 Several revealing statistics have recently been released about housing affordability in Texas and about our homebuying habits nationwide and in Texas. The bad news is that homes are generally a bit pricier and incomes have dropped. The result is that many Texans can’t afford to buy a home these days.
According to recent numbers from the Real Estate Center at Texas A&M University, median income has declined 2% for Texans since 2003, and that means more Texans aren’t able to afford to buy a median-priced home – since the median sales price of a Texas home is up more than 3% (to $129,000).
Though interest rates that dropped 12 basis points over the last year have helped Texans, the Texas Housing Affordability Index (THAI), which tracks the relationship between housing costs and incomes in most metropolitan and a few non-metropolitan areas of the state, fell to .99. That means the median household income is 1% below the income needed to buy a median-priced home. In the fourth quarter of 2003, the THAI was 1.04.
“The combination of lower household incomes and higher home prices means that fewer Texas households can afford to buy a home compared with the year before,” says Jack C. Harris, research economist with the Real Estate Center at Texas A&M University.
Harder to buy
For first-time homebuyers, housing is especially less affordable. Currently, the First-Time Homebuyer's Affordability Index (FTHAI) is .91, meaning that the median income of a renting household in Texas is 9% short of the amount needed to buy the median-priced starter home with a loan covering 95% of its value. A year ago, the FTHAI was .95.
In fact, Texas already lags woefully behind the rest of the country in homeownership levels – 64% compared to 68% nationwide, according to the Census Bureau. Texas currently ranks only 45th out of 50 states in homeownership. And with the Legislature considering new school-finance solutions, Texas’ homeownership gap could either grow or shrink, depending on what finally happens during the current 79th session. Texas REALTORS® support property-tax relief for homeowners. And our children’s education is paramount – the future of Texas depends on it. But some ideas out there simply replace one type of property tax with another, such as a real estate transfer tax.
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Shifting one property tax to another is not the answer. Homeowners have paid the lion’s share of taxes in Texas for far too long. Any tax changes by the Legislature should encourage Texans to invest in their families and future, not make the barriers to homeownership even higher.
Facts about how we buy
The 2004 National Association of REALTORS® Profile of Home Buyers and Sellers was also recently released. In general, 39% of homebuyers were purchasing for the first time, 72% of buyers purchased a previously owned home, and the median price of homes was $144,300.
The survey found that 38% of buyers recently purchased a home in the suburbs or a subdivision, and that most buyers rate neighborhood quality as an important factor (72%) influencing their home purchase.
First-time buyers searched for about six weeks and saw 11 homes before making a decision. Repeat buyers searched for eight weeks and looked at 12 homes before buying. Seventy-six percent of buyers used a real estate agent during their search, and 57% of buyers used the Internet as part of their home search.
Habits of Texas homebuyers
Besides the general statistics of how we buy nationwide, the National Association of REALTORS® also included a special focus on Texas homebuying habits, looking at how our buying habits have changed from 2003 to 2004.
For example, in 2003, the median age of Texas buyers was 37 years old, median household income was $72,000, and the median price paid for a home was $148,000. In contrast, the medians for 2004 buyers were 40 years old, $75,100 in income, and a home price of $144,300.
The percentage of first-time buyers in Texas declined slightly (from 46% in 2003 to 39% in 2004), and Texas buyers have become more Web-savvy. In 2003, 52% of buyers used the Internet frequently, compared to 57% in 2004.
More people (75% compared to 70% a year ago) used an agent when buying a home. Even with so many buyers using the Internet to do research, people still understand just how valuable the professional assistance of a REALTOR® can be when looking for a place to call their own.
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