Trulia says Houston home affordability falls dramatically (Sugar Land, Cinco Ranch: mortgage, student loan)

[TDAlmighty]

For Houston, what will happen? Will salaries go up to compensate? Will housing prices stop going up? Will there be a bunch of new moderately-priced housing built? A combination of the above factors?

[cheryjohns]

Something I have noticed over the last year - and especially accelerating in the last 6 months, is that the builders are abandoning construction for the $250-300K buyer - and going up to $350K minimum, or over.

[jerbear30]

This was a topic of conversation on the "Houston Matters" NPR show on Monday. I haven't had time to listen to it yet, but here's the link to the podcast:

Tank Cleaning Hazards, Real Estate, and Sports Monday: Houston Matters for Monday, May 12, 2014 | Houston Matters

[TDAlmighty]

Originally Posted by cheryjohns

Something I have noticed over the last year - and especially accelerating in the last 6 months, is that the builders are abandoning construction for the $250-300K buyer - and going up to $350K minimum, or over.

Interesting. Is this a bigger house/lot with more expensive finishes, or is this due to infilling in higher-priced areas? Or are the raw land prices increasing that drastically? Or is there some sort of chokepoint on resources (labor/land/permits) that requires them to focus on high-dollar homes only? Or just purely increased risk-taking through expensive spec homes?

[LocalPlanner]

Originally Posted by TDAlmighty

Interesting. Is this a bigger house/lot with more expensive finishes, or is this due to infilling in higher-priced areas? Or are the raw land prices increasing that drastically? Or is there some sort of chokepoint on resources (labor/land/permits) that requires them to focus on high-dollar homes only? Or just purely increased risk-taking through expensive spec homes?

Two things going on. One, a significant share of our job growth has been in well-paid positions who can afford what are fairly expensive homes by historical Houston standards. Some of these folks have sold in more expensive areas of the country and are bringing a lot of cash to the table.

Secondly, as I have often nagged on this board, there is still plenty of affordable housing, even brand new housing, available in Houston. Much of it closer to the center of the city than the Sugar Lands and Cinco Ranches that dominate the discussion. If people would just adjust their requirement for the super-achieving, homogeneously affluent public schools of their dreams and feel comfortable allowing their children to share their classroom with lower-income classmates, this whole discussion would be moot. A similar argument applies to those who are childless but unwilling to leave in the eastern half of the Inner Loop. The blind preference for the trendy areas has resulted in rapidly increasing land prices in those areas, and builders are forced to sell only to the higher end of the market.

Regarding standards of affordability, most housing policy practitioners put the max desirable ratio of housing costs to income at 30%, with 25% much more preferable. Of course you have to add in other ongoing costs such as student loans and medical costs which can further lower this number.

[ToyYot]

Originally Posted by cheryjohns

Something I have noticed over the last year - and especially accelerating in the last 6 months, is that the builders are abandoning construction for the $250-300K buyer - and going up to $350K minimum, or over.

Funny that, because the sub $150k market in Katy is on fire.

[usc619]

Originally Posted by ToyYot

Funny that, because the sub $150k market in Katy is on fire.

Investors

[cheryjohns]

Originally Posted by ToyYot

Funny that, because the sub $150k market in Katy is on fire.

Sorry, I should have been more specific: Sugar Land, The Woodlands, lower Katy (below I-10) and a lot of Cypress. This in subdivisions that started much lower, only a few months back. In upper Katy, it's still doable. Places like Bridgeland, Aliana, etc. appear to have changed their entry price. Actually, that bodes well for re-sale in that range.

[DSL_PWR]

Originally Posted by cheryjohns

Something I have noticed over the last year - and especially accelerating in the last 6 months, is that the builders are abandoning construction for the $250-300K buyer - and going up to $350K minimum, or over.

I wish they would get around $450k and stay there.

[Hangster]

The housing price increase has just been crazy. It hits certain areas much harder than others. In our area in Cypress (Kluge Lake, White Oaks, Parc Lakes, Rock Creek, etc, the builders have increased their home prices dramatically within the last years.