Texas has long had a reputation as an affordable place to live, in large part because homeownership stayed within reach for the middle class.
Now the state is being walloped by the same forces that have made homes a lot less affordable in many cities previously known for reasonable prices: pandemic-era migration from California and other more expensive areas.
California to Texas was the most popular interstate relocation route in the country in 2021, according to an analysis by storage-space search site StorageCafe using Census Bureau data. During that year, about 111,000 people—about 300 a day—moved from California to Texas.
Soaring prices have left many longtime residents grumbling about the Californization of Texas.
The Federal Reserve Bank of Dallas recently analyzed data on housing affordability in Texan cities, defined as the percentage of the housing stock affordable to families earning the median income in those places. At the beginning of 2014, nearly two-thirds of homes in San Antonio were affordable for a median-income family. By the end of 2022, fewer than one-third were. Affordability, defined as what a family spending 28% of its gross income on housing could buy, also declined in Dallas, Fort Worth and Austin, before ticking up slightly early this year.
Maintenance technician Randy Templeton moved from Illinois to San Antonio a decade ago because of Texas’ low cost of living. This year, however, when he started looking for an affordable home to buy and fix up for his growing family, he got an unpleasant surprise.
“The prices on those fixer-uppers shot up ridiculously,” he said. “And then even if you do find a home that’s for sale, you’re paying twice what you would have paid even just four years ago.”
Similar price spikes are hitting many other cities around the country where government workers, teachers, and other middle-class professionals have long found affordable housing. In this year’s second quarter, 40% of homes in Raleigh, N.C., were considered affordable, down from 73% in first-quarter 2014, according to data from the NAHB/Wells Fargo Housing Opportunity Index. In Sacramento, the share of affordable homes fell from 45% to 18% during that period. The Affordability in Colorado Springs dropped from 79% to 25%, and in the Fort Myers, Fla., metro area, from 69% to 26%.
Maintenance technician Randy Templeton moved from Illinois to San Antonio a decade ago because of Texas’ low cost of living. This year, however, when he started looking for an affordable home to buy and fix up for his growing family, he got an unpleasant surprise.
“The prices on those fixer-uppers shot up ridiculously,” he said. “And then even if you do find a home that’s for sale, you’re paying twice what you would have paid even just four years ago.”
Similar price spikes are hitting many other cities around the country where government workers, teachers, and other middle-class professionals have long found affordable housing. In this year’s second quarter, 40% of homes in Raleigh, N.C., were considered affordable, down from 73% in first-quarter 2014, according to data from the NAHB/Wells Fargo Housing Opportunity Index. In Sacramento, the share of affordable homes fell from 45% to 18% during that period. The Affordability in Colorado Springs dropped from 79% to 25%, and in the Fort Myers, Fla., metro area, from 69% to 26%.
“Austin became extremely expensive during the pandemic, and San Antonio has experienced spillover migration as a result,” said Daryl Fairweather, chief economist for residential real-estate brokerage
. “Sacramento is the top migration destination for home buyers leaving San Francisco, and Raleigh has been popular among home buyers leaving Washington, D.C.”
Texas gained 9,085,073 residents between 2000 and 2022, more than any other state, making it the fourth fastest-growing state in the U.S. Even before the pandemic hit, people were moving to San Antonio from other Texas cities and other states, according to tax data analyzed by the AEI Housing Center. The latest data, for 2019 and 2020, shows the largest source of net migration to Bexar County, where San Antonio is located, was Southern California, followed by other Texas counties primarily along the border, and Hawaii, Illinois and Washington.
San Antonio’s affordability started to drop in the first half of 2021, according to the Dallas Fed report, which attributed the price spike to rising demand, increased labor costs and higher building-supplies prices related to the pandemic.
Migration to San Antonio has cause home prices to spike.
Homes closer to San Antonio’s city center are less affordable than those farther out. The former Pearl brewery complex has been transformed into a cultural district with restaurants, bars, boutiques and apartments.
Texas home values rose sharply postpandemic. The price appreciation peaked in early 2022 at a 20% year-over-year increase, according to data from the Federal Housing Finance Agency. That spike was comparable to California’s in 2004 and 2005, following the dot-com boom, although Texas homes are still much less expensive than those in California.
Luis Torres, senior business economist at the Dallas Fed’s San Antonio branch, said that while Texas is still affordable compared with many other states, the drop in affordable housing was significant because the state was always less expensive than other parts of the U.S., and the region had never seen such sharp price increases. Home prices in Texas were largely flat from 2000 to 2005 when prices were rising nationally, which allowed Texas to largely escape the housing boom and subsequent bust that led to the 2007-09 recession.
Similar forces are driving up prices in Sacramento and Raleigh, both state capitals and traditionally affordable for the government workers who make up big chunks of their workforces.