Houston has been crowned one of the most affordable cities to buy a home in the country.
The Texas city took the lead for the most affordable large city in new research by the nonpartisan nonprofit and research institution American Enterprise Institute. The Washington, D.C.-based firm conducts and publishes a variety of housing-related research each year.
The team weighed 64 factors, including displacement pressure caused by the ratio of median house price over median household income. It found Houston to have the lowest homelessness rate in the country compared to other cities and the largest housing supply attainable by most socio-economic levels. By comparison, it said, Los Angeles has the highest homelessness rate and is one of the toughest communities to obtain homeownership.
“When you build a lot of homes and you allow homes to be built more quickly and with less regulatory burden, they are more affordable,” said Edward Pinto, a senior fellow and director of the institute's housing center. “Houston builds homes much more affordable than what gets built and at much lower price points than Los Angeles and other places in California.”
Houston remains free of traditional zoning regulations, opting for land use restrictions. Those land use restrictions have evolved since the early 1990s, when only one residence could be built per every 5,000-square-foot lot, the institute reported. In 1998, the city changed that to 1,400-square-foot lots, allowing for more density within the urban core around the Interstate 610 Inner Loop. By 2013, the land use restriction applied to the rest of the city.
Harris County may seem like a dream opportunity for house hunters, but locals face a different reality, said Stephen Averill Sherman, a professor and researcher at Rice University's Kinder Institute for Urban Research. Houston had a median home sale price of about $320,000 at the end of April, according to Homes.com data. While it may seem more affordable than other U.S. cities, Sherman said it’s mostly within reach only for those recruited to work within the city’s medical, oil, and real estate industries.
The median household still earns $72,336 per year, according to the latest American Community Survey, published by the U.S. Census Bureau in 2023. Since many housing experts recommend buyers spend up to three and a half times their annual household income on a home, this would mean the typical household in Houston can afford to buy a property priced around only $250,000 to avoid being cost-burdened.
“People always look for the secret sauce. They want the city with diversity, jobs, good schools and where a mortgage will cost them $2,000 a month. Good luck," Sherman said. "A good, strong regional economy that’s diverse, there’s fun things to do, good jobs, excellent schools. Everything is a trade-off.”