Texas Real Estate Research Center At Texas A&M University
STATION COLLEGE, Texas – (Texas Real Estate Research Center) – Overall, housing in Texas is still affordable. However, rising mortgage interest rates are contributing to declining housing affordability across the state, according to a new report from Texas A&M University’s Texas Real Estate Research Center (TRERC).
“A popular measure developed by TRERC and deployed by industry groups depicts a decline in housing affordability across the state in the second quarter,” said Dr. Clare Losey, TRERC’s deputy research economist.
“The Texas Housing Affordability Index (THAI), which measures the relationship between median family income and the income required to buy the home at the median price in a particular area, saw widespread declines last quarter, largely precipitated by the significant rise in mortgage interest rates.”
A higher THAI indicates relatively greater accessibility. A ratio of 1.00 means that the median family income (MFI) is exactly enough to buy the house at the median price. A THAI greater than 1.00 means the MFI exceeds the income required to buy a house at the median price. Conversely, a THAI below 1.00 indicates that the MFI is not sufficient to buy the house at the median price. The THAI provides a tool for planners, practitioners and others in the real estate industry to compare affordability over time and across regions.
In the Austin-Round Rock-Georgetown Metropolitan Statistical Area, for example, the latest THAI fell to 0.96 from 1.32 in the first quarter.
“This indicates that a family earning the median income earned 4% less than what would have been needed to qualify for a loan for the home at the median price,” Losey said. “The THAI is down to less than one for Collin, Kerr and Travis counties.”
Meanwhile, the THAI rose above 1.00 for the state (1.22), indicating that Texas remains affordable for a family earning the median income, she said.
Wichita Falls and Odessa led the state in affordability, a factor in the smallest gap between home prices and median family income in the two MSAs.
See the latest Texas Housing Affordability Outlook report here. Here is the link to the supporting data.
Funded primarily by Texas real estate license fees, TRERC was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers, and the public.
Thousands of data pages are available on the Centre’s website. News is also available in our bi-weekly RECON e-newsletter, our Real Estate Red Zone podcast, our daily NewsTalk Texas feed, on Facebook, Twitter, LinkedIn and Instagram. To request a free press subscription to our flagship quarterly periodical XL magazine, contact David Jones at the above email address.
Editor’s note: As of January 1, 2021, our official name is the Texas Real Estate Research Center. Subscribe to Center press releases here