Housing affordability for those in the Greater Houston area is a concern, according to the Kinder Institute for Urban Research’s 2022 State of Housing in Harris County and Houston.
Affordability
The growing cost of buying a home is far outpacing the growth in per capita income. Rising costs associated with down payments, interest rates and homeowners’ insurance have helped keep potential buyers away.
Rising rents have also kept residents living in apartments from being able to save enough to meet the demands of securing a mortgage.
The Kinder Institute report indicated that the median renter household faced an affordability gap of $172,067 — meaning the median home price in the Houston area was more than $170,000 more than renters could afford.
Is there a tipping point where the Houston housing market will become too unaffordable?
“We’re past that,” said Steve Sherman, a research scientist with the Kinder Institute.
The gap between what the median apartment dweller can afford and what homes cost has increased more than 40% in the last year, Sherman said.
Supply is not the problem.
“The regional population is growing,” Sherman said. “There is a strong demand for housing. We’re building plenty of units.”
The issue is the rising costs of housing that is keeping those wanting to buy a house in apartments with increasing rents, rendering them unable to save for a home.
“Prices do not go up the same through the region,” Sherman said. “In some places houses have not gone up as much. You can still find a house under $300,000.”
Income
According to Federal Reserve Economic Data, the Houston-The Woodlands-Sugar Land metropolitan statistical area per capita personal income was $68,344 in 2022, the latest-available figure. That was up 4.38% from $65,477 in 2021.
Houston’s per capita personal income is lagging behind some of Texas’ largest cities, according to the Federal Reserve. However, the city’s increase of 4.38% year over year is in line with or better than other areas.
The Dallas-Fort Worth-Arlington MSA reported a 2022 per capita income of $70,493, up 3.75% from $67,945 in 2021.
The Austin-Round Rock MSA had a 2022 per capita income of $75,119, up 4.56% from $71,844 in 2021.
Among the state’s largest population centers, the San Antonio-New Braunfels MSA had the lowest per capita income in 2022 at $55,180. That’s up only 1.32% from 2021’s figure of $54,459.
Within the Houston metro area, Harris County lags behind Fort Bend County’s 2022 per capita income of $70,390, which is 4.38% higher than in 2021.
Topping the region is Montgomery County to the north, which includes Conroe, Shenandoah and The Woodlands. The per capita personal income in 2022 was $76,043, up 5.7% over 2021.
Housing costs
The high cost of housing remains a big concern for Houston-area residents.
As the 2023 Kinder Houston Area Survey pointed out, from 1990 to 2010, home prices were about three times the per capita income, according to Federal Reserve data.
New data from 2022 suggests this trend is worsening in the Houston area and elsewhere. High interest rates set by the Federal Reserve in an effort to curb inflation have added hundreds of dollars to mortgages, which squeezes out more potential homebuyers. The current rate stands at 5.5%. In March 2022, the rate was 0.5%.
Expanding demand for single-family homes and rising housing costs — due in part to higher costs for lumber and supply chain issues — have helped keep prices high in a tight market.
The Federal Reserve indicates the Houston-The Woodlands-Sugar Land MSA median price for homes reached $359,900 by the end of 2022. The cost of a home sold was about 5.27 times more than the per capita income. The latest average home price is about $365,000 according to The Fed.
Big city comparison
The average house price for the Dallas-Fort Worth MSA as of 2022 was $438,959, more than 6.2 times the per capita income. The current average listing price for houses in that area is $445,000.
The Austin-Round Rock-Georgetown MSA carried a $525,000 average house price by the end of 2022, which was nearly seven times higher than the per capita income. The latest average house price has since risen to $549,495.
The San Antonio-New Braunfels MSA’s average price of $349,000 by the end of 2022 seemed more affordable but was still 6.3 times the per capita income. Home prices in 2023 have remained relatively the same at $339,900.
Despite the price of a home in the Greater Houston region, the area remains a bargain compared to the state as a whole, with a current average home listing price of $509,986, down from a high of $571,076 in May 2022. The current Texas average is $533,757.
The Federal Reserve reports the latest average listing price for houses in the nation is $742,884.
