Even though incomes are rising, education levels are improving, and poverty is decreasing, affording life in Texas is becoming more challenging, according to new data from the Texas Tribune and the Census.
U.S. Census Bureau data released Thursday indicate that, although the state has experienced strong economic growth since the beginning of the decade, Texas incomes have not kept up with national averages. Moreover, housing costs in the state have grown faster than incomes, resulting in a larger proportion of Texas renters and homeowners allocating a greater portion of their earnings to maintain their residences than was the case prior to the COVID-19 pandemic.
Texas has been considered very affordable for a long time, especially in comparison to other large states such as New York and California. Despite the fact that housing here is still less expensive than in those areas, this affordability has diminished over the past few years in light of the state’s economic growth.
“Texas is in no position to be taking a victory lap right now on housing affordability,” said Ben Martin, Research Director for Texas Housers, a research and advocacy group.
An Overview of Texas Trends & Figures
The median household income for the five years ending in 2024 was $78,476, reflecting a 3.1% increase from the five-year period that ended in 2019. It is lower than the U.S. median household income of $80,734, which increased at a faster rate of 4.4% during the same timeframe.
As Texas experienced a housing market boom, the expenses associated with renting or owning a home in the state outpaced income growth. When taking inflation into account, the median rent increased by 9.1% over the two five-year periods. Homeowners experienced smaller yet comparable increases in their overall homeownership costs, which encompass expenses such as utilities and insurance.
Over half of the 4.1 million renters in the state are now classified as “cost-burdened,” which means they allocate over 30% of their income to rent. This leaves them with fewer dollars for essential household expenses such as groceries, child care, and transportation, or for saving toward a home down payment. Prior to the pandemic, roughly 48% of tenants in Texas were regarded as “cost-burdened.”
A larger proportion of homeowners, who generally have a better financial situation than renters, were classified as “cost-burdened” at the end of the five-year period compared to before the decade began. As of 2024, approximately 29% of homeowners with a mortgage dedicated over 30% of their income to housing expenses. Homeowners have increasingly struggled with rising home insurance rates in particular.
Martin noted that, due to the five-year period over which the Census data was gathered, it included significant rent increases in Texas during 2021 and 2022, as well as instances of rent flattening and decline in subsequent years. In the wake of a large-scale apartment construction surge, rents in the Austin-Round Rock area have decreased over the past few years.
In an effort to alleviate the state’s housing shortage—a major factor contributing to elevated home prices and rents—state legislators enacted a series of laws last year that are intended to streamline the construction of new residential buildings (houses and apartments). Martin stated that it is also essential for legislators to implement strategies aimed at assisting lower-income families in locating affordable housing options.
Overall, for the period spanning 2020 to 2024, the poverty rate among Texans decreased marginally, reaching a figure of 13.8%. During the prior five-year period, that number was 14.7%.
“None of these (changes) are really dramatic, but they certainly are moving in the direction that I think we would like them to be moving,” Potter said.
With more college graduates relocating to Texas for employment and an increase in the number of Texans achieving secondary degrees, the educational attainment level is rising, resulting in a greater proportion of Texans having earned at least a bachelor’s degree. The proportion of Texans aged 25 and older who held at least a bachelor’s degree during the 2020-24 period exceeded one-third, rising from 29.9% in the preceding period. Lloyd Potter, the state demographer, noted that this growth has been mainly fueled by women pursuing degrees—especially Hispanic women.
The post Home Affordability Hurdles Remain, But Growing Even Further in this Historical State first appeared on The MortgagePoint.
