Is Houston Less Affordable For the Middle Class than Previously Thought?

by Peter Thomas Ricci

The term “affordability” is thrown around quite a bit, but when it concerns the middle class, the scenario is all the more interesting.


Creative Commons: Hequals2henry, http://commons.wikimedia.org/wiki/File:Panoramic_Houston_skyline.jpg

According to a detailed new report from Trulia, 46 percent of the Houston area’s housing stock is affordable to the middle class, meaning that the monthly costs were for homeowners – including the mortgage payment, insurance and property taxes – are all added together, that percentage of housing stock accounts for less than 31 percent of median income.

It’s a surprisingly low percentage, especially given how affordable Houston appears to be when compared with other metro areas; yet, per Trulia’s analysis, quite a few areas were much more affordable for the middle class, including Atlanta (71 percent), Chicago (67 percent), Philadelphia (65 percent) and Phoenix (61 percent).

How could this be the case? Simply, it’s the flip-side to Houston’s soaring housing market. Last month, home prices in the Bayou City reached record highs for the month, with the average and median price of single-family homes jumping 9.8 and 8.3 percent, respectively; that increase, Trulia explained to us, has outpaced even Houston’s economic gains, and as a result, affordability sunk from 56 percent of homes to 46 percent.

Also, we should keep in mind that prices in Houston, along with other metro areas in Texas (Dallas affordability was just 46 percent, and at 40 percent, Austin was the ninth least affordable metro area in the nation), started out the housing recovery with a head start, given that they did not drop all that much during the downturn; so while home prices remain depressed in areas like Chicago and Atlanta, they’re at all-time highs here in Texas.

The Housing Affordability Conundrum

Affordability is a common topic on our website, and for good reason. Not only does it continue to worsen at time drags on, but it has also led to both a surge of doubled-up households (essentially, homes with roommates) and shifting consumer preferences for homes that are more cost-effective and closer to where they work; regardless of what one may think about housing affordability, it’s here to stay, and with consumer incomes still stagnant and savings low, it will continue to shape the housing market as it lurches into recovery.

Interested in how our area compares with other metro areas? Check out our graphic below, and stay tuned for additional coverage from us on affordability, including average down payment data and what percentage of housing is affordable to Millennials.

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