Last reviewed March 2026 · DwellQ Research · Texas7 SOURCES
Market data sourced from publicly available reports. Data is not updated in real time — verify current figures with local sources before making decisions.
Median Home
$450,000
Median Condo
$380,000
Condo / Apt
Median Rent (1BR)
$1,600/mo
Median Rent (2BR)
$2,000/mo
Break-Even
3–6 years
Estimated range
Appreciation
3.8%/yr
Property Tax
1.8–2.2%
State Income Tax
None
Monthly PITI
$3,400–$3,900
Principal + Interest + Tax + Ins
Rate Modeled
6.1%
Down Payment
$90,000 (20%)
📌
Texas has no state income tax but relies heavily on property taxes. Rates of 1.8–2.2% on the full assessed value make carrying costs significantly higher than the headline price suggests.
KEY INSIGHT
Texas has no income tax but property tax rates of 1.8–2.2% add $675–$825/mo on a $450K home. The SALT cap increase has minimal impact here since total SALT rarely exceeds the old $10K cap. Strong recent appreciation favors buyers with 4+ year horizons.
Market Overview
Austin’s median home price of $450K and condos at $380K offer a moderate entry point among major tech markets. Appreciation has averaged 3.8% annually over the past five years, though this follows a post-pandemic correction from the 15%+ surge years. The absence of state income tax is a headline draw, but property taxes of 1.8–2.2% on assessed value create carrying costs that surprise many first-time buyers.
Texas Property Tax Dynamics
On a $450K home at 2.0%, annual property tax is $9,000 ($750/mo). This is roughly $4,000–$5,000/yr more than a comparable home would generate in effective property taxes in most coastal markets with sub-1.2% rates. The tradeoff: no state income tax means higher earners keep more of their paycheck, but this benefit is capitalized into home prices, partially negating the savings.
Under baseline assumptions, break-even occurs in 3–6 years. The moderate entry price means smaller down payments ($90K at 20%) and therefore smaller opportunity costs. Combined with 3.8% appreciation, equity builds relatively quickly. However, property tax reassessments in appreciating neighborhoods can create unexpected cost increases.
SALT Cap Irrelevance
Because Texas has no state income tax, total SALT deductions are limited to property taxes alone. At $9,000/yr on a median home, most Austin buyers were already below the old $10,000 cap. The increase to $40,000 provides no additional benefit. This is a meaningful difference from NYC or San Francisco, where the SALT increase directly shortens break-even.
⚠Property tax reassessment risk in rapidly appreciating neighborhoods
⚠Water scarcity and infrastructure strain as population grows
⚠No homestead exemption portability between properties
⚠Tech hiring volatility affects demand and price stability
⚠No Prop 13 equivalent—taxes rise with assessed value
Frequently Asked Questions
Does no state income tax make buying better in Austin?+
It helps take-home pay but high property taxes (1.8–2.2%) offset much of the advantage. On a $450K home, annual property tax of $8,100–$9,900 is a significant carrying cost that many buyers underestimate.
How does Austin compare to other Sun Belt markets?+
Austin offers stronger fundamentals than many Sun Belt peers (tech employment, population growth) but higher property taxes than Florida or North Carolina. The SALT cap change is a non-factor here unlike in high-tax states.
Is Austin’s housing market still growing after the 2022 correction?+
Austin experienced a 10–15% price correction in 2022–2023 after pandemic-era overheating, but has resumed positive appreciation at roughly 3.8% annually.
How does homestead exemption affect property taxes in Texas?+
Texas homestead exemption reduces the taxable value of a primary residence by up to $100K for school district taxes. On a $450K home this saves roughly $1,200–$1,500/yr. File promptly after purchase.
Run the numbers for Austin
See how the rent-vs-buy math works with Austin market data pre-loaded.
DwellQ research uses a net worth comparison framework. Both paths—buying (building equity minus all ownership costs) and renting (investing the down payment plus monthly surplus)—are modeled month-by-month over the full holding period. Assumptions are documented, sensitivity-tested, and sourced from publicly available data. This is scenario analysis, not financial advice.
SOURCES & REFERENCES
U.S. Census Bureau. American Community Survey, Austin-Round Rock MSA.[census.gov]
Zillow Research. Austin ZHVI and ZORI Data, accessed Jan 2026.[zillow.com/research]
Travis County Appraisal District. Property Tax Rates and Exemptions.[traviscad.org]
Texas Comptroller of Public Accounts. Property Tax Rates by County.[comptroller.texas.gov]
Federal Housing Finance Agency. House Price Index, Austin MSA.[fhfa.gov]
Austin Board of Realtors (Unlock MLS). Monthly Housing Market Statistics.[unlockmls.com]
Federal Reserve Bank of St. Louis. FRED: Mortgage Rates and CPI.[fred.stlouisfed.org]