HAR: Only half of metro could afford Q1 median pricing in Houston real estate

by Lindsey Wells

Fewer households throughout Greater Houston could afford to purchase a median-priced home in the first quarter of 2022 as home prices and mortgage interest rates climbed.

Buyers in the Houston Area need 26.9% more income than they did a year ago to afford a home, according to the Houston Association of REALTORS® (HAR) Housing Affordability Index.

HAR’s Housing Affordability Index measures the percentage of households that can afford a median-priced, single-family home for regions and select counties in Texas.

About half of all Houston-area households (47%) earned the minimum annual income needed to purchase a $330,800 home in the first quarter of 2022, down 58% year over year. The monthly payment, including taxes and insurance, on a 30-year fixed-rate loan, would be $1,840, assuming a 20% down payment and an effective composite first quarter interest rate of 3.82%, the report noted.

Homes in the Houston area were more affordable than in the Austin and San Antonio metro areas. However, the analysis found that all metro areas examined are less affordable today than a year ago. Households in Texas need to earn 29.8% more income than they did a year ago to afford a typical home.

A household income of $73,200 was required to qualify for purchasing a $328,990 statewide median-priced, single-family home in the first quarter of 2022.

Compared with Texas, 45% of the nation’s households could afford a $368,200 median-priced home, which required a minimum annual income of $74,400 to make monthly payments of $1,860. Nationwide affordability was down from 55% at this time last year.

“With rising home prices and mortgage interest rates at the top of most consumers’ minds, HAR felt compelled to provide an easy-to-understand measurement for gauging housing affordability,” said HAR Chair Jennifer Wauhob. “We plan to produce these reports on a quarterly basis to help consumers make informed decisions about the home buying process.”

“The median price of a single-family home in Houston has increased nearly $80,000 in the last two years, and this makes it difficult for families to afford to buy a home,” said Patrick Jankowski, senior vice president of research for the Greater Houston Partnership, who assisted with reviewing the data. “As home prices and interest rates continue to increase, we could see more people stay in rentals or multi-family units because they cannot afford to move, and some people are going to have to accept less house than they originally wanted to buy.”

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