value Index". Updated March 31, 2024.
[9] Zillow – "Zillow Home Value Index, difference over last five years". Updated March 31, 2024.
[14] U.S. Census – "U.S. Census Table S1501 - Educational Attainment 2018-2022". Updated 2018-2022.
[15] Zillow – "Zillow Home Value Index". Updated March 31, 2024.
[16] Zillow – "Zillow Home Value Index, difference over last five years". Updated March 31, 2024.
[21] U.S. Census – "U.S. Census Table S1501 - Educational Attainment 2018-2022". Updated 2018-2022.
[22] Zillow – "Zillow Home Value Index". Updated March 31, 2024.
[23] Zillow – "Zillow Home Value Index, difference over last five years". Updated March 31, 2024.
[28] U.S. Census – "U.S. Census Table S1501 - Educational Attainment 2018-2022". Updated 2018-2022.
[29] Zillow – "Zillow Home Value Index". Updated March 31, 2024.
[30] Zillow – "Zillow Home Value Index, difference over last five years". Updated March 31, 2024.
[35] U.S. Census – "U.S. Census Table S1501 - Educational Attainment 2018-2022". Updated 2018-2022.

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