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If I select the Type tool, click somewhere in my composition and type in some text, it appears that I cannot resize the area the text occupies without resizing the text itself.

However, if I click and drag, to create a text block instead, I can use the corner handles of this block afterwards to reposition and resize this block, and have the text inside reflow automatically.

Is there a way to go from the first to the second? ie. first click, type in some text, then resize it as though it was a block?

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The terms used in Photoshop are 'Point Text' and 'Paragraph Text'. – e100 Jan 16 '13 at 18:20
up vote 3 down vote accepted

Layer -> Type -> Convert to Paragraph Text

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In Photoshop CC 2015:

Type > Convert to Paragraph Text


Type > Convert to Point Text

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