Rent vs Buy in Texas

Texas has no state-level cap on property tax rates; rates are set locally by counties, cities, school districts, and special districts, which is why the state averages run high. The state homestead exemption caps annual assessed-value increases at 10% on a primary residence, so long-time owners can see a gap between their tax bill and what a new buyer pays on the same property. Protests of the appraisal review board's valuation are common and routinely successful, and the protest process is built into state law.

Average Texas rent runs $1,500 per month, or $18,000 per year for a comparable home. Texas is one of nine U.S. states with no state income tax, so a renter here keeps more of every paycheck than in California or New York. That makes the renter-side investment alternative more potent in Texas: dollars not paid to a state income tax can compound in a brokerage account instead. The rent half of the comparison is not just about rent itself, but about what else the rent dollar could be doing.

Within Texas, prices diverge sharply. The four major metros (Houston, Dallas-Fort Worth, Austin, San Antonio) drive most of the recent appreciation, while rural Texas runs noticeably lower. The state median is a useful starting point, but the comparison for your specific scenario depends on which metro you are in. Insurance also runs high statewide at roughly $3,100 per year, partly due to severe-weather exposure (hail, tornado, and Gulf-coast hurricane risk).

On the median $359,950 home, Texas property tax alone runs roughly $504 per month before insurance, maintenance, or any HOA dues. That is on top of mortgage principal and interest. Insurance at the state average of $3,100 per year adds another $258 per month. Together, taxes and insurance push the all-in monthly cost about $762 above the headline mortgage payment, before maintenance.

In the rent-vs-buy comparison, that tax-plus-insurance line is a fixed cost a renter does not pay directly. It pushes the break-even point (the year at which cumulative buying costs fall below cumulative renting costs) further out compared with a low-tax state at the same price level. Texans benefit from no state income tax, but that benefit is paid back in property tax on the buy side.

The 10% homestead cap matters most for long-stay homeowners; in the early years of ownership, the assessed value is at or near market value and the cap rarely binds. For short stays, the calculator's break-even result is sensitive to the property tax rate you enter. If your county or school district runs above the state average, model that explicitly rather than relying on the state-level default.