After years of rapid price growth and frantic bidding wars, Texas’s real estate market is more balanced and strategy-driven. For investors searching for the best small towns in Texas for investment properties, the shift could not have come at a better time.
Texas continues to be one of the fastest-growing states in the country. The state added over 2 million residents between 2020 and 2024, with the majority coming from net migration. No state income tax, a diversified economy, and a business-friendly reputation continue to draw people in. But while cities like Austin and Dallas are facing affordability pressures, the small towns on their outskirts are gaining momentum.
Mortgage rates have settled into the low-to-mid 6% range. Statewide home prices are expected to grow between 1.3% and 4.4% this year. And with about 5.2 months of housing supply on the market, there’s finally room for investors to take their time, run the numbers, and negotiate.
Here is a look at the small towns across Texas that stand out for their investment potential right now.
Sherman: The Silicon Prairie of North Texas
About an hour north of Dallas, Sherman has gone from a quiet agricultural town to one of the most talked-about real estate markets in the state. The reason comes down to one thing: semiconductors.
Texas Instruments announced a $60 billion investment to build four semiconductor fabrication plants in Sherman — the largest foundational chip manufacturing project in U.S. history. The first fab began production in late 2025, just three years after breaking ground. When fully operational, the project is expected to support more than 60,000 jobs nationwide, with a large share based in the Sherman area.
That kind of industrial activity has a direct impact on housing. Home values in Sherman have climbed 124% over the past decade. By February 2026, the median home value reached nearly $268,600, and monthly home sales also surged by over ~50%.
Infrastructure is another sign worth paying attention to. Sherman recently wrapped up a $200 million water expansion project, including a 16-mile pipeline from Lake Texoma. When a city invests that heavily in its water supply, it’s planning for decades of residential and industrial growth — a strong signal for investors.
Princeton, Anna, and Melissa: The DFW Outer Ring
Not far from Sherman, the small towns of Collin County have become the go-to landing spots for families and professionals priced out of Frisco and McKinney. Each one offers a slightly different opportunity for investors.
Princeton
According to the U.S. Census Bureau, Princeton grew by 30.6% in a single year, making it the fastest-growing city in the country. Its population more than doubled between 2020 and 2025, jumping from about 17,500 to over 37,000.
The draw is affordability. Median home prices in McKinney sit above $500,000. In Princeton, the entry point is around $300,000-$345,000. Median rent is $1,822 per month, which creates a solid rent-to-price ratio for landlords. The town has also adopted zoning that supports mixed-income, multi-story housing with ground-floor retail — a forward-thinking approach that could support long-term density.
Anna and Melissa
Anna and Melissa are often grouped, but they serve different types of investors. Anna’s 14.6% growth rate is fueled by budget-conscious families attracted to the highly rated Anna ISD and newer neighborhoods with community amenities.
Melissa takes a more premium approach. With a 10% growth rate and a median price of about $365,000, its biggest draw is a school district that consistently ranks in the top 5% of Texas. Homes in A-rated school zones historically sell faster and hold value better during downturns. For investors, Melissa is a stability play.
Taylor, Hutto, and the Samsung Corridor
Austin’s growth has pushed steadily northward, creating what locals now call the “Tech Corridor” along I-35. The anchor of this expansion is Samsung’s $17 billion semiconductor facility in Taylor — the largest foreign direct investment in Texas history.
Taylor & Hutto
The Samsung plant is expected to create over 2,000 direct jobs and 20,000 additional positions in the region. As the facility ramps up, housing demand in the area has surged significantly.
There’s an interesting tax benefit here, too. As large industrial players like Samsung begin paying full property taxes, the burden on residential homeowners in Taylor ISD and Hutto ISD is expected to stabilize. In Texas, where property taxes are the primary cost of ownership, that kind of relief makes a real difference.
Hutto stands out as one of the most affordable options in Williamson County, with a median price around $320,000. Its Co-Op District has expanded significantly, giving the town the kind of walkable retail and dining amenities that attract younger professionals.
Jarrell and Liberty Hill
Further up I-35, Jarrell is growing at about 13.95% annually, largely because its developable land is much cheaper than what you’d find in Georgetown or Round Rock. Median prices are still under $300,000.
Liberty Hill, west of Georgetown, is seeing an even faster pace at 14.72%, driven by spillover from Leander and Cedar Park. Both towns are what some investors call “land-grab plays” — the goal is to get in before the next decade of northern Austin expansion fills in around them.
Fulshear: Houston’s Master-Planned Boom
In Houston, it’s all about master-planned communities, and Fulshear, located in Fort Bend County, is leading the charge. The city’s population has grown by over 315.14% since the 2020 census, making it one of the fastest-growing cities in the country.
This isn’t an affordability play. The city-wide median is closer to $560K–$608K, while the upper end reflects premium neighborhoods like Fulbrook. The investment case here is built around quality of life. Cross Creek Ranch, for example, posted nearly 10% year-over-year price gains, well ahead of the broader Houston market.
The upside for investors right now? Fulshear’s market has shifted toward more balanced conditions. Inventory in the Katy-Fulshear area rose nearly 40% year-over-year in 2025, giving buyers significantly more negotiating power than in recent years.
South of Houston, towns like Manvel and Iowa Colony follow a similar model but at a lower price point, giving investors exposure to the Houston market without the premium entry cost.
Seguin: The San Antonio Corridor’s Best-Kept Secret
Seguin sits right on I-10 with a quick commute to San Antonio, and it’s one of the few small towns in Texas where homes under $250,000 are still consistently available.
In early 2026, Seguin is a clear buyer’s market. Median prices sit around $280,000–$300,000, and homes typically take 90 to 120 days to sell. With a sale-to-list ratio under 95%, there’s meaningful room for negotiation.
There’s also a sign of institutional confidence here. A 282-unit multifamily project recently broke ground to serve Seguin’s growing manufacturing workforce. When large developers start building rental projects in a small town, it usually means they see long-term demand that isn’t going away.
Port Aransas and Galveston: Coastal Short-Term Rentals
Coastal Texas real estate is a niche that revolves almost entirely around short-term rentals. Port Aransas and Galveston are the two strongest markets, though they attract very different types of investors.
Port Aransas
Port Aransas is widely considered one of the best spots for rental ROI on the Texas coast. The median home price sits around $600,000. Typical vacation rental properties earn an average daily rate in the $360–$480 range, with annual revenue averaging $57,000–$72,000. Top performers can bring in $120,000 or more.
One thing to keep in mind: over half of listings now require a 30-plus-night minimum stay. That signals a shift toward longer vacation commitments, which changes how investors should model occupancy and cash flow.
Galveston and Budget-Friendly Alternatives
Galveston is Houston’s go-to weekend getaway, with a median price around $350,000. South Padre Island sits at roughly $440,000–$455,000 and pulls strong occupancy rates of 38% for short-term rentals.
For investors watching their budget, Corpus Christi offers the lowest entry at roughly $218,000. Annual revenue typically ranges from about $22,000 to $31,000, and at 44% occupancy, it’s a solid cash-flow play.
Choosing the Right Town for Your Goals
The best small towns in Texas for investment properties depend on what you’re trying to achieve. The 2026 market rewards patience and research over speed, and there’s no shortage of options.
The state remains the top destination for migration and corporate investment in the country, and the small towns on the edges of its biggest cities are the ones benefiting most. For investors willing to do their homework, the current window offers more choice, more leverage, and a clearer path to long-term returns.
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