Housing affordability is still on the decline in the first quarter of 2023, despite a moderation in home prices in Greater Houston.
According to the data, the percentage of homebuyers who can afford a median-priced home in Hekou fell 5 percentage points from 47% in the first quarter of 2022 to 42% in the first three months of 2022 HAR’s Housing Affordability IndexRising borrowing costs have left many Houstonians struggling to afford the median price, which fell 1.1% to $327,000 in the first quarter of this year.
Monthly mortgage payments on a 30-year fixed-rate loan, which includes taxes and insurance, rose to an average of $2,230 this year from $1,840 a year ago due to higher rates. As a result, Houston-area households need to earn 21 percent more annually than they did a year ago to afford a median-priced home. While a household earning $73,600 a year could buy a median-priced home by 2022, it would now take nearly $90,000 a year to afford it.
Compared with the median home price of $235,900 in 2019, the report shows that home prices in the Houston area have increased significantly.Median home prices are about 39% higher than before the pandemic, as Wage growth starts to slow.
According to HAR’s index, this trend is also evident statewide. Last year, 45 percent of Texans could afford a home with a median price of $329,000. Today, the percentage of Texans who can afford a home with a statewide median price of $330,000 has dropped to 40%.
Houston’s Memorial Villages, River Oaks and West University Place are the least affordable areas for single-family homes, with only 3 percent of Harris County residents able to afford those prices. Meanwhile, Pasadena is the most affordable, with 50 percent of residents meeting the income requirements for a median-priced home.
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Despite falling housing affordability, there is still a silver lining in Houston’s rental market. Rental prices for single-family homes are up just $50 year-over-year, making rental properties a hot commodity for those too overpriced to buy. The median single-family home rental price increased from $1,900 in 2022 to $1,950 in the first quarter of 2023.Rental affordability increases from 46 percent last year to 48 percent in 2023 as compensation costs for Houstonians rise 3.5 percent year-over-year, according to Bureau of Labor Statistics.
