The price is not right

Texas first-time buyers need $10,000 more to afford a home this year

Texans now need $10,000 more in income to be approved for a $229,000 house.

Photo by fstop123/Getty Images

The hurdles are raised for first-time homebuyers in Texas yet again, as rising interest rates demand an overall higher income for mortgage approval.

The Texas Real Estate Research Center released findings in its recent Texas Housing Affordability Outlook that Texans buying their first homes need $10,000 more in income than at the beginning of last year to be approved for a $229,000 house.

Purchasing power, the center explains, and mortgage interest rates are indirectly related. Higher interest means higher monthly payments; it takes a higher income to keep up. “... As long as the rise in home prices continues to outpace the increase in income, purchase affordability, or the ability of a household to buy a home, will continue to diminish,” explains the report.

The $229,000 figure represents the first-quartile home price in Texas in Q1 2022, described as "the highest home price among those lowest-priced 25 percent of homes sold" in the state. The state's median home price for the first quarter of 2022 was $319,000. Year-over-year growth was slightly higher for the median figure (18.4 percent) than first-quartile figure (17.5 percent), but both are at their highest rates since the beginning of the chart in 2012.

San Antonio’s first-quartile home price sat slightly above the state average, at $235,000, while the area's median home price for the first quarter came in at $305,000. The Austin-Round Rock area is a large contributor to the statewide growth, with a 29.2 percent change in first-quartile prices, up to $420,000. Dallas’ numbers are a near match to the state's figures, and Houston’s are just slightly below.

Unfortunately for many Texans currently renting, only 37.4 percent of them are making the qualifying income ($61,652) to buy one of those first-quartile homes with a 3.4 percent interest rate (that was the national interest rate at the beginning of the year; by mid-May the interest rate had risen to 5.25 percent). In San Antonio, only 32.5 percent of area residents are in a similar position, necessitating an income of $63,236. This is nearly twice the qualifying income required for a first-quartile home in 2011 ($23,142).

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reaching new heights

San Antonio apartment construction surges to 15th highest in the U.S.

Photo courtesy of Dallas Apartment Locators

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Apartment construction has been on the rise in San Antonio, and according to a new insight report from RentCafe, the metro area has the 15th highest new apartment construction rate nationwide in 2024.

The report from August 7 analyzed new apartment construction data across 369 U.S. metropolitan statistical areas (MSAs). For the purpose of the study, only apartment buildings containing 50 or more units were included. Any U.S. metros with fewer than 300 units or fewer than two properties/buildings were excluded.

The top five metros with the highest rates of newly built apartments expected in 2024 are New York City, New York (No. 1); Dallas, Texas (No. 2); Austin, Texas (No. 3); Phoenix, Arizona (No. 4); and Atlanta, Georgia (No. 5). Dallas-Fort Worth developers are expected to build a staggering 32,932 total apartment units in 2024, which is just three fewer units than No. 1-ranking New York City's anticipated goal.

The San Antonio metro area is still expected to complete 9,617 new apartments by the end of the year, so construction appears to be keeping up alongside the top 10 metros. In just San Antonio proper, developers are anticipating 7,058 completed units by year-end.

The report attributes booming construction rates to each metro's steady population growth, the area's thriving job market, and its desirability among major employers.

"Demand for rental apartments in the U.S. continues to outstrip supply, even with recent construction efforts mirroring the building boom of the early 1970s — when a comparable number of rentals entered the market as Baby Boomers were coming of age — due to significant growth in the renter population in the last 50 years," the report's author wrote.

San Antonio makes up the bulk of new apartments in the area, while New Braunfels is expected to build the second highest number of new apartments in the metro, totaling 887 units.

San Antonio apartment construction by 2028
Based on the number of newly built apartments from 2019 to 2023, RentCafe's analysts extrapolated that New York, Dallas-Fort Worth, and Austin will continue dominating new apartment construction through 2028. But unlike past years when there was a steady growth in completed units, the report predicts construction will dwindle until 2027; then it will experience a big hike in 2028.

"[A]partment construction starts are expected to keep falling throughout the next year as developers struggle to get financing due to stricter loan standards amid economic uncertainties, which causes delays in projects," the report said.

For context, Dallas-Fort Worth had the highest number of new apartments completed over the five-year period – 128,418 units – from 2019 to 2023, versus New York's 116,207 newly built units. San Antonio built 29,689 new units during the same time period.

RentCafe calculated New York will once again lead the nation with 150,327 new apartments built by the end of 2028, and DFW will trail behind with 108,178 completed units. The Metroplex's anticipated figures are 28 percent lower than New York's expected apartments.

San Antonio will steadily increase construction with a projected 35,576 new apartments by 2028.

"[S]everal large metros are set to slow the pace of new apartment construction by 2028, yet they remain some of the nation's heaviest builders," the report said.

The full report and its methodology can be found on rentcafe.com.

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