For What It’s Worth
The Stouffer Report

The 2023 Texas Mid-year Market Analysis

We are a full-service appraisal firm that specializes in commercial, farm and ranch, and residential appraisals. With locations in San Antonio, Austin, Houston, Boerne, and Dallas-Fort Worth, we provide appraisals for all purposes, including estate valuations, divorce, litigation support, lending, condemnation, easements, and more.

Data and information for the 2023 Texas Mid-year Market Analysis is sourced from data within our company database, various brokers and other market participants, CoStar, various MLS subscriptions, and information from the Texas A&M Real Estate Research Center, among others.

We are excited to share our thoughts and insights with you in the inaugural edition of “The Stouffer Report.”

San Antonio Market Overview

Commercial Real Estate

Retail and Industrial Remain Strong

The San Antonio MSA remains a bright spot in the greater Texas and national markets. Demand for retail and industrial properties/markets remain very strong, with both occupancy levels and contract lease rates near record levels and holding firm due to more limited deliveries to the market than typical.

Impact of Hybrid and Remote Expectations

Office market demand remains a moving target at this time as we continue to navigate industry changes caused by recent remote working trends created by the COVID-19 pandemic. While some larger firms are beginning to request workers to return to the office, ample remote work opportunities remain. As a result, it will likely stall eventual returns to office even though corporations are becoming more aware that employees tend to be less productive outside of the office. A direct indicator of the impact of remote working is that leased office space/square footage is noted to be substantially higher than that of physically occupied space.

The Flipside of the Coin

On the other hand, the primary highlight for the office market is record-level contract lease rates. Class A space experiences significantly more demand than older properties and less than new product deliveries to the market. Although commercial real estate remains predominantly strong, commercial real estate transactions are down across the board due to increased lending rates and owners choosing to hold investments rather than making them available for sale at higher capitalization rates compressed by lending rates.

Spurred, Stronger Growth

Overall, San Antonio’s commercial real estate market remains strong with both transaction levels and deliveries to the market seeming to pick up slightly in the last month or so, significantly spurred by growing San Antonio demographics. Even in the current environment of overall uncertainty across the country, San Antonio is forecasted to maintain growth for the foreseeable future and very likely poised for even stronger growth as lending and inflation pressures retreat.

Chris T. Jones, MAI
Vice President, Commercial Appraisal

Residential Housing

Supply/Demand Factors: The Question: Why Sell Now?

A common question many would-be sellers are asking, is “Why would I sell now?” The thought of purchasing a new home and replacing their current (likely lower) fixed interest rate for one twice that amount (or more) now has limited the housing supply in many submarkets throughout San Antonio. The 2021 to 2022 seller’s market is over and the divide between sellers’ and buyers’ expectations on price has caused the average days on market (DOM) to increase by approximately 80%. We are also seeing the terms “back on market” or “price change” on listings more often, which is a further indication of the balanced seller/buyer market.

Takeaway: Supply and demand are in relative balance and appear to be more in line with pre-pandemic levels.

Value Trends – The Bigger Question: What’s it Worth?

Residential values are largely tied to supply/demand factors and are also heavily influenced by interest rates. As illustrated in the graph below, values soared from the middle of 2020 until the beginning of 2022 (when interest rates were at historic lows) and have since stabilized as a result of the Fed raising the fed funds rate at one of the more drastic rates in history.

Based on the trends we’re seeing, higher-end property values ($1.5M and above) have been less impacted by rising interest rates when compared to properties below this threshold, which in turn may out-price many would-be home buyers.

Takeaway: Value trends are relatively stable across the board based on a comparison of median price per square foot.

Forecast: What Should We Expect?

We forecast that the San Antonio housing market will continue to outpace most areas of the country due to the strong job growth and population increases. Fluctuations in interest rates will continue to play a pivotal role. If rates remain stable or decline slightly, we expect tremendous activity for refinance and purchase transactions. If rates continue to increase, which is less likely, we could see another 6-12 months of moderate conditions similar to pre-pandemic norms.

Overall, future activity in the market is largely dependent on interest rate stability.

Blake Stouffer
VP – Farm and Ranch, Residential

Houston Market Overview


Given the pronounced decrease in the aggregate count of commercial real estate transactions, industrial properties have displayed remarkable resilience against the impacts stemming from the recent Federal Reserve interest rate hikes. We continue to see several bid requests for purchases. Speculative construction is still active in some industrial parks, namely in the West Houston market. Furthermore, we have seen some relief in construction costs.


Retail occupancy remains strong, averaging 95.1% across the market overall. Houston’s retail tenants are in expansion mode in large part due to Houston’s decision to “pump the brakes” on new construction during the Covid-19 pandemic. The record low new supply during that time set the stage for today’s strong retail leasing performance and general market fundamentals. That said, trailing six-month sales volume (as of August 2023) declined in 2023 versus the same period in 2022.


Multifamily had a decent leasing rebound in the first half of 2023. Net absorption was negative in the second half of 2022, the first time since 2009 that Houston had two consecutive quarters of negative demand. Houston was 2nd place behind West Palm Beach in average insurance premium increases – 45% for Houston. Multifamily properties in Houston are not immune to the recent decline in sales activity.


The office market has a strong share of challenges. There are close to 80 million SF available for lease, and many think this has not yet peaked. “Return to the office” does not have the momentum that was anticipated. Still, there are some bright spots – leasing demand from the oil and gas industry has picked back up. There is also a significant gap in demand (for the better) for Class A offices. Office properties within the Houston market are also susceptible to the effects from interest rate hikes.


