20th Aug, 2012

Rundown on Texas and Hill Country Home Affordability

Texas home ownership remains more affordable than in the USA. Homes in Texas Hill Country, Austin, and San Antonio regions are more than 10 percent more affordable than during an average of the previous six years. Essentially, factors such as Texas Hill Country home prices, median family incomes, and interest rates combine to affect affordability.

Fredericksburg TX home prices have decreased, interest rates have decreased, and median income has held relatively steady. Therefore, investing in Fredericksburg Texas real estate – farms, TX ranches, and property in Fredericksburg historic downtown – may be more affordable in 2012 than it might be five years down the road.

Based on the Texas Housing Affordability Index (THAI) produced by the Real Estate Center at Texas A&M University, we might infer that Gillespie County and Fredericksburg TX real estate today is more affordable than it has been in many years.In a Terra Magazine article from the Center entitled “State of Affordability,” James P. Gaines, discusses the relationship between household income and housing prices in the Texas MLS Areas.  He also explains similar research produced by the National Association of Realtors.

Interest rates have great impact on housing affordability. The interest rate set by the Federal Loan Mortgage Corporation for a 30-year, fixed-rate mortgage averaged 6.8 percent since 1991. Today, it hovers around 4 percent. A Gaines’s sample home priced at $150,000 in 1991 mortgaged at 80 percent for 30 years with the 9.64-percent interest rates from 1991 resulted in monthly mortgage payments of $1021.31. To qualify, the homebuyer would have needed an annual income near $50,000.In 2012, at the current 4-percent rate, the monthly mortgage payment would be only $572.90. The required income drops to $27,500 annually.

Interest rates alone greatly impact housing affordability but, of course, household incomes are key players in the home-affordability equation. Studies of the 2010 household incomes in the State of Texas reveal that only 10.7 percent of households can afford to purchase a home priced above $400,000—supposing 10 percent down and 4-percent interest rates. However, another 8.8 percent can afford homes in the $300,000-$400,000 range. Almost 80 percent of households are able to afford homes in price ranges under $300,000.

The variety of real estate opportunities in and around the historic communities of Texas Hill Country offer buyers from throughout the nation great opportunities to purchase primary and second homes. See more on “Rundown” in upcoming posts.

To find out about Texas Hill Country real estate for sale, please call Dale E. Cook, MBA and owner of SAGE – Premium Texas Real Estate in Fredericksburg at (830) 992-0056.

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