The Texas Squeeze: A series examining the high cost of high growth in North Texas.
The cost of owning a home is soaring all over the U.S. alongside higher mortgage rates, but especially in Texas, where home prices are still dramatically on the rise.
Collin County saw one of the most drastic changes in affordability in the nation, according to a new report from Attom Data Solutions.
Attom’s home affordability index measures affordability by comparing the cost of owning single-family homes and condos in each county to average wages using U.S. Bureau of Labor Statistics data. Of counties with populations of more than 1,000,000,he company found affordability worsened the most in these:
- Hillsborough County, Florida (Tampa)
- Clark County, Nevada (Las Vegas)
- Collin County (Plano)
- Maricopa County, Arizona (Phoenix)
- Pima County, Arizona (Tucson)
While mortgage rates were already soaring over the last few years due to few homes for sale and strong demand, still-rising prices have led to mortgage payments that can cost 40% to 50% more than a year ago.
The report found the monthly cost of owning a midpriced Collin County home is $2,856, up $971 from the same time last year, including mortgage payments, property taxes and insurance. The annual household income needed for buying a Collin County home to be considered affordable rose to $122,384.
“Many potential buyers may elect to continue renting until market conditions improve. Others might adjust their sights and look for smaller properties, or homes that are further away from major metro areas,” Attom’s Rick Sharga said in the report. “And it’s possible that worsening affordability could accelerate the migratory trends that the COVID-19 pandemic started, as residents in high-cost, high-tax states who can now work from home look for less expensive places to live.”
Collin saw the biggest price gain in the nation during the second quarter of 2022, up 28% to $525,000, according to Attom. Meanwhile, wages only grew 6%.
The firm found homes to be less affordable than ever in almost all of the counties it analyzed in the U.S. and all of the counties it looked at in Texas.
Home prices have soared over the last few years, but historically low mortgage rates and rising wages kept them relatively affordable, Sharga said. He expects prices to stay flat or even dip modestly in some markets.
The number of homes on the market is up 62% as demand from buyers slows, according to a just-released report from Realtor.com. But that has not yet had much of an effect on overall pricing, as home prices jumped 26% since last year across Dallas-Fort Worth to a median of $486,000 in June.