Rental housing affordability is about the relationship between rent costs and renters’ incomes. While Texas rental housing is more affordable than the national average, affordability growth in the Lone Star State has slowed in recent years.
According to the U.S. Department of Housing and Urban Development, families who pay 30 percent or more of their income for rent are considered rent-burdened. Severe rent burden is defined as paying 50 percent or more. The 30 percent rule has been criticized on the grounds that household incomes vary greatly, and 70 percent may not be enough for some families to cover other expenses (see infographic). In addition, some argue that the 30 percent rule does not take into account regional cost-of-living differences.
Texas’ median monthly rent in 2018 was $998, lower than the nationwide average of $1,023. The state’s median monthly rent increased by 27 percent from 2010 compared with 21.6 percent for the U.S. The upward trends in median rents have accelerated for both the state and the nation since 2015, and the difference between the state’s rent and the nation’s narrowed from $55 to $25 between 2010 and 2018 (Figure 1). Median rent accounted for 29.1 percent of the state’s median income in 2018, smaller than the nation’s 30.1 percent. This rental housing affordability indicator has not changed significantly for Texas since 2016.
As a percentage of occupied housing units, College Station-Bryan had the largest share of rental units (49.3 percent) followed by Lubbock, Killeen-Temple, Austin-Round Rock, Waco, and Dallas-Fort Worth-Arlington.
Houston-The Woodlands-Sugar Land had the highest growth rate of demand for rental units among the four major metros from 2013 to 2018, followed by Dallas-Fort Worth-Arlington, Austin-Round Rock, and San Antonio-New Braunfels. Among the smaller metros, Killeen-Temple had the highest growth rate followed by Lubbock, Laredo, and Midland.
Median monthly rent in 2018 varied across Texas metros from as high as $1,233 in Midland to as low as $710 in Brownsville-Harlingen (Table 3). Midland had the highest median rent followed by Austin-Round Rock, Dallas-Fort Worth-Arlington, Houston-The Woodlands-Sugar Land, Odessa, and San Antonio-New Braunfels. Brownsville-Harlingen had the lowest median rent, followed by McAllen-Edinburg-Mission, Texarkana, Wichita Falls, El Paso, and Laredo.
Odessa was the most affordable Texas metropolitan rental market in 2018 in terms of shares of rental units where renters pay less than 30 percent of their incomes for rent, followed by Sherman-Denison, Killeen-Temple, Midland, and Amarillo (Table 5). College Station-Bryan had the smallest share of affordable rental units, followed by Laredo, Lubbock, Brownsville-Harlingen, and McAllen-Edinburg-Mission. Again, College Station-Bryan’s low rental housing affordability is mainly due to its large student population.
Excerpts from an article from Real Estate Center by Dr. Anari (firstname.lastname@example.org) is a research economist with the Real Estate Center at Texas A&M University.