According to the April 2023 Texas A&M REC Spotlight Report, average sales prices dipped 12.89% year over year from $679,290 to $591,761, while the average price per square foot subsequently declined from $334.97 to $276.77. Additionally, the median price declined 15.14% year over year from $550,000 to $466,705 and the median price per square foot declined from $286.25 to $233.70.

Source: CoStar
Marty Salinas
Managing Director – Houston

Austin Market Overview

According to the April 2023 Texas A&M REC Spotlight Report, average sales prices dipped 12.89% year over year from $679,290 to $591,761, while the average price per square foot subsequently declined from $334.97 to $276.77. Additionally, the median price declined 15.14% year over year from $550,000 to $466,705 and the median price per square foot declined from $286.25 to $233.70.

Source: Dallas Fed


The Austin retail market continues to witness healthy operating conditions and is outperforming other markets nationally. The fast growth of the suburbs and one of the best-performing job markets in the country have encouraged retailers to expand in the market.


The Austin office market continues to see an increase of sublease space available, surpassing 4.6 million square feet per the most recent CBRE report. Vacancies sit at 20.6% with an average gross lease rate of $47.89/sf, which is up from the previous quarter.

Industrial Growth Continues

The industrial market is a growth engine. With a record year in 2022, 2023 was off to a fast start. Expansions by Tesla and Samsung have fueled growth in the area’s manufacturing sector. In Samsung’s case, three semiconductor suppliers, KoMiCo Technology, Valex, and Ultra Clean Technology, announced expansion plans in Q3 and Q4 of 2022.

P.J. Dooling
Managing Director – Austin

Dallas/Fort Worth Market Overview

The Dallas-Fort Worth MSA remains another bright spot for Texas and national markets. In 2023, demand for retail properties has waned somewhat when compared to the explosive growth in late-2021 and through the first half of 2022.


  • In many instances through the first half of 2023, buyers have backed out of contracts during the feasibility period.
  • Industrial properties and markets are holding firm as one of the nation’s leaders in terms of demand and absorption.
  • Demand for the office market remains a moving target at this time as we continue to navigate industry changes stemming from the recent remote working trends created by the COVID-19 pandemic. A direct impact of the new remote working trend is leased office space/square footage noted to be substantially higher than that of physically occupied space.
  • Recent trends in the multi-family sector indicate that demand for this product may be increasing after subsiding around the first of the year.
  • Although pricing in the commercial real estate markets remains strong, significantly lower transaction volume is being observed as compared to the record-high volume recorded at varying levels in late 2021 and into 2022.
  • A trend noted by Stouffer indicates an increase in loan volume within the private lending sector.

Market Research

In a recent survey, one participant interviewed stated that there is adequate liquidity in the market and deals are still getting done, albeit with new underwriting guidelines. Additional interviews with market participants indicate that buyers in the commercial real estate market have increased leverage and the market has become more balanced after a lengthy seller’s market.

Higher Rates, Increased Coverage Ratios

There is currently no evidence of substantial pricing discounts across the commercial real estate market in North Texas; however, borrowers will need to become accustomed to higher interest rates and increased coverage ratios.


Overall, demand for commercial property in the DFW area remains strong (relative to major metropolitan areas outside of Texas) due in large part to ongoing inbound corporate relocations.

Ian Grigar
Managing Director, DFW

Texas Land and Ranch Market Overview

Supply/Demand Factors: A Return to Pre-Pandemic Levels?

Throughout 2021 and most of 2022, brokers routinely commented on the lack of “good” inventory which was likely a catalyst for the massive price and value increases in the Texas land markets. However, inventory levels appear to be trending towards pre-pandemic levels. Buyer demand for most recreational properties has continued to focus on properties with scenic attributes, proximity to major demand centers (Austin, Houston, DFW or San Antonio), and of course, water. Properties with live or significant surface water are a “first-choice” for discerning buyers and command a significant premium.

Takeaway: The days of sellers receiving full asking price or above are likely over. Price discovery will be a factor in most transactions going forward – similar to pre-pandemic trends.

Value Trends: Lower Volume, Higher Prices

Ranch values – like all asset types – are largely influenced by supply and demand. During the pandemic, the demand for rural properties spiked to record highs with buyers desiring land for personal and recreational use, as well as the anticipation for long-term appreciation. The graph below illustrates the general land price trends throughout Texas dating back to 1971. As you can see, land ownership has proven to be a great investment for the long-term investor.

Source: Texas A&M Real Estate Resource Center

Most land regions in Texas have experienced lower overall sales volume but higher priced land values. West Texas is the one exception with very limited measurable sales activity. Properties near the United States-Mexico border have experienced significantly less interest and activity, which will likely result in downward pressure on prices.

Takeaway: Investing in land has continued to be the tried-and-true choice for many investors and will likely continue for the foreseeable future.

Forecast: What Should We Expect?

Considering the balanced supply and demand factors and the fact that most land purchases are all cash – and not as significantly affected by higher borrowing costs – we expect to see continued stability or modest price/value trend increases for the foreseeable future.

Takeaway: For now, expect to see continued stability or little movement in price/value trends.

Blake Stouffer
VP – Farm & Ranch, Residential
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About Stouffer & Associates

Stouffer & Associates has been serving Texas since 1985 with real estate appraisals for commercial, residential, farm and ranch, and special purpose properties. Our mission is to provide high quality, accurate and reliable appraisal and consulting services relating to the real estate needs of our clients — in a timely, professional, and ethical manner. Our focus on honesty, integrity, experience and personalized service has placed Stouffer & Associates in the forefront of the appraisal industry in the Texas market.

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