As real estate prices rise across the United States, buying a home has become more competitive than ever, and as more inventory moves off the market, historically affordable markets have become slightly less affordable. In certain areas, starter homes in particular are becoming non-existent, but in Texas, starter home prices are rising despite regular inventory levels.
On a national scale, the number of available starter homes this year dropped 12.1 percent. In addition, buyers now have to pay more than ever to get their hands on a starter home, as much as 1.9 percent more of their income, and likely to continue growing. However, Texas is faring relatively well. According to a recent Trulia research article, “Inventory and Price Watch: It’s Harder to Get Started” price, not inventory, is the problem across Texas metropolitan areas.
In Houston, the median starter home price in Q4 of 2016 was $104,967 — a 16.6 percent change over Q4 of 2015. However, buyers in Houston needed a 3.4 percent additional share of income to afford a starter home. Dallas fared slightly better. The average cost of a home in Q4 of 2015 was $117,667, only a 2.9 percent additional share of income.
Austin is one of the fastest growing metros in Texas, so it makes sense that the median starter home price jumped considerably, to $182,867, a 4.2 percent additional share of income. The Fort Worth-Arlington metropolitan area saw the smallest increase in price and share of income, with a median starter home list price of $99,633 and a 0.8 percent increase in share of income.
The good news is that Texas is still a smart place to invest in real estate, despite the overall decrease in inventory and steady increase in price.