Well known economist James P. Gaines from the Texas A&M Real Estate Center, told a group of home builders in the Tyler, Texas area that the increasing gap between household incomes and housing prices is a critical issue facing the housing market in Texas. According to Gaines, household incomes are rising at a fraction of the pace of home prices.
“Our incomes are lower in Texas than the national levels,” he said. “House prices relative to those incomes is getting higher, and the further that spread gets, the bigger this separation between the red line and the blue line, then the more and more (important) the affordability issue becomes.”
Gaines said the Real Estate Center is projecting a 5 percent downturn in single-family home building in part because of the lack of availability of affordable retail lots. He said data from building permits show this trend is coming true.
With a projected downtown in single-family home building, prices will continue to go up and put more upward pressure on the rental market, which in turn will likely experience an uptick in rents, adding to the housing crisis where more and more people are cost-burdened (spending more than 30 percent of their household income on housing costs). The impact will grow the need for income-based affordable housing.