Rice Kinder Institute report: Homeownership growing from historically affordable to out of reach for many Houston residents

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Despite Houston’s longtime reputation as one of the most affordable large cities in the country, homeownership is increasingly out of reach for many of its residents, according to the 2024 State of Housing in Harris County and Houston report from Rice University’s Kinder Institute for Urban Research. The report also reveals the city has experienced a loss of Black homeowners from five years ago.

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The fifth annual report, which focuses on homeownership, found that in spite of homeownership being unattainable for many residents, it is something they value: Approximately 9 in 10 Harris County residents said owning a home was an important milestone in becoming an adult, more than three-quarters said they thought homeownership represented freedom and nearly 8 in 10 said owning a home was a good way to build wealth.

The problem comes down to a major affordability gap — i.e., the difference between what a household can afford and what the market provides. This gap almost quadrupled in Harris County between 2018 and 2023 amid rising home prices and stagnant salaries. Harris County home prices increased 43%, but the home-purchasing power of a median income household increased only 1.2%.

Still, when it comes to homes in Houston and Harris County versus many other large cities and counties in Texas, homes remain more affordable relative to incomes. According to U.S. Census Bureau data on home values and incomes, the city of Houston has a smaller affordability gap and better income-to-price ratios than its peer cities in Texas except San Antonio. The affordability gap in Austin is three times that of Houston, and Dallas has a 40% larger gap.

“We really do believe that Houston is uniquely positioned to confront its affordability challenges given that it is starting from a better place than some urban areas,” said Kinder Institute Director Ruth N. López Turley. “Housing is a core area of research for us given that it affects so many aspects of our lives, from education to health and economic mobility.”

Only seven neighborhoods in Harris County are considered affordable to purchase a home based on the county’s median household income of about $71,000: Kashmere Gardens, Pleasantville, South Park, Gulfgate Riverview/Pine Valley, Galena Park, Eastex/Jensen and Denver Harbor/Port of Houston. Even a household earning $100,000 a year could not afford to buy a median-priced home in the majority of neighborhoods.

“Simply put, Harris County is running out of affordable neighborhoods for the typical household,” said Stephen Averill Sherman, research scientist and lead author of the report.

For the first time, the Kinder Institute also analyzed housing patterns in Fort Bend and Montgomery counties. These two combined added almost as many new homeowner households as Harris County did despite the two suburbs having only a third of the population of their larger neighbor.

The researchers noted that homeownership across the three-county region is diversifying, particularly in the suburbs. Hispanic households are increasing their proportion of homeowners in all three counties, but the city of Houston and Harris County have proportionately fewer Black homeowners than they did five years ago. Despite the county adding 17,000 new Black homeowner households, the city of Houston experienced a loss of Black homeowners.

The report used data from the Houston Association of Realtors and the U.S. Census American Community Survey. It was authored by Sherman and fellow Kinder Institute researchers Andrew Kim, Aaron Niznik, Anna Glanzer, Alec Tobin and Daniel Potter. The report is available at: https://kinder.rice.edu/research/2024-state-housing-harris-county-and-houston.