Galveston is an easy beach destination from the Lake Conroe area. In just a couple of hours, you can have your toes in the sand and your feet in the warm waters of the gulf. Moody Gardens and Schlitterbahn are additional draws to the island. However, despite its usually sunny days, the island’s real estate market is partly cloudy as Galveston experiences a slowdown.

Short-Term Rental Market

Oversaturation

With the popularity of Airbnbs or VRBOs growing, many people chose to purchase a home on Galveston Island in the hopes of turning it into a cash-flow property. TikTokers and other social media accounts made running a short-term rental property look easy and failproof. Owning a rental on Galveston Island should be profitable, right? So what could be the problem? Oversaturation. Too many people had the same idea. According to Newsweek, the number of short-term rentals has climbed from 2,300 to 4,900 since 2021. Therefore, there are too many short-term rentals on the market on the same island competing for the same tenants. Automatically, landlords have to lower their rental prices to stay booked, which hurts their bottom line.

Increased Costs

Property taxes have gone up in Galveston. Costs to insure a home have also increased. With homes generating less revenue combined with rising costs to own a home, many owners are putting their would-be vacation rentals on the market for sale. However, prospective buyers are more wary in 2025. Inventory is at its highest level in a decade or more. Many homes are sitting on the market for over six months regardless of downward price adjustments.

What to Do?

The market always dictates the price of homes. Unfortunately for sellers, the current market says these vacation home prices need to be lower regardless of how much they spent to buy it a few years ago. Sellers need to have realistic expectations. If they need to be out from under their property, then they are going to have to lower the asking price to a competitive number. If they don’t have to sell now, then don’t. Wait until there are fewer homes available. Push pause until interest rates decrease. Be patient until the market gets out of this slowdown.

While Galveston experiences a slowdown, the island still draws many visitors and vacationers throughout the year. This will only ramp up in the summer months as it remains a beach destination for Texans and others alike. As such, the island will always need short-term rental properties to house its guests. The oversaturation of vacation homes and rising costs have caused this slowdown. Hopefully, the sky will clear and be sunny once again in Galveston’s future real estate market.