Cost of Living & Housing in Fredericksburg
Fredericksburg is a genuinely expensive Texas market, and the reason why is specific and disclosed here rather than left vague: an extraordinarily large short-term-rental sector -- 3,338 active listings against a town of only about 12,000 residents -- means housing demand here is driven substantially by vacation-rental investment, not local wages alone.
Exploring the idea of moving?
We can connect you with a local real estate professional who knows the area -- no pressure, just a starting point.
Learn moreAn above-average cost of living, driven by housing specifically
BestPlaces cites a cost-of-living index of 104 (100 = national average) for Fredericksburg, about 4% above the national average -- with a separate source (HomeSnacks) citing a higher 113. The gap between sources is disclosed rather than resolved to one figure, but both point to Fredericksburg running above the national baseline. The underlying driver is clear either way: a housing sub-index of 147 (47% above the national housing-cost average) against much more moderate grocery (96) and transportation (94) sub-indices (base record).
The short-term-rental effect on housing: a real, structural dynamic
Fredericksburg had 3,338 active Airbnb/short-term-rental listings as of June 2026 -- an extraordinary ratio against a citywide population of only about 12,000 -- generating average annual revenue near $36,200 per listing, with occupancy running from a median around 32%-33% up to a March wildflower-season peak of 51% (base record). The city requires a city-issued STR license and Texas hotel occupancy tax collection for these properties. This is a genuinely different housing-market dynamic than most Texas cities in this dataset: a meaningful share of Fredericksburg's housing stock functions as vacation-rental investment property, not owner-occupied residential housing, and that demand is a real, disclosed contributor to the market's elevated prices.
Median home price vs. median household income: a real gap to budget around
Fredericksburg's median sale price is cited at $595,000 (up 32.5% year over year in the most recent trailing-30-day reading, though this small a market should be read with real caution around short-window statistics), while median household income is cited in a $53,500-$64,500 range across sources (base record). That gap is real and directly tied to the vacation-rental/tourism-driven demand described above -- a household budgeting to move here on local wages alone should not assume the median home price reflects what a typical local income can comfortably support.
Property taxes read favorably, with one disclosed data-quality caveat
Ownwell cites an effective property tax rate of about 0.85% for Fredericksburg specifically, below the Gillespie County-wide average of 1.16% and below several other Texas markets in this dataset (base record). One separately cited figure -- a median home VALUE of $191,100 used to calculate a $2,209/year median tax bill -- is dramatically lower than the $595,000 median SALE price cited above, almost certainly reflecting Texas's homestead-exemption/appraisal-cap rules holding assessed values below market value, or a stale underlying dataset; this mismatch is disclosed rather than silently resolved. Confirm a precise, current combined millage rate directly with the Gillespie Central Appraisal District for a specific property.
Key takeaways
- Cost of living runs about 4%-13% above the national average across sources (BestPlaces 104, HomeSnacks 113), driven almost entirely by a housing sub-index running 47% above the national baseline.
- An extraordinarily large short-term-rental sector (3,338 active listings against a town of ~12,000 residents) is a real, disclosed structural driver of Fredericksburg's high housing costs -- not simply a reflection of local demand.
- The median sale price ($595,000) runs well above what the cited median household income range ($53,500-$64,500) alone would support -- budget accordingly if relying on local wages rather than outside income or investment capital.
- Fredericksburg's effective property tax rate (Ownwell-cited at 0.85%) reads favorably relative to several other Texas markets in this dataset, though one cited median-home-value figure appears stale relative to current sale prices and a precise current combined millage rate was not confirmed this session.
Want to know what your budget actually buys here?
Tell us a bit about what you're looking for and we'll connect you with someone local who can walk you through real numbers.
Get local guidanceRead the full Fredericksburg overview for the complete picture -- housing, taxes, climate, and who this place genuinely fits.
Planning a move?
Tell us what you're looking for and we'll connect you with a local expert who can help you make it happen.
Talk to a local expert