Homeownership and Renting in Houston
Exploring homeownership and renting across our community
While homeownership rates are increasing across Houston, they remain disproportionately low among low-income and non-white households. We also see a rise in renters across all three counties, reflecting lifestyle changes and barriers often associated with buying a home.
Why homeownership matters to Houston
Homeownership can provide a path to economic security, social mobility and long-term wealth building. For many, barriers such as lack of a down payment or credit access are limiting entry into homeownership. These barriers can limit residents’ ability to secure an asset that is central to wealth building in America. As lending standards increase, the supply of housing for low-to-median income households shrinks, and lifestyle preferences change, renting can be a less expensive alternative for many. With the growth of the renting population, there is also a need to ensure renters are protected and represented in our housing policy.
The more we understand homeownership and renting trends in our region, the better we can remove barriers for Houstonians who want to own homes and the better we can work to ensure all residents have safe and secure homes.
Homeownership trends highlight disparities within the three-county area
Overall, as of 2017, 59% of occupied housing units in Houston were occupied by owners, compared to 62% statewide and 64% nationally. From 2010–17, the percentage of owner-occupied housing units in Houston increased by 12%, compared to 7% statewide and 2% nationally. At the same time, the percentage of renter-occupied households increased by 22% in Houston, as opposed to 15% statewide and 9% nationally.
Breaking down the data by county, 55% of occupied housing units in Harris County were occupied by owners in 2017, compared to 77% in Fort Bend County and 71% in Montgomery County. Between 2010 and 2017, Fort Bend County saw the greatest increase in both homeowners and renters. Owner-occupied households increased by 26% in Fort Bend County, 16% in Montgomery County, and 9% in Harris County. These numbers track with the overall growth rates of new homes in each of these areas. Renter households increased by 36% in Fort Bend County, 35% in Montgomery County and 20% in Harris County.
Homeownership by race and ethnicity
Not only are homeownership rates lower in Houston than they are across the state or the nation, but there are also racial and ethnic disparities in homeownership and renting across the three-county area.
Across the Houston three-county area, 72% of White and Asian householders, 52% of Hispanic householders, and 41% of Black householders are homeowners. These numbers are comparable to the state and national averages.
Looking at individual counties, further racial and ethnic disparities emerge. In 2017, homeownership was the lowest for Black householders in Harris County (36%) compared to Montgomery County (46%) and Fort Bend County (71%). Furthermore, this is less than in 2010. Homeownership rates among Hispanic householders in Fort Bend County were 68%, compared to 63% in Montgomery County and 50% in Harris County in 2017, holding fairly steady since 2010. Overall, most of Black householders are renters in Harris and Montgomery counties.
Nationally, there is a decline in Black homeownership.1 The three-county area mirrors the national trend. Reasons for this decrease in Black homeownership include a lack of affordable housing and struggle with student debt.2 Real estate discrimination is also pervasive in certain areas, although lenders argue that minorities generally have lower credit scores and lower incomes. Research found that Black residents were more than twice as likely to receive a subprime loan than White applicants.3
Homeownership by Age
With the aging of the baby boomer generation, we see the median age of homeowners is older. Across the Houston three-county area, householders aged 45–54 made up the largest share (23%) of homeowners, and householders aged 35–44 years made up the second largest share (20%).
While the Houston three-county area has a higher percentage of homeowners under 60 years old than either the state or the nation, overall the age of homeowners in the region and in each of the three counties is consistent with the age of homeowners in Texas and across the U.S. As the millennial generation ages, the number of 25 to 34-year-old homeowner households is expected to increase over the next decade.
Nationally, the largest growth in homeownership was among householders between the ages of 25 and 39.1 Between 2010 and 2017, Houston saw increases in the percent of homeowners between 35 –44 years old and homeowners over the age of 55, both of which outpaced growth across the state and the nation.
Among the three counties, the greatest change in homeownership by age group occurred in Fort Bend County, where homeownership among persons over the age of 85 increased from 971 to 2,910, or by 200%.
Homeownership by income
On average, homeowners have higher incomes than renters — often about double the household income across the three counties. According to the American Community Survey data, Houston has a higher median household income among both owners and renters than either the state or national average.
One of the major obstacles to homeownership is having the means to afford a downpayment and to maintain a mortgage, maintenance, and utilities while balancing other costs and debts. To demonstrate the number of households in need of housing assistance of some form, the U.S. Department of Housing and Urban Development (HUD) compiled “Comprehensive Housing Affordability Strategy” (CHAS) data. CHAS data provide counts of the number of households that have low enough incomes to qualify for government housing assistance. Those making less than 80% of the HUD Area Median Family Income (HAMFI), begin to qualify for assistance at both the local, state, and federal levels, though some programs are reserved for the lowest income households.4
The Houston three-county area has a slightly higher percentage of homeowners making more than the 80% HAMFI threshold than the state or the nation. Across the three counties, about 60% of homeowners in Harris County make more than 100% HAMFI, compared to 64.3% in Montgomery County and 71.4% in Fort Bend County.
The distribution of renters’ household income is very different, and renter occupied households have lower average incomes. Overall, only 29.2% of renters in the Houston area make more than 100% HAMFI, compared to 28.6% of renters in Texas and 26% of renters across the U.S. The income distribution of renters in Harris County is similar to that of the state and the nation. In Fort Bend County and Montgomery County, however, a higher percentage of renters make more than the HAMFI. These numbers make the case that more avenues for assistance to both homeowners and renters are needed if we want all residents are able to access secure, safe and affordable homes in our region.
We can also compare the proportions of owners and renters for each income category.
The CHAS data shows that the composition of owners and renters for each income group in Texas is similar to that in the U.S. However, more low-income families living in Harris County are renting rather than owning homes. For example, only 28% of households making 30% HAMFI or less were homeowners, compared to 35% in Texas, and 33% in the U.S. The percentage of owners for every income group in Harris County is lower than that in the state.
However, Fort Bend County and Montgomery County see a different pattern. The homeownership rate among low-income families is higher than Harris County and the state and national average. Again, among households making 30% HAMFI or less, 54% in Fort Bend County and 52% in Montgomery County were homeowners, compared to only 28% in Harris County.
Mortgages and lending activity
Access to a mortgage is essential to homeownership, