Austin predicted to become least affordable housing market outside of California by year’s end

(Texas News Radio) — Austin is predicted to be the least affordable housing market outside of California by the end of 2021.

An analysis by Zillow found that monthly mortgage payments in Austin are become larger percentages of incomes in that market and will climb over 30 percent, the threshold Zillow determines to be unaffordable.

“As of June 2021, Austin is more affordable than eight major U.S. metros,” the real estate website said in a news release. “But by December, it should surpass Seattle, Miami and New York, leaving only expensive California metros beyond it: San Francisco, San Jose, San Diego, Los Angeles, and Riverside. Keep in mind, though, that typical home values and sale prices in Austin are still less than half of those in San Francisco and San Jose.”

The company said new home buyers in Austin were spending 19.7 percent of their income on monthly mortgage payments in June 2020.  A year later, that rose to 25.3 percent and Zillow predicts that will rise to 30.1 percent by December.

Zillow notes that despite the decreasing affordability, home prices in Austin are still much lower than the California metro areas.

Housing experts, according to the real estate company, say relaxing zoning rules is the most effective way to increase housing supply.

Among other Texas metro areas analyzed, Houston is the most affordable housing market in the state of the big metros with mortgage payments taking 17.2 percent of the typical income.  San Antonio followed at 19.5 percent and Dallas-Fort Worth at 19.8 percent.

In December, Houston’s affordability rate is expected to rise to 18.8 percent, whereas San Antonio’s is expected to rise to 21.8 percent and Dallas-Fort Worth to 22.1 percent.

Rental affordability among the big Texas metros are expected to stay relatively flat.  Dallas-Fort Worth is currently the most affordable at 26.7 percent of income being spent on rent, followed by San Antonio at 27.8 percent, Austin at 28.6 percent, and Houston at 28.8 percent.

That is expected to rise in Dallas-Fort Worth to 27.1 percent, fall in San Antonio to 27.4 percent, rise in Houston to 29 percent, and rise in Austin to 29.6 percent.  Only Austin would be the metro area where renting would be more affordable than buying.