HOUSTON – (By Dale King, Realty News Report) – For years many Texas communities have been attractive to families, job seekers, former renters and retirees because of relatively moderate home prices that make settling down more affordable.
The May Housing Affordability Index published by RealtyHop examined affordability across the 100 most populous U.S. cities and uncovered notable trends that reflect shifting demand and the rising cost of homeownership in several Sun Belt markets.
Most striking for Texans is that two major Texas metros—Dallas and Austin—ranked among the least affordable cities on the list.
Least Affordable: Los Angeles and New York City
At the national level, Los Angeles and New York City top the list of least affordable housing markets, while the most affordable big city is a long-struggling Rust Belt market: Detroit.
RealtyHop’s report recommends that buyers in search of strong affordability consider Detroit, where the report finds the market remains the most affordable among the top 100 cities. After accounting for property taxes, principal and interest, the typical Detroit household would need to allocate just 15.38% of annual income to own a home.
Detroit Is Dirt Cheap
The report notes a median asking price in Detroit of $69,900, underscoring why it ranks as the most affordable major city in the study.
Meanwhile, Austin’s deteriorating affordability corresponds with a surge of corporate relocations and expansions that have increased local demand for housing. High-profile moves include Tesla’s large electric-vehicle facility and Oracle’s relocation of its headquarters to Austin in late 2020, among other announced or contemplated corporate moves.
Austin Home Prices Skyrocket
RealtyHop highlights Austin’s rapid jump in unaffordability. “The city moved up four spots this month to become the 19th least affordable city in the nation,” the report states. “Strong demand has been consistently pushing up real estate values. On average, a family would have to allocate 42.81% of their annual income, or $2,553 per month, to own a home.”
The report places Austin and Dallas in similar positions. Dallas is ranked the 17th least affordable city among the 100 markets analyzed, a one-spot change from last year. In Dallas the median household income is listed at $52,580 and the median home price at $369,500, which translates into buyers needing to commit just over 45% of household income toward homeownership costs.
Houston ranks 27th least affordable, up slightly from 29th last year. The report shows an average household income of $52,338 and average home price of $318,000, meaning prospective buyers would need to allocate roughly 39% of annual income to cover mortgage payments, taxes and related costs.
Overall, Texas placed 12 communities in the top 100, with rankings that spread from relatively unaffordable to more moderate. Key Lone Star results include:
- Irving: number 34 (one spot worse than last year). Buyers would need about 36.67% of annual household income to own.
- Fort Worth: number 55 (slightly more affordable than last year’s 54), requiring about 31.23% of household income.
- San Antonio: number 61 (improving from 62 in 2020), where households must allocate roughly 30% of income.
- Laredo: number 63, requiring about 29.17% of income.
Additional Texas cities and their standings include Arlington at number 64 (up from 70), requiring 29.16% of household income; Corpus Christi at 65 (similar to last year) requiring just over 29%; El Paso at 68 for the second year running; Plano at 69 (up from 71) at just under 29%; Lubbock at 74 (down from 65) where workers earning the average household income of $50,453 would need about 27.9%; and Garland at 79 (down from 74) requiring about 27.15% of household income to purchase a home.
The Dishonor Roll of Affordability
The least affordable major housing markets, according to RealtyHop, are:
- Los Angeles: still the least affordable, where the median household income of $62,142 would have to cover 85.60% of annual income to buy a home—about $4,433 per month.
- New York City: ranked second most unaffordable, with a median asking price near $950,000 and an ownership burden of 81.46% of annual income.
- Miami: ranked third, where monthly ownership costs of roughly $2,586 equal about 79.47% of annual household income.
- Newark, N.J.: fourth, with households allocating about 71.43% of income toward homeownership given a median household income of $35,199.
- San Francisco: rounding out the top five least affordable markets. Despite high average incomes (about $112,449), homeownership would consume roughly 65.52% of annual income—about $6,139 monthly.
On the opposite end of the spectrum, other highly affordable metros in the RealtyHop report include Wichita, Kansas (number 2 most affordable) at about 16.32% of annual income; Fort Wayne, Indiana (about 16.75%); Virginia Beach (about 22.67%); and Louisville, Kentucky, where a family would need to contribute just over $1,000 per month toward mortgage and property taxes, equal to roughly 22.67% of annual income.
May 4, 2021 Realty News Report Copyright 2021
File: Austin Loses Ground in Home Affordability
For more about Texas real estate, check out the book Houston 2020: America’s Boom Town – An Extreme Close Up by Ralph Bivins. Available on Amazon