Etymology

Popular local legend states that the area was named Tres Palacios ("Three Palaces") several centuries ago by shipwrecked Spanish sailors who claimed they saw a vision of three palaces on the bay. Historians believe it was more likely named for José Félix Trespalacios, an early Mexican governor of Texas. The town was originally called Trespalacios, but shortened its name due to a nearby post office already using the longer version. The name is pronounced to rhyme with "splashes," unlike the original Spanish pronunciation.

^Geography
 

Palacios is located on the Gulf Coast at 28°42′33″N 96°13′3″W / 28.70917°N 96.2175°W / 28.70917; -96.2175 (28.709153, -96.217588),  about halfway between Houston and Corpus Christi. It is connected to both cities by State Highway 35.

According to the United States Census Bureau, the city has a total area of 5.3 square miles (14 km²), of which, 5.0 square miles (13 km²) of it is land and 0.2 square miles (0.52 km²) of it (4.36%) is water. It is located on the shores of Tres Palacios Bay, an arm of Matagorda Bay.

The Palacios area is known among birders for its wide diversity of bird life. Since 1997, as part of the 15-mile-diameter Matagorda County-Mad Island Marsh count circle of the National Audubon Society Christmas Bird Count, it has consistently reported more bird species than anywhere else in the United States. On December 19, 2005, a record 250 species were observed.

Climate

Palacios experiences a humid subtropical climate. Average daytime high temperatures range from 62 °F (17 °C) in January to 90 °F (32 °C) in August. Average nighttime lows range from 44 °F (7 °C) in winter to 77 °F (25 °C) in summer.

Palacios has an unusually high percentage of Asian-Americans as it is home to a large community of Vietnamese immigrants and their families. There is a section of town known to locals as the Vietnamese Village.

There were 1,661 households out of which 44.7% had children under the age of 18 living with them, 55.4% were married couples living together, 13.4% had a female householder with no husband present, and 25.1% were non-families. 22.0% of all households were made up of individuals and 10.2% had someone living alone who was 65 years of age or older. The average household size was 3.08 and the average family size was 3.64.

In the city the population was spread out with 35.4% under the age of 18, 9.1% from 18 to 24, 25.8% from 25 to 44, 18.6% from 45 to 64, and 11.1% who were 65 years of age or older. The median age was 30 years. For every 100 females there were 100.9 males. For every 100 females age 18 and over, there were 95.7 males.

The median income for a household in the city was $27,623, and the median income for a family was $35,518. Males had a median income of $27,483 versus $21,875 for females. The per capita income for the city was $13,107. About 19.8% of families and 24.2% of the population were below the poverty line, including 28.9% of those under age 18 and 14.3% of those age 65 or over.