Texas has a reputation as an affordable place to live — largely because the cost of housing is much less than on the coasts. But the truth of the matter is that housing in Texas is gradually becoming less affordable — especially in the large metropolitan areas where virtually all of the population and economic growth is taking place. And that trend could prove to be a brake on Texas’ economic growth down the road.
The current coronavirus pandemic will only further complicate the situation.
Indeed, even Gov. Greg Abbott — speaking in San Antonio in January — said that although people have been fleeing the coastal states for Texas because of housing affordability, “that affordability issue is now beginning to bite Texas.”
This problem will only get worse with the COVID-19 crisis — not because home prices are rising (they’ll probably fall), but because so many people will lose income and may not be able to make their rent or mortgage payment.
With that in mind, here’s an overview — mostly pre-COVID — of housing affordability trends in Texas. (Most of the data in this report is drawn from the State of the Nation’s Housing 2019 report from the Joint Center for Housing Studies at Harvard University.)
State’s housing problem is concentrated in the Triangle
Like so many issues in the state, Texas’ emerging affordable housing problem is concentrated in our large metropolitan areas — and in particular, the so-called “Texas Triangle” (the 35 counties surrounding Houston, Dallas-Fort Worth, Austin and San Antonio). Some 18 million of Texas’ 29 million residents live in the Triangle and, as the chart below shows, 85% of new population growth since 2010 has been in the Triangle.
In addition, almost 80% of the state’s economy takes place in the Triangle. Essentially, all of Texas’ economic growth — with the exception of the Permian Basin — occurs in the Triangle’s metropolitan areas.
For this reason, this overview focuses mostly on large metros in Texas (including, in some cases, El Paso, Midland and a few others outside the Triangle).
Long known as a place where everything except the cost of living is big, the state seems to be losing its edge in the area of home prices — especially in its large metros. Continuing in that direction could lead to trouble down the road.