As housing costs continue to climb, more Texans are finding it increasingly difficult to afford both homeownership and renting. A recent report from Harvard University’s Joint Center for Housing Studies reveals that the high home prices in Texas have made owning a home an unattainable dream for many families. This trend is particularly pronounced in the state’s major urban areas where job opportunities are concentrated.
Daniel McCue, a senior research associate at the center, highlighted the issue, stating, "The costs of buying a home have left homeownership out of reach to all but the most advantaged households." The disparity between the rise in home prices and income growth has significantly eroded the affordability of housing in Texas.
Rising Home Prices and Income Disparity
To afford a typical home in Houston or Dallas-Fort Worth, a family now needs an income exceeding $100,000. In Austin, this figure jumps to over $140,000. This stark reality underscores the widening gap between housing costs and household incomes, making it nearly impossible for many to purchase a home.
Renters are also feeling the squeeze, with over half of the state's renter households classified as "cost-burdened," spending more than 30% of their income on rent and utilities. A significant number of these households allocate at least half of their income to housing costs, falling into the "severely cost-burdened" category.
Homeowners Struggling with High Costs
Homeowners are not exempt from financial stress, facing rising insurance premiums and property taxes. According to Harvard’s analysis, nearly a quarter of Texas’s 6.9 million homeowner households are spending too much on housing. These high costs, combined with a shortage of affordable housing, have contributed to a 12% increase in homelessness, with over 27,000 Texans experiencing homelessness in 2023.
Shifting Housing Market Dynamics
Despite these challenges, some areas like Austin and San Antonio have seen a decline in home prices due to high interest rates slowing the pace of homebuying. This slowdown has increased the supply of homes on the market, giving buyers more negotiating power. Clare Knapp, a housing economist for the Austin Board of Realtors, noted, "Buyers are still very much contending with elevated home prices and mortgage rates, but with more listings, they have more negotiating power."
However, high interest rates have also discouraged potential sellers from entering the market, contributing to a nationwide shortage of available housing. Steady job growth in regions like Houston and Dallas-Fort Worth continues to keep home prices elevated, despite a temporary dip.
Renters Experience Temporary Relief
The booming apartment construction in Texas, the highest since the 1980s, has provided some relief for renters. As new apartments open, competition among landlords has led to a decrease in asking rents in Austin, Dallas-Fort Worth, Houston, and San Antonio. Bruce McClenny, industry principal at MRI ApartmentData, stated, "It doesn't make up for all that crazy rent growth that we had in ‘21 and ‘22, but it's starting to make a difference."
Future Outlook and Solutions
Despite the current relief, the Harvard report warns that rents are likely to rise again. Builders are pulling back on new projects due to high borrowing costs and lower revenue growth from rents. Additionally, Texas has lost a significant number of low-cost rental units over the past decade, exacerbating the shortage of affordable housing.
Local and state leaders are increasingly focusing on easing city zoning restrictions to address the housing affordability crisis. These restrictions, often seen as a barrier to building more homes, are being targeted as a root cause of high housing costs.
"In a lot of ways, the current zoning laws that we have don't reflect the wishes of the people," McCue said. "So it's good to revisit those."
The housing affordability crisis in Texas remains a pressing issue, affecting both current and prospective homeowners as well as renters. As policymakers and housing advocates work towards solutions, the path to affordable housing for all Texans continues to be a significant challenge.