Outlook for Texas Housing Affordability Outlook

Home prices in Texas continue to rise at a strong pace, according to a Texas Real Estate Research Center’s article, “Texas Housing Affordability Outlook.” The first quarter of 2022, Texas homes experienced a year over year increase in median price of 18.4 percent and a first-quartile sales price increase of 17.4 percent. This resulted in a median sales price of $319,000 and a first-quartile sales price of $229,000. These rates of growth are significantly higher than average year over year growth for the first quarter, according to the Texas Real Estate Research Center.

Offsetting this trend, family income “experienced robust growth” after “years of generally sluggish growth.” Median family income increased 13.6 percent from 2021 to 2022. However, home prices outpaced the increase in income and therefore, “purchase affordability, or the ability of a household to buy a home, will continue to diminish,” said the article.

Factoring in Interest Rates

“All other things being equal, lower (higher) mortgage interest rates translate into lower (higher) monthly mortgage payments and ease (diminish) purchase affordability.”

While interest rates are low by historical standards, “The Federal Reserve is widely anticipated to continue to raise interest rates over the near-term to reduce inflationary pressures, which will likely prompt additional increases in mortgage interest rates.”

Read the article by Clare Losey, Harold D. Hunt, and Reece Neathery, and view the graphics here.