Home Ownership Slipping Beyond The Reach Of Some Middle-Income Families

Jan 19, 2016

Credit Texas Public Radio

Area planners estimate one million more people will move to Bexar County in the next 25 years. As part of our project, “Growing Pains,” Texas Public Radio is taking a deeper look at the opportunities and hurdles that come with that growth.  This week we’re looking at housing. Check out the data below showing how home prices have risen. 

The Hunt for Affordable Homes

To put it simply, the San Antonio area doesn’t have enough homes of good quality for middle income earners.  A U.S. Housing and Urban Development study found that more than 150,000 San Antonio homeowners or renters are paying more than a third of their income--the recommended maximum--for housing. 

These are working people with household incomes around $50,000.  For many of them, having the American dream, is slipping beyond their reach.

It’s cold, rainy and dark outside. Not the ideal time to house hunt.  Still, first-time homebuyers Gabriela Ramirez and Brian Wakely have rushed to see a five-year-old, 1,600-square-foot home for sale, near the Stone Oak area of San Antonio.

The home is priced at $205,000, which is a bit of a stretch for the couple’s budget.  Gabriela is finishing her marketing degree.  Brian works at a cable television company. 

“We were thinking lower than $200,000, but when we started looking, we didn’t want to live in those neighborhoods so we decided to bring up the price,” says Gabriela. “Once your family grows you’re going to grow into a bigger house so you want resale.”

“When you’re looking at the lower end of the price range, $175,000 to $180,000, the areas aren’t as well kept,” says Brian as the couple checks out the tile floors and open kitchen of the home they’re touring.

Their Realtor, Brian Mylar, urges them to move quickly if they want this house. 

Home buyers Gabriela Ramirez and Brian Wakely look at a home with Realtor Brian Mylar.
Credit Shelley Kofler / Texas Public Radio

“If you go from $150,000 to $250,000, those homes don’t stay on the market very long.  That is the most popular price range in San Antonio. There are lots of cases of multiple offers, sometimes homes only stay on the market for a day,” says Mylar.

Mylar says it’s especially competitive for median income buyers looking near the bottom of that range, for houses priced around $150,000.

“Houses aren’t being built in that range,” says Mylar.  “Unless you want an older home, you aren’t going to find anything new in that range.”

Housing Prices Have Risen Faster Than Wages

The San Antonio Board of Realtors, (SABOR) says that in Bexar County last year, the median price of a brand new home climbed to $255,000.  The median price of all homes sold rose to $184,000.  That’s 42 percent more than the cost of the median priced home 10 years ago. (See graph with data below.)

Meanwhile household income for our area  actually went down.  The U.S. Census Bureau says the San Antonio metro area had a median household income of $52,689 in 2014.  When adjusted for inflation the median household income in 1999 was $55,631 in today's dollars.

So how did this happen?

“When we started we sold lots for many, many houses under $100,000, that wasn’t uncommon at all 25 years ago,” said San Antonio real estate developer Norman Dugas.

He says the dramatic increase in the cost of new homes today begins with the price of raw land.  More people are moving to the area and that’s driven up the cost.

What’s Increased Housing Prices?

Standing in front of a huge wall map, Dugas points to the subdivisions where he’s put in the drainage, roads and utility access needed for building. He says the cost of materials has increased faster than inflation, and the cost of new government regulations is also being passed on to homebuyers.

“The San Antonio Water System’s (SAWS) water impact fee is now almost $2,800 per home.  It used to be non-existent.  You know, Bexar County has changed the street standards from an inch and a half of asphalt to two inches of asphalt.  Doesn’t seem like much but that’s 33 percent more asphalt.  And all those things disproportionately affect the price of entry level homes,” says Dugas.

San Antonio developer Norman Dugas says the rising cost of lots, inflation and new regulations have contributed to the San Antonio area's median home price rising more than 40 percent in 10 years.
Credit Shelley Kofler / Texas Public Radio

Dugas says a lot ready for building usually accounts for 20 percent of the home price.  So at an average of $40,000 to $45,000 for a starter home lot, the area’s entry level homes are now priced between $200,000 and $225,000- more than many median income households can comfortably afford.

Options for Median Income Home Buyers

Dugas believes many people who want to buy will decide to rent instead.

“There are a lot more multi-family units being put on the ground and people can afford to pay rent up to x.  And if they can get into a nice apartment for that price it may be the best option for them,” says Dugas.

John Dugan, the City of San Antonio planning director, says in the future there could be more affordable homes for buyers willing to give up their Texas-sized yards.

“Maybe a home inside a high-rise building,  or a mid-rise building or attached to another building in terms of a townhouse.  It may be a different kind of home but it’s still theirs they own.”

But Bob Dotzour, the former chief economist for the Real Estate Center at Texas A&M, doesn’t see new housing catching up to demand anytime soon.

“A school teacher, a firefighter, just an average American person living in San Antonio or most of the state of Texas, what you’re going to do is buy a 10-year-old home or a 20- or 30-year-old home and fix it up over time.”

That’s what soccer coach Sally Stewart and animal care services employee Jessica Travis are doing.  They wanted a house priced around $150,000, but Jessica says it was almost impossible to find.

“The thing that was frustrating is they needed so much work.  It became so stressful thinking about moving into a house, and you had to do so much before you moved in,” says Travis. 

But Stewart says they jumped when a three-bedroom in a great neighborhood came back on the market, even though it needs some work.

Jessica Travis and Sally Stewart say buying a house that needed some repairs allowed them to stay in their price range of around $150,000.
Credit Shelley Kofler

“The master bathroom is not usable.  The tiling and drywall is all coming off,” she says.

She says they’re also replacing the electrical system because it is a fire hazard.  

“The house was listed at $155,000. We bid the full price,” says Travis, who adds the older home suits them.

“To me there’s something a little charming about an older house. Kind of reminds me of great-grandma or something.  So, yeah, we’re happy.”

San Antonio planners say they’re looking for opportunities to create additional, middle-income housing by changing zoning requirements and by take other steps that would encourage developers.