Good news for Houston buyers: They’re earning more and paying less

by James McClister


In the first quarter of 2016, nearly every county in Greater Houston – Harris, Montgomery, Brazoria, Galveston – boasted a residential housing market more affordable than “historically normal levels,” confirmed RealtyTrac’s latest Home Affordability Index. The sole outlier was Fort Bend.

RealtyTrac’s affordability index, derived from publicly recorded sales deed data collected by RealtyTrac and average wage data from the U.S. Bureau of Labor Statistics, compares current affordability over historical averages, with a score of 100 representing “normal.”

As the below table shows, four of the five counties analyzed managed index scores above 100. However, all counties experienced drops in affordability from Q1 2015, with Brazoria and Harris recording double-digit declines.

State County Q1 2016 Affordability Index YoY Pct Change Q1 Median Sales Price
Texas Harris 105 -14% $184,403
Texas Fort Bend 96 -2% $246,882
Texas Montgomery 110 -1% $222,376
Texas Brazoria 102 -14% $208,268
Texas Galveston 104 -2% $186,816
U.S. Total 115 -13% $199,000

The decline comes as a small shock, as prices in the area have stumbled over the past year – a result of low oil prices and a stunted energy market. Three of the five Houston-area counties analyzed by RealtyTrac saw declines in year-over-year median sales price, while median price in Harris county remained unchanged.

State County YoY Median Home Price Growth YoY Wage Growth Pct of Avg. Wages to Buy
Texas Harris 0% 0% 22%
Texas Fort Bend -5% -1% 38.50%
Texas Montgomery -7% 0% 34.40%
Texas Brazoria 9% 3% 31.10%
Texas Galveston -2% 4% 32.40%
U.S. Total 8% 3% 30.20%

In the first quarter, the five-county area averaged a median sales price of $209,749 – in Harris alone the price was $184,403, below the U.S. median of $199,000.

Only two counties – Brazoria and Galveston – benefited from positive wage growth in the first three months of 2016; though, Brazoria’s small leap in median home price will offset the increase for buyers.

Ultimately, despite Montgomery and Harris posting unchanged wage levels, and Fort Bend a 1 percent decline, wage growth is still outpacing home price appreciation in Greater Houston, which is good news for a market still struggling to overcome inventory shortages, faltering demand and overvaluation.

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