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Higher mortgage interest rates hurting Texas housing affordabilityHigher mortgage interest rates hurting Texas housing affordability2022-08-09T05:00:00Z


COLLEGE STATION, Tex. (Texas Real Estate Research Center) – Texas housing overall is still affordable. However, higher mortgage interest rates are contributing to declining housing affordability statewide, according to a new report from the Texas Real Estate Research Center (TRERC) at Texas A&M University.

“A popular metric developed by TRERC and deployed by industry groups depicts a decline in housing affordability across the state in the second quarter," said Dr. Clare Losey, TRERC assistant research economist.

“The Texas Housing Affordability Index (THAI), which measures the relationship between the median family income and the required income to purchase the median-priced home in a particular locale, faced widespread declines last quarter, largely precipitated by the significant uptick in mortgage interest rates."

A higher THAI indicates relatively greater affordability. A ratio of 1.00 means the median family income (MFI) is exactly sufficient to purchase the median-priced home. A THAI above 1.00 means the MFI exceeds the required income to purchase a median-priced home. Conversely, a THAI below 1.00 indicates the MFI is not sufficient to purchase the median-priced home. The THAI provides a tool for planners, practitioners, and other folks in the real estate industry to compare affordability over time and across regions.

In the Austin-Round Rock-Georgetown Metropolitan Statistical Area, for example, the latest THAI declined to 0.96 from 1.32 in the first quarter.

“This indicates a family earning the median income made 4 percent less than would have been necessary to qualify for a loan for the median-priced home," said Losey. “The THAI fell to less than one for Collin, Kerr, and Travis Counties."

Meanwhile, the THAI exceeded 1.00 for the state (1.22), indicating Texas remains affordable for a family earning the median income, she said.

Wichita Falls and Odessa led the state in affordability, a factor of the smaller gap between home prices and median family income in the two MSAs.

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View the latest Texas Housing Affordability Outlook report here. Here's the link to supporting data.

Funded primarily by Texas real estate license fees, TRERC was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers, and the public.​

https://mailchi.mp/mays/higher-mortgage-interest-rates-hurting-texas-housing-affordability24-0822
Texas’ housing manufacturers ‘hit the brakes’ in response to higher interest rates, economic outlookTexas’ housing manufacturers ‘hit the brakes’ in response to higher interest rates, economic outlook2022-08-08T05:00:00Z

COLLEGE STATION, Tex. (Texas Real Estate Research Center) – After two years of incessant activity, Texas' housing manufacturers pulled back on production as the industry adjusted to higher interest rates and a mixed economic outlook.

Results from the latest Texas Real Estate Research Center at Texas A&M University (TRERC) indicate the production index dipped into negative territory in July and will likely fall further in coming months.

The Texas Manufactured Housing Survey's (TMHS) sales index reached a record low on top of eight consecutive monthly decreases, and the number of cancelations elevated amid rapid changes in the mortgage market.

“Manufacturers had to hit the brakes after two years of playing catch-up with retail and community demand," said Rob Ripperda, vice president of operations for the Texas Manufactured Housing Association. “When backlogs were running around eight months, retailers were scrambling to keep homes on their lots and avoid stockouts."

Backlogs have fallen substantially over the past year, with particularly stark readings in the TMHS index since May.

“Manufacturers kept pushing their productivity higher, while economic conditions started lowering the number of potential buyers showing up on retail lots. Inventories filled up, and retailers are now canceling existing orders that don't have buyers already lined up," said Ripperda.

Dampened demand is expected to persist during the second half of 2022, and the industry responded with the first TMHS employee-index contraction since onset of the COVID-19 pandemic.

“Payroll adjustments are in line with trends we are seeing in the broader labor market," said TRERC Senior Research Associate Wesley Miller. “Despite an uptick in initial unemployment insurance claims at the national level, there is still a significant shortage of skilled labor, pushing nominal wages higher. Housing manufacturers expect the shortage to persist and are preparing to raise wages even higher."

While labor costs are increasing, prices paid for raw materials fell for the second straight month.

