Housing Affordability Declining in Texas

Housing affordability in Texas has contributed to a massive influx of new residents in recent years, and that affordability is slipping away.

Homes in Dallas-Fort Worth, Austin, San Antonio and Houston have become increasingly unaffordable in relation to residents’ incomes over the past decade, rivaling the costliness of metros like New York and Chicago, the Dallas Morning News reported, citing National Association of Realtors and U.S. Census Bureau data.

To determine housing affordability ratios, median home prices in the second quarter were divided by the previous year’s median household income. The result: Houston and San Antonio matched DFW’s affordability ratio, while Austin was deemed slightly less affordable.

While Texas still offers numerous advantages, this shift in affordability could deter newcomers to the Lone Star State.

Homes in DFW are still considerably more affordable than cities like San Francisco and Los Angeles, but the region’s median home prices have more than doubled in the past decade, even as incomes increased by 45 percent. Interest rate hikes in the latter half of 2022 pushed home prices down slightly, but not enough to offset significant gains that occurred in the initial years of the pandemic.

As a result, some prospective homebuyers are exploring more affordable options in Midwestern cities, where median household incomes are comparable to those in Dallas-Fort Worth but home prices are lower. The median sale price of existing homes in DFW was about $390,000 in spring 2023, roughly $27,000 more than the median price in Chicago, the outlet reported.

The post-pandemic housing boom further exacerbated the shortage of affordable homes in North Texas, making it increasingly difficult for younger buyers to find starter homes. The number of homes selling for less than $200,000 has plummeted since 2019, forcing many to reconsider their home search or look for options in other regions.

Real estate agents in the area have reported clients exploring out-of-state alternatives, such as Colorado and other Texas cities, in search of more cost-friendly housing options. These market changes are challenging the long-held perception that Texas is significantly more affordable than the rest of the country.

—Quinn Donoghue