Home affordability drops below 50% across Houston area, study says

Home prices may have decreased for the first time in nearly a year, but fewer than half of first-time homebuyers in the Houston-The Woodlands-Sugar Land market can afford the median-priced home.

“Generally speaking, homebuying has eroded as prices and mortgage rates have increased,” said Clare Losey, an assistant research economist with Texas A&M's Texas Real Estate Research Center, during a Nov. 30 interview.

study from the real estate center published on Nov. 4 compared data from 2011 through the third quarter of 2022. The study, completed by Reece Neathery, Harold Hunt and Losey, found several key factors in determining housing affordability have risen dramatically over the past decade, including the 30-year fixed mortgage rate.

According to the study, first-time homebuyers must factor in a monthly mortgage payment that is nearly three times as high as it was a decade ago. In 2011, the average mortgage interest rate of 5.62% equated to a monthly payment of $865. First-time homebuyers in 2022 pay an average of $2,379 per month for that same interest rate. Moreover, the actual mortgage rate has increased considerably over the past year.

According to the study, mortgage rates have increased from 3.82% in the first quarter of 2021 to 5.27% in the second quarter, before settling at the existing rate of 5.62%.