Austin First-time Homebuyers Guide 2022
The price is not right

Texas first-time buyers need $10,000 more to afford a home this year, report shows

Texas first-time buyers need $10,000 more to afford a home this year

Home for sale sign
Texans now need $10,000 more in income to be approved for a $229,000 house. Photo by fstop123/Getty Images

The hurdles are raised for first-time homebuyers in Texas yet again, as rising interest rates demand an overall higher income for mortgage approval.

The Texas Real Estate Research Center released findings in its new Texas Housing Affordability Outlook that Texans buying their first homes need $10,000 more in income than at the beginning of last year to be approved for a $229,000 house.

Purchasing power, the center explains, and mortgage interest rates are indirectly related. Higher interest means higher monthly payments; it takes a higher income to keep up. “... As long as the rise in home prices continues to outpace the increase in income, purchase affordability, or the ability of a household to buy a home, will continue to diminish,” explains the report.

The $229,000 figure represents the first-quartile home price in Texas in Q1 2022, described as "the highest home price among those lowest-priced 25 percent of homes sold" in the state. The state's median home price for the first quarter of 2022 was $319,000. Year-over-year growth was slightly higher for the median figure (18.4 percent) than first-quartile figure (17.5 percent), but both are at their highest rates since the beginning of the chart in 2012.

The Austin-Round Rock area is, of course, driving a large part of this growth, with a 29.2 percent change in first-quartile prices since Q1 2021. That figure in Austin now sits at $420,000, almost double the state's first-quartile home price. Dallas’ numbers are slightly above the state average, San Antonio’s nearly exactly match, and Houston’s are slightly below.

Unfortunately for many Texans currently renting, only 37.4 percent of them are making the qualifying income ($61,652) to buy one of those first-quartile homes with a 3.4 percent interest rate (that was the national interest rate at the beginning of the year; by mid-May the interest rate had risen to 5.25 percent). Only 19.3 percent of Austinites are in a similar position, necessitating a six-figure income ($112,342) for the first time. This is over three times the qualifying income required in 2011 ($34,505), which a simple majority of Austinites met.

It’s not news, really, that Austinites are being priced out. Although those ratios followed a similar trajectory across the state, by the beginning of this study in 2011, Austin was already significantly the least affordable location for renters looking to buy.