Inflation, Housing Costs And Taxes 'Screwing Up The Texas Miracle'

Houston commercial real estate executives are caught in a balancing act.

They’re optimistic about Houston’s cultural vibrance, economic growth and a slowdown in development that is allowing demand to catch up.

But with every utterance of “inflation” or “interest rates,” they’re reminded of cost pressures that are cutting into profit margins, diminishing consumer confidence and potentially unraveling the threads of the Texas Miracle.

“We’re not as affordable as we used to be,” Laurie Baker, chief operating officer for Camden Property Trust, said at Bisnow’s 2026 Houston Executive Market Kickoff event at The Briar Club on Wednesday. 

Even if a developer builds a house as cheaply as possible, taxes and insurance drive up monthly payments to a rate not attainable for the traditional first-time homebuyer, The Signorelli Co. CEO Danny Signorelli said.

“Something that keeps me up at night, that one is more of a political battle than anything,” Signorelli said. “It's unjust, it's unfair, and it's screwing up the Texas Miracle.” 

The Signorelli Co.’s First America Homes can build a house for cheaper than it could three years ago, spending about $35K per home it sells, he said.

“It hasn't changed the story for that person that would like to buy a house for 250 grand because they can't cover the taxes, the insurance, the whole deal,” Signorelli said.

First America Homes is buying down interest rates so buyers can qualify for a 3.5% mortgage. This leaves no profit but keeps a team alive and building houses “until other things get figured out,” he said. 

In Greater Houston, 88,634 single-family properties sold last year. That’s comparable to a pre-pandemic 2019, when 86,205 homes sold, though the metro’s population has increased at more than double that rate.

The median Houston single-family home price also increased over the same period, from $245K to $335K, according to data from the Houston Association of Realtors. The affordability gap between Texas and other states is narrowing, Signorelli said. 

These circumstances are keeping people in apartments longer. Multifamily REIT Camden is seeing all-time-high lease renewal rates, in the 70% range, Baker said. But that’s still not enough to push rents up while the market comes off a 50-year-high delivery rate and inflation persists.

“[This] should help our margins because we’re not turning as many units, but we just don’t have the pricing power right now,” Baker said. “There’s a lot of cost pressures, too.” 

Baker expects a better 2026 than 2025, though. The pandemic created an incredible demand for homes and apartments, and Camden began developing about 600,000 units per year, up from its historical average of 300,000 units per year, she said.

Construction starts plunged as interest rates and construction costs rose, and capital markets retreated in recent years. Now, deliveries are also finally slowing down, so demand will get the chance to catch up.

“What I’m most excited about and optimistic about is that this 50-year high of construction is falling off,” Baker said.

That will allow for rent growth, which has been negative in many of Camden’s markets for the past couple of years. Houston CRE executives also lean on the metro’s economic and population growth, which continues to spur demand and development.

“There are a lot of good things happening in the economy,” Baker said. “Yes, there's a lot of confusion out there, and there's a lot of concern about what's happening. But at the same time, we're starting to see that balance coming into play with supply and demand, and we're excited about that.”