As the 88th Texas legislative session progresses, we’re reflecting on where our state stands in regard to housing affordability. The National Low Income Housing Coalition (NLIHC) released its annual report, “Out of Reach 2022: The High Cost of Housing,” highlighting the mismatch between the wages people earn and the price of decent rental housing throughout the U.S. To cut to the chase: Texas ranks 23rd in housing affordability, with 124 hours of work per week at minimum wage required to afford a two-bedroom rental home. Last year, minimum wage workers needed to work 115 hours per week to afford a modest two-bedroom rental home in Texas or 95 hours to afford a modest one-bedroom rental home.

NLIHC’s Out of Reach report also calculates the “Housing Wage” a full-time worker must earn to afford a rental home without spending more than 30% of income on housing costs. Last year’s national Housing Wage was $25.82 per hour for a modest two-bedroom home at fair market rent and $21.25 per hour for a modest one-bedroom home. Texas’ Housing Wage for 2021 was $22.54 for a two-bedroom home, a $1.64 increase from 2020’s $20.90 Housing Wage. 

It’s crucial that we recognize the significantly greater impact of higher housing costs for people of color, particularly women of color. As Out of Reach states, “The median Black and Latino worker earns nearly $6.00 less per hour than the median white worker. Among renters, 55% of Black households are cost burdened and 53% of Latino households are cost-burdened, compared to 43% of white households. The disparities grow even starker for women of color: More than 70% of Black and Latina women earn wages that fall short of the one-bedroom Housing Wage.”

Looking ahead, it’s worth noting the Out of Reach report was released on July 28, 2022, when mortgage interest rates were still hovering around 3%. In the fall of 2022, mortgage rates jumped to 7% nationally (the biggest increase in over 20 years), pricing out many homebuyers. Many potential homebuyers no longer qualify for a mortgage loan at the new rates, and even if they do qualify, they are looking at a $1,000-per-month higher mortgage payment. Combined with increased home prices (30-40% increase in two years), slowing construction, and inflation, fewer families will purchase homes, therefore increasing the demand for rentals, and therefore decreasing the rental supply, and potentially driving up fair market rent for 2023. It’s possible in some areas of Texas to see rents outpace home prices and hit new highs.

As rental and home prices rise, evictions rise, and COVID-19 policy measures expire, low-income families, especially those of color, will continue to face practically insurmountable hardships in finding and maintaining affordable housing without significant legislative action. THN continues to advocate for key policy measures needed to solve the housing affordability crisis. To learn more and support THN’s legislative advocacy, please click here.

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Sources and more information: 

• • NLIHC Releases Out of Reach 2022 | National Low Income Housing Coalition
  • Austin real estate: Not much hope in 2023 forecast for homebuyers (kxan.com)
  • Homebuyers are losing big deposits because of rising mortgage rates – capradio.org
  • Mortgage rates are now above 7% on average nationally – capradio.org
  • Inflation, Soaring Rents, And The Housing Crisis (forbes.com)

The Out of Reach 2022 interactive website includes data for each state, county, and metropolitan area and an easy-to-use search function for identifying data by metropolitan-area ZIP code. The website can be accessed at: https://reports.nlihc.org/oor