Texas Affordability Guide
Understanding housing affordability and opportunities across the Lone Star State
In this guide:
Understanding Housing Affordability
Housing affordability measures the relationship between housing costs and household income. A common benchmark considers housing "affordable" when it consumes no more than 30% of a household's gross income.
In Texas, affordability varies significantly across different regions, influenced by local economic conditions, housing supply, population growth, and other market factors. Understanding these dynamics can help homebuyers identify opportunities in areas that best match their financial situation.
Key Affordability Metrics:
- Housing Affordability Index: Measures whether a typical family can qualify for a mortgage on a typical home
- Price-to-Income Ratio: The ratio of median home prices to median household income in an area
- Monthly Housing Cost Ratio: The percentage of monthly income spent on housing
- Cost of Living Index: Compares overall living costs, including housing, across different areas
Affordability in Major Texas Metros
Each of Texas's major metropolitan areas offers different affordability profiles. Understanding these differences can help you target your home search to areas that best match your budget and needs.
Austin Metropolitan Area
Austin has emerged as Texas's least affordable major housing market, driven by strong tech industry growth and quality of life factors.
- •Median home price: Significantly above the state average
- •Affordability challenges: High demand, limited supply, and rapid price appreciation
- •More affordable alternatives: Pflugerville, Manor, and areas east of I-35
Dallas-Fort Worth Metroplex
The DFW area offers varying levels of affordability, with significant differences between close-in neighborhoods and outlying suburbs.
- •Median home price: Above state average but with substantial variation
- •Affordability challenges: Rapid price increases in desirable suburbs
- •More affordable alternatives: Southern and eastern suburbs like Mesquite, Forney, and Midlothian
Houston Metropolitan Area
Houston maintains better overall affordability than many large metros, thanks to its expansive footprint and fewer geographical constraints.
- •Median home price: Near state average with numerous affordable pockets
- •Affordability challenges: Flood insurance costs in certain areas
- •More affordable alternatives: Northwest, Northeast, and Southeast suburban areas
San Antonio Metropolitan Area
San Antonio consistently ranks as one of the most affordable large metropolitan areas in Texas.
- •Median home price: Below state average
- •Affordability strengths: Good housing supply, moderate appreciation rates
- •Value areas: South, East, and West San Antonio
Income Requirements Across Regions
The income needed to comfortably afford a median-priced home varies significantly across Texas regions. These estimates assume a 20% down payment, a 30-year fixed mortgage at current rates, and housing costs not exceeding 28% of gross income.
Estimated Annual Income Needed by Region
Austin
$95,000 - $115,000
Dallas-Fort Worth
$75,000 - $90,000
Houston
$70,000 - $85,000
San Antonio
$65,000 - $75,000
El Paso
$55,000 - $65,000
Smaller Cities/Rural
$50,000 - $70,000
Note: These figures are estimates and will vary based on interest rates, down payment amount, property taxes, HOA fees, and other factors.
It's important to note that these income requirements reflect median home prices. Each market contains both more affordable and more expensive neighborhoods, and specific property types (condos, townhomes, single-family homes) will have different price points and income requirements.
Factors Affecting Texas Affordability
Several key factors influence housing affordability across Texas. Understanding these can help you better navigate the market and identify potential opportunities or challenges.
Property Taxes
Texas has no state income tax, but property taxes are among the highest in the nation. These taxes significantly impact the total cost of homeownership.
Key consideration: Property tax rates vary by county and municipality, sometimes creating significant differences in housing costs between neighboring areas.
Insurance Costs
Home insurance costs in Texas can be higher than the national average due to risks from storms, flooding, and other natural hazards in certain areas.
Key consideration: Flood insurance can add significant costs in coastal areas and flood-prone regions, affecting total affordability.
Supply Constraints
Some areas face more significant housing supply constraints due to zoning, geographic limitations, or development regulations.
Key consideration: Cities with fewer constraints on new development typically maintain better long-term affordability.
Wage Growth
Areas with stronger wage growth relative to housing price increases maintain better affordability over time.
Key consideration: Some rapidly growing areas have seen housing prices outpace wage growth, creating affordability challenges despite strong economies.
Transportation Costs
While housing may be more affordable in outlying areas, transportation costs can offset these savings.
Key consideration: When evaluating affordability, consider the combined costs of housing and transportation, not just the mortgage payment.
Most Affordable Texas Regions
While housing costs continue to rise across Texas, several regions maintain better affordability profiles, offering greater value for homebuyers on a budget.
These areas typically combine reasonable housing prices with solid economic opportunities and amenities.
Mid-Sized Cities with Strong Value
- •Amarillo: Combines low housing costs with a stable economy and low unemployment
- •Lubbock: Home to Texas Tech University with diverse economic drivers and affordable housing
- •Waco: Centrally located with improving amenities and housing costs below state averages
- •El Paso: One of the most affordable larger Texas cities with strong Hispanic cultural influence
Affordable Metro Suburbs & Exurbs
- •DFW Area: Lancaster, Balch Springs, Terrell, Crowley
- •Houston Area: Baytown, Texas City, Conroe, Rosenberg
- •San Antonio Area: Kirby, Leon Valley, Universal City
- •Austin Area: Bastrop, Lockhart, Taylor, Jarrell
Growing Smaller Communities
These smaller cities are growing in popularity as remote work makes them viable for more homebuyers:
- •Temple: Growing healthcare sector with affordable housing and proximity to Austin
- •San Marcos: University town between Austin and San Antonio with more reasonable housing costs
- •Huntsville: Strong public sector employment and affordable housing within reach of Houston
- •Killeen-Fort Hood: Military presence stabilizes the economy with very affordable housing
Affordability Tip
When considering relocating to a more affordable area, research job opportunities, schools, healthcare access, and amenities to ensure they meet your needs. A home with a lower price tag may not be a good value if it requires significant compromises in other areas of life.
Strategies for Affordable Homeownership
Beyond location choice, several strategies can help make homeownership more affordable in any Texas region:
Explore Down Payment Assistance Programs
- •Texas Department of Housing (TDHCA) Programs: Offers several assistance options for first-time buyers
- •Local Housing Authorities: Many cities and counties offer down payment grants or forgivable loans
- •Profession-Based Programs: Special options for teachers, healthcare workers, first responders
Consider Alternative Property Types
Different property types can offer pathways to homeownership at lower price points:
- •Condominiums: Often 20-30% less expensive than comparable single-family homes
- •Townhomes: Offer more space than condos with lower prices than detached homes
- •Manufactured Homes: Modern manufactured homes offer quality at significantly lower prices
- •Smaller Single-Family Homes: Consider properties under 1,500 square feet for substantial savings
Look Into Special Loan Programs
- •FHA Loans: Lower down payment requirements (3.5%) and more flexible credit criteria
- •VA Loans: No down payment required for eligible veterans and service members
- •USDA Loans: No down payment required in eligible rural and suburban areas
- •Home Possible/HomeReady: Low down payment options with flexible terms for moderate-income buyers
Explore Emerging Neighborhoods
Finding neighborhoods on the cusp of revitalization can offer affordability with future appreciation potential.
- •Look for areas with new infrastructure investments
- •Track neighborhoods where young professionals are moving
- •Pay attention to planned commercial and transportation developments
Find Your Affordable Texas Dream Home
Our mortgage advisors can help you understand your borrowing power and identify loan programs that maximize your affordability in today's market.