Texas has long been thought of as a relatively affordable place to buy a house — or at least, a place where you can get a lot of bang for your buck. But is that still true today?
According to a report from Builder Online via Zonda Data Intelligence, the answer is yes. On a local level, the Bayou City has ample inventory, and 268 builders are currently offering homes priced under $300,000. Houston might also get even more affordable in the near future, as builders complete the huge number of units under construction. This “downward pressure” will be especially influential on price if consumer demand continues to slow.
Another factor that influences Houston’s affordability is the relatively low cost of living. Texans don’t pay state income tax, and it’s just barely more expensive to pay a monthly mortgage than monthly rent (about $25). Population is actively growing, and local unemployment numbers are trending downward. The median household income has also increased by 11.5% to $83,632.
It’s of course not all good news in the Houston market — mortgage payments have increased by 71% since the beginning of 2022, and the city has a traffic problem that isn’t helped much by current local transit. However, it looks like prospective buyers who are able to overlook these details will have their choice of housing inventory throughout the rest of the year.
Housing starts were down 37.2% year over year in March, while vacancies were up 42.3%. That means Houston is approximately 3.22% oversupplied. Meanwhile, home sales have been trending downward for months. Annually, new home sales were down 21.7%, while existing home sales were down 29.9%.
When it comes to new homes, the top 10 most-active projects have a sales rate of 19.4%. The project with the fastest sales rate is Legacy Park from D.R. Horton, which has sold 46% of its projected units. In fact, most of the current top-selling community projects in greater Houston are from D.R. Horton, including Breckenridge Forest, Lakeview Retreat, Ventana Lakes and Tamarron.
Home prices are down year over year as well — though the average list price increased by 1.6% from 2022, it’s still far below the all-time highs seen last summer. Closings were also highest among homes priced below $250,000 in March. With all this in mind, Houston’s new-home affordability ratio is 40.5%.