What are we going to do about that?
In the sprawling Houston region, those who could not afford homeownership in the city’s urban core always had options. They could trade proximity for affordability.
But as rising home prices and mortgage rates push homeownership further out of reach for the average renter, the suburbs within Harris County are losing their reputation as an affordable haven, said Rice University’s Kinder Institute for Urban Research — just one example of how access to homeownership and quality housing has grown more difficult over the past decade, with challenges accelerating during the pandemic.
The Kinder Institute and Harvard University’s Joint Center for Housing Studies released Tuesday morning their annual reports on the state of housing in the Houston area and the nation. Together, they painted a picture of a deepening divide between the prospects of current homeowners, whose equity has been buoyed by record-breaking home price appreciation, and renters, who have seen the monthly costs of buying a home rise far more quickly than wages.
The median-priced home in the suburbs of Clear Lake and Jersey Village, for example, were priced between $162,000 and $175,000 in 2011, according to the Houston Association of Realtors. They now go for $300,000 to $317,000.
“You have to go farther and farther out until you find a home that’s affordable,” explained Stephen Sherman, a researcher at the Kinder Institute. “The whole saying is drive until you qualify. We’re finding that people will have to drive even more” — a development which will have rippling implications on traffic and the way floodwaters drain.
And no matter how far out you look, it’s difficult to find a home priced below $200,000 in Harris County these days, where the median home price is on track to soon surpass that in Houston, according to the Kinder report.
Nationwide, four million renters in the past year have been priced out from buying homes, the Joint Center for Housing Studies report found. That’s a concern, said Daniel T. McCue, senior research associate at the center, because “if the door is closing on homeownership, it would lock in some significant inequities in housing.”
[…]
Home prices have outpaced incomes because of a confluence of issues including the chronic underbuilding of homes (the building of which has failed to keep up with population growth for years), the increased demand for homes as millennials enter the homebuying market, surging construction costs as the pandemic interrupted supply chains around the country and the fact that most new construction is focused on the high end of the market.
“Suburban Houston — and new homes in suburban Houston — used to be extremely affordable,” said Lawrence Dean, the Houston regional director for Zonda, which does market research related to new home construction. Since then, the costs of land, materials and labor have all shot up. These days, it’s near impossible to build a home for less than $200,000, he explained.
Wood, fiber-cement siding and even land that’s ready for new homes became harder to come by and labor became scarce during the pandemic. According to the federal government’s producer price index, which measures the average change in selling prices, residential construction materials saw costs rise more than 30 percent in January 2022 from March 2020, when the pandemic began to disrupt businesses in the United States.
The Kinder report is here. This is a regional problem, but it’s also a national problem. It’s partly pandemic-induced, and so may ease up a bit over time, but it’s also driven by other factors, including some lasting effects of the pandemic such as working from home. The point about housing within the city of Houston now being generally less expensive than in the non-Houston parts of Harris County is interesting, as a lot of the population growth in the unincorporated areas has been driven by affordable housing. We’re still cheaper than many other parts of the country (though not by as much now) so some of that will continue, but some of it will be pushed into other counties, and perhaps some of it will come back within the city of Houston. I’d like to see what the demographers think about that.
In the meantime, this is a real problem for a lot of people, and it’s going to take some big ideas to fix. Which, I’m sorry to say, doesn’t exactly fill me with hope. The abundance of available land, the lack of restrictions on building, and the general attractiveness of Texas as a place to live has been a huge driver of growth in the area. What do we do when the first two aren’t making a difference and the third is no longer true?