Texas A&M’s Real Estate Center has released its Texas Housing Affordability Index for 2014. The report finds that, even with statewide median home prices increasing by 24 percent since 2011, Texas continues its streak as an affordable housing market.
The state had an index value of 1.74 for the fourth quarter of 2014. According to the center’s research economist, Jim Gaines, this means the state’s median income was 1.74 times (or 174 percent of) the income required to qualify to purchase a median-priced home (with an 80 percent mortgage at the prevailing interest rate, and the lender requiring that the total mortgage payment be no greater than 25 percent of the buyer’s monthly income). “The higher the index value, the more affordable homeownership is in the state,” Gaines says.
Of the eight North Texas MLS markets, Fort Worth came in with the highest annual index for 2014, at 2.45. The lowest was Dallas, at 1.75, which was still above the statewide annual index of 1.72. Gaines says Texas remains a relatively affordable state compared with other U.S. markets. “From 1999 to 2014, Texas has averaged an index value about 20 percent higher than the comparable U.S. index score,” he said. “The ‘Texas spread,’ or the differential between the U.S. index value and the Texas index, narrowed to only 6 percent in 2011 as home prices nationally bottomed out, but has rebounded to a nearly 15 percent spread in 2014.”