“Commodity prices are finally taking a breather, and the cost of lumber reached a new low for 2022 this week," said TRERC Research Economist Dr. Harold Hunt. “Although still problematic, supply chains have been stabilizing over the past 12 months and could ease prices further. The timing couldn't be better as the U.S. economy continues to slow."

In addition to economic-growth concerns, the manufactured housing industry is grappling with impending regulatory changes from the Department of Energy. Despite the various headwinds, the TMHS capital-expenditures index held well above zero, indicating longer-run optimism behind the cloud of uncertainty.

Funded by Texas real estate licensee fees, TRERC was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers, and the public. 

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Thousands of pages of data are available at the Center's website. News is available in our twice-weekly electronic newsletter RECON, our Real Estate Red Zone podcast, our daily NewsTalk Texas feed, on Facebook, on Twitter, on LinkedIn, and on Instagram. To request a free press subscription to our quarterly flagship periodical TG magazine, contact David Jones at the e-mail address above.

 

Editor's note: As of Jan. 1, 2021, our official name is the Texas Real Estate Research Center.

Subscribe to Center news releases here.​​

https://mailchi.mp/mays/texas-housing-manufacturers-hit-the-brakes25-0822
Austin’s luxury home market catching up with Houston, DFWAustin’s luxury home market catching up with Houston, DFW2022-07-19T05:00:00Z


COLLEGE STATION, Tex. (Texas Real Estate Research Center) – Sales of luxury homes – those priced at $1 million or more – have risen significantly from pre-pandemic levels in Texas' four largest metros, with Austin showing particularly strong momentum.

The number of luxury homes sold in Austin in the first five months of 2022 was almost twice the number sold there for all of 2018. Compare that with Houston, Dallas-Fort Worth, and San Antonio, where the number sold during the same period was about on par with the total sold in those cities four years ago.

Housing data show Austin's luxury market has been gaining momentum over the past few years.

In 2018, the city's luxury sales were half of those in Houston and DFW. By 2021, though, Austin was only slightly behind Houston. The two cities have been neck and neck this year in terms of luxury home sales, and Joshua Roberson, lead data analyst with the Texas Real Estate Research Center at Texas A&M University, says Austin is poised to surpass Houston.

“What makes this all the more remarkable is that Austin's population is only about one-sixth the population of Houston and one-seventh that of DFW," Roberson said.

DFW has led the state in luxury home sales for five years in a row.

“In-state migration, particularly among higher-income households, has propelled luxury home markets," Roberson said. “And booming DFW and Austin have provided steady growth for the state's overall luxury market."

However, while year-to-date sales are on pace to surpass pre-pandemic sales, Roberson says it's too early to tell if there is enough momentum to exceed 2021 sales.

Funded primarily by Texas real estate license fees, TRERC was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers, and the public.

 

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Thousands of pages of data are available at the Center's website. News is also available in our twice-weekly electronic newsletter RECON, our Real Estate Red Zone podcast, our daily NewsTalk Texas feed, on Facebook, on Twitter, on LinkedIn, and on Instagram. To request a free press subscription to our quarterly flagship periodical TG magazine, contact David Jones at the e-mail address above.

Editor's note: As of Jan. 1, 2021, our official name is the Texas Real Estate Research Center.

Subscribe to Center news releases here.​

https://mailchi.mp/mays/austins-luxury-home-market-catching-up-with-houston-dfw23-0722
Student loan debt: Another hurdle for first-time homebuyersStudent loan debt: Another hurdle for first-time homebuyers2022-07-12T05:00:00Z

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All debt a person carries has to be considered in assessing the ability to qualify for and afford a home purchase mortgage. Because a little over half of students have student loan debt, we looked into its impact. – Gary Maler, executive director, Texas Real Estate Research Center.



COLLEGE STATION, Tex. (Texas Real Estate Research Center) —  Student loan debt can consume anywhere from 3.3 to 10.9 percent of the average Texas college graduate's income, making it harder to qualify for a home mortgage or save for a down payment.

“On average, a household earning $50,000 may need just over two years to save the down payment on a $217,000 home," says Dr. Clare Losey, a housing affordability expert with the Texas Real Estate Research Center (TRERC) at Texas A&M University. “However, that increases to six years if the household carries the average student loan payment."

Losey said, “For many younger households, student loan debt is yet another on a growing list of obstacles facing first-time homebuyers. These include historically high home-price appreciation, strong demand for homeownership amidst a limited supply of homes for sale, tightened mortgage credit availability, and now rising mortgage interest rates."

Being a credit risk to lenders can hinder homeownership. Student loan debt makes mortgage applicants more of a credit risk by increasing their back-end debt-to-income ratio (total measure of household debt). This constrains their ability to save and lowers their credit score if they miss student loan payments, said the TRERC assistant research economist.

The Institute for College Access and Success reported that 52 percent of undergraduate students at four-year universities in Texas graduated with student loan debt in 2019-20, carrying an average balance of $26,273. Interest rates on student loans vary considerably depending on the first disbursement date of the loan and whether the loan is federal or private.  

In a 2021 poll by the National Association of Realtors, 60 percent of non-homeowning millennials (between the ages of 26 and 41) cited student loan debt as a hurdle to purchasing a home. Two-fifths of millennial homeowners reported student loan debt delayed their home purchase by at least three years.

To learn more, read Losey's article, “School Daze: Student Loan Debt Challenges Younger Homebuyers."

Funded primarily by Texas real estate license fees, TRERC was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers, and the public.

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Thousands of pages of data are available at the Center's website. News is also available in our twice-weekly electronic newsletter RECON, our Real Estate Red Zone podcast, our daily NewsTalk Texas feed, on Facebook, on Twitter, on LinkedIn, and on Instagram. To request a free press subscription to our quarterly flagship periodical TG magazine, contact David Jones at d-jones@tamu.edu.

Editor's note: As of Jan. 1, 2021, our official name is the Texas Real Estate Research Center.

Subscribe to Center news releases here.

 

 

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https://mailchi.mp/mays/news-releasestudent-loan-debt-another-hurdle-for-first-time-homebuyers22-0722
Texas’ manufactured housing demand slips, could slow in second half of 2022Texas’ manufactured housing demand slips, could slow in second half of 20222022-07-05T05:00:00Z

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COLLEGE STATION, Tex. (Texas Real Estate Research Center) – Recent recessionary concerns suggest a possible slowdown in manufactured housing sales for the remainder of 2022, according to industry experts and the Texas Real Estate Research Center at Texas A&M University (TRERC).

“It is now quite obvious that the U.S. economy is slowing," said TRERC Research Economist Dr. Harold Hunt. “Mortgage rates are significantly higher than they were a year ago, and that is already putting a damper on the housing market."

The latest Texas Manufactured Housing Survey (TMHS) sales index registered its lowest reading on record (the series began in June 2020), and activity is expected to slow in the second half of the year.

“There is a wide disparity between economists, however, regarding how much the economy will slow in the months ahead, and employment growth remains strong," said Hunt.

Manufactured-housing output and payrolls held firm in June, but TMHS respondents contemplated pulling back production as they adjust to weaker demand.

While raw-materials prices fell for the first time in eight months, supply-chain issues continued both upstream and downstream from manufacturers.

“Market dynamics have shifted from supply constraints at the plant level to demand constraints at the retail level," said Rob Ripperda, vice president of operations for the Texas Manufactured Housing Association. “Texas retailers are battling a lack of transportation and install services to deliver sold homes, falling foot traffic from new customers, and increased inventory costs on any deals that fall through."

These challenges, combined with impending regulatory changes from the Department of Energy, resulted in heightened uncertainty and a more moderate outlook after a bullish start to the year. Expectations of future interest-rate increases suggest that these headwinds may persist for the foreseeable future.​

https://mailchi.mp/mays/texas-manufactured-housing-demand-slips-could-slow-in-second-half-of-202221-0722