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Waco, TX housing market

Housing market indicators

Indicator	2022	2023	2024	2025*	Change	2022	2023	2024	YTD
Median Listing Price per Square Feet	$178	$182	$178	$180		14.8%	2.2%	-2.2%	1.1%
Active Listing Count	768	1,014	1,172	1,609		107.6%	32%	15.6%	37.3%
Median Days on Market	63	73	87	100		40%	15.9%	19.2%	14.9%
Share of listings with price increase	0.6%	0.7%	0.4%	0.4%
Share of listings with price decrease	16.7%	23.7%	23%	21.9%

* last available value


Note: 12M MA - 12 months moving average, Permits - New Private Housing Structures Authorized by Building Permits. Source: FRED

Housing market overview

Waco, TX MSA overview and key areas

• Waco MSA consists of McLennan, Bosque, and Falls counties in Central Texas, anchored by the city of Waco.
• 2024 estimated MSA population about 307,000, up from about 296,000 in 2020, indicating steady growth.
• Region lies along the I‑35 growth corridor roughly halfway between Dallas and Austin, with the Brazos River and Lake Waco as key geographic features.
• Functional sub‑areas for housing analysis:
  • Urban core – Waco city
  • McLennan County suburbs/exurbs – Hewitt, Woodway, Robinson, Bellmead, Lacy‑Lakeview, China Spring area, McGregor
  • College‑oriented areas – Baylor University and adjacent neighborhoods
  • Rural/small‑town Bosque County – Clifton, Meridian, Lakes around Brazos/Clifton areas
  • Rural/small‑town Falls County – Marlin and farming communities

Area	City/town	Population	Density	Income	Quality of Schools	Crime level	Property tax (%)	Personal Income tax	Comments
Urban core	Waco (city)	≈146,000	Moderate city density; mix of older neighborhoods and infill	Low‑to‑moderate; median household ≈$50k–$55k; notable income disparity	Mixed; GreatSchools often in 3–7 range depending on campus	Higher than suburbs; pockets of elevated property and violent crime, improving near downtown and Baylor	≈2.2–2.5% effective (city + McLennan County + ISD)	None (no local income tax above state level)	Medical, education, logistics and tourism hub; strong rental and student housing market near Baylor
Inner suburb	Hewitt	≈16,000–17,000	Suburban, single‑family, relatively high residential density	Moderate‑to‑high; many middle‑income households	Generally above average; many schools 6–8 on GreatSchools (Midway ISD)	Lower than Waco city; typical low‑to‑moderate suburban crime	≈2.2–2.5%	None	Popular with families; strong owner‑occupied base; good commuter access to Waco employment centers
Inner suburb	Woodway	≈9,000–10,000	Low‑to‑moderate density; established subdivisions	High relative to MSA; above‑average household incomes	Strong; many Midway ISD schools in 7–9 range	Low; among safer communities in the MSA	≈2.0–2.4%	None	Higher‑end housing stock; stable, mature neighborhood character
Inner/SE suburb	Robinson	≈12,000	Suburban/semi‑rural; larger lots common	Moderate; mix of blue‑ and white‑collar households	Average‑to‑good; roughly 5–8 on GreatSchools	Low‑to‑moderate; below Waco city levels	≈2.1–2.4%	None	Appeals to buyers seeking space and small‑town feel within short drive of Waco jobs
North Waco fringe	Bellmead / Lacy‑Lakeview	Each ≈10,000–11,000	Suburban but with older, modest‑density housing	Low‑to‑moderate; below metro median	Below metro average; many schools 3–6 range	Moderate‑to‑high; more crime than southern/western suburbs	≈2.2–2.6%	None	Budget‑oriented ownership and rental markets; sensitive to economic cycles
West McLennan	China Spring area / McGregor	China Spring area ≈6,000–8,000; McGregor ≈5,000	Low density; mix of subdivisions, small town and rural	Moderate; notable share of middle‑income households	China Spring ISD often in 6–8 range; McGregor ISD more mixed	Low overall, with rural small‑town patterns	≈2.0–2.4%	None	Growth tied partly to industrial/defense employers in McGregor corridor and appeal of semi‑rural lifestyle
College district	Baylor University area (within Waco)	Student‑heavy tracts ≈20,000+ residents	High local residential density, dominated by multifamily and student housing	Per‑capita low due to students, but strong parental and institutional spending	N/A for K‑12; higher education anchor	Property crime higher (car/bike theft, burglaries); violent crime somewhat contained by campus policing	≈2.2–2.5%	None	High rental yields; turnover risk but very durable demand; subject to student‑housing specific regulations
Bosque County	Clifton / Meridian / rural areas	County ≈18,000–19,000; small towns 1,500–4,000	Low density; predominantly rural/small‑town	Low‑to‑moderate; older and retiree populations noticeable	Small districts; quality ranges roughly 4–7 on GreatSchools	Generally low; isolated property‑crime incidents	≈1.6–2.0%	None	Appeals to retirees and rural‑lifestyle buyers; limited new construction and thinner resale inventory
Falls County	Marlin / rural areas	County ≈16,000–17,000; Marlin ≈5,000–6,000	Very low density; agricultural and small‑town	Low; incomes below MSA average	Generally weaker; many schools in 2–5 range	Low‑to‑moderate overall; some local crime challenges in Marlin	≈1.8–2.2%	None	Slow‑growth, value‑oriented market; high sensitivity to local employment and ag economy

Citizens: income and education

• Income structure
  • MSA household income profile is skewed to lower and middle brackets compared to large Texas metros.
  • Waco city median household income in low‑$50k range; MSA slightly higher due to stronger‑income suburbs.
  • Average household income in McLennan County around low‑$80k, reflecting higher‑income segments and outliers.
  • Relatively high poverty rates in Waco city (around one‑quarter of residents) contrasted with much lower poverty in suburbs like Woodway and Hewitt.
• Education levels
  • Share of adults with bachelor’s degree or higher is moderate; boosted by Baylor University and other colleges but diluted by large blue‑collar and service workforce.
  • Baylor, Texas State Technical College and McLennan Community College create strong post‑secondary presence and talent pipeline in education, health, engineering‑tech and business.
  • Educational attainment is higher in suburbs (Woodway, Hewitt, China Spring) and lower in more rural Bosque/Falls areas.
• Demographic notes
  • Population is relatively young, with strong 18‑34 cohort due to university presence.
  • Ethnically diverse, with substantial Hispanic and Black populations, and growing in‑migration from larger Texas metros.

Key economic sectors

• Education and health services
  • Baylor University, McLennan Community College and Texas State Technical College are major employers and stable, counter‑cyclical anchors.
  • Large health‑care complex around Baylor Scott & White Hillcrest, Ascension Providence and specialty clinics supports steady middle‑income jobs.
• Manufacturing and industrial
  • Manufacturing includes food processing, equipment, aerospace/defense‑related plants and other light industry, particularly near McGregor and industrial parks.
  • Industrial sector provides relatively well‑paying blue‑collar jobs, supporting entry‑level homeownership in fringe suburbs.
• Logistics, warehousing and distribution
  • I‑35 corridor location between Dallas–Fort Worth and Austin–San Antonio makes Waco attractive for regional distribution centers and logistics operations.
  • Growth in e‑commerce and just‑in‑time supply chains is driving demand for industrial space and transportation employment.
• Government and public sector
  • City, county, state and federal facilities (including nearby military/defense‑linked operations) provide stable employment base.
• Tourism, hospitality and retail
  • Magnolia‑related tourism, riverfront and downtown revitalization have boosted short‑term rentals, hotels, restaurants and retail.
  • Visitor economy is concentrated in Waco core, particularly downtown and Silos district.
• Agriculture and rural services
  • Bosque and Falls counties feature cattle, crops and rural services; housing demand is modest but steady for farm/ranch and small‑town properties.

Housing buying market – supply drivers

• Zoning and land availability
  • Waco city has substantial infill potential and some openness to increased density along corridors and near downtown.
  • Suburbs (Hewitt, Woodway, Robinson, China Spring area) usually favor low‑density single‑family zoning; more restrictive on multifamily and small lots.
  • Large tracts of developable land exist on Waco’s outskirts and in McLennan County, supporting greenfield subdivisions.
  • Bosque and Falls counties have abundant rural land but weaker infrastructure and demand, limiting large‑scale subdivisions.
• Regulatory strictness and entitlement process
  • Regulatory environment is generally moderate and more builder‑friendly than large coastal markets.
  • Subdivision and infrastructure requirements in suburbs can raise per‑lot costs but remain manageable by national‑builder standards.
  • Historic‑district rules and neighborhood opposition can slow infill and multifamily approvals in parts of Waco core.
• Construction costs and workforce
  • Construction labor costs are lower than in major Texas metros but have risen significantly post‑pandemic due to statewide labor shortages.
  • Material costs follow broader U.S. trends; volatility (lumber, steel) has pressured builder margins and pushed prices upward.
  • Local contractor base is solid but capacity is not unlimited; rapid surges in demand can lead to backlogs and longer build times.
• Financing and development climate
  • Higher interest rates have cooled speculative building somewhat but builders still target entry‑level and move‑up segments in Waco suburbs.
  • Institutional SFR investors are present but less dominant than in larger Texas metros; this slightly alleviates competition for resale inventory.
• Infrastructure
  • I‑35 reconstruction and related projects have improved access but create short‑term disruption.
  • Water/sewer capacity is generally adequate in most growth corridors, with some localized constraints that can slow subdivision approvals.

Housing buying market – demand drivers

• Population growth and migration
  • MSA population has grown steadily over the past decade, with particular strength in McLennan County suburbs.
  • In‑migration from higher‑cost Texas metros (Austin, Dallas–Fort Worth) and out‑of‑state buyers seeking affordability is a key driver.
  • Student and faculty growth at Baylor and other institutions supports strong demand for rentals and small homes near campus.
• Growing industries
  • Expansion in education‑health, logistics/warehousing and selected manufacturing is creating new jobs and supporting housing absorption.
  • Tourism/hospitality growth around Magnolia and downtown creates demand for short‑term rentals and small multifamily properties in central Waco.
• Affordability relative to other markets
  • Average home prices in Waco MSA remain substantially below Austin, Dallas and even some smaller Texas metros, attracting price‑sensitive buyers.
  • However, price‑to‑income ratios have worsened for lower‑income households, especially within Waco city limits.
• Interest‑rate environment
  • Elevated mortgage rates have reduced move‑up buying and investor leverage but have not fully offset demand from first‑time and in‑migrant buyers.
• Suburban preference
  • Post‑pandemic preference for more space and suburban lifestyles benefits Hewitt, Woodway, Robinson, China Spring and semi‑rural fringe areas.

Key challenges in the housing market

• Affordability for lower‑income households
  • Home prices and rents have grown faster than wages in service and lower‑skilled sectors.
  • High property tax rates (typical for Texas) increase monthly payment burdens, particularly in Waco ISD and smaller cities with higher tax rates.
  • Limited supply of quality entry‑level homes under key price thresholds near employment centers.
• Quality differentials between sub‑markets
  • Sharp contrasts in school quality and crime between central Waco and higher‑income suburbs steer family buyers toward a small set of favored districts.
  • This concentrates demand and price growth in specific ISDs (Midway, China Spring), leaving weaker districts behind and deepening spatial inequality.
• Older housing stock and rehabilitation needs
  • Many Waco neighborhoods feature aging homes needing significant rehab, which can deter retail buyers and require investor capacity.
  • Renovation costs and code‑compliance work can be high relative to after‑repair values in lower‑income areas.
• Cyclical and sector‑specific risks
  • Industrial and manufacturing exposure brings vulnerability to national downturns or plant closures, which would impact certain small towns and fringes disproportionately.
  • Student housing near Baylor is exposed to enrollment trends and university policy changes about on‑campus housing.
• Infrastructure and planning
  • Managing growth along I‑35 while maintaining traffic flow and neighborhood livability is an ongoing challenge.
  • Coordinating planning across Waco and multiple small municipalities is complex and can slow coherent regional responses to growth.
• Insurance and climate‑related costs
  • Severe weather risk (hail, wind, occasional flooding) contributes to rising homeowners‑insurance premiums.
  • Floodplain restrictions along Brazos River and tributaries limit development and require mitigation in some tracts.

Investment potential by area/region

Area	Appreciation potential	Risk	Key drivers
Waco – downtown and near‑Baylor core	High	Moderate	University anchor; tourism and downtown revitalization; infill and higher‑density potential; strong rental demand; offset by crime pockets and regulatory scrutiny on STRs
Waco – older inner neighborhoods (non‑student)	Moderate‑to‑high (selectively)	High	Low entry prices; value‑add via renovation; proximity to jobs; risks from school quality, crime perception, and exit liquidity
Hewitt and Woodway	High	Low‑to‑moderate	Strong schools (Midway ISD); stable, higher‑income households; limited raw land within city limits; strong owner‑occupier demand supports price resilience
Robinson and China Spring area	Moderate‑to‑high	Moderate	Family‑oriented with room to expand; appeal of semi‑rural lifestyle; demand from commuters and teleworkers; risk if infrastructure lags or schools underperform expectations
Bellmead / Lacy‑Lakeview	Moderate (income constrained)	High	Proximity to Waco and I‑35; low price point attractive to investors; but higher crime, weaker schools and tenant‑quality risk can limit appreciation and raise operating costs
McGregor and west McLennan	Moderate‑to‑high (industrial‑linked)	Moderate	Industrial and defense‑related employment; land for new subdivisions; potential upside if more employers locate along this corridor; cyclical risk tied to specific plants
Bosque County small towns and rural	Low‑to‑moderate (long‑term)	Moderate	Appeal to retirees, second‑home and rural‑lifestyle buyers; limited growth, thin transaction volume; appreciation more tied to lifestyle migration than job growth
Falls County (Marlin and rural)	Low	High	Weak local job base; lower incomes and school performance; very low acquisition prices but slow demand; high sensitivity to plant openings/closures or prison/ag employment shifts
Short‑term rentals near Magnolia / downtown Waco	High (income‑driven)	High	Tourism magnet effect; strong ADR and occupancy when tourism is robust; elevated risk from regulatory changes, tourism downturns and competition from new hotels
Student housing near Baylor	Moderate‑to‑high (select assets)	Moderate‑to‑high	Durable enrollment and institutional presence; high rent per bedroom; but exposure to oversupply, shifts toward on‑campus housing and changing student preferences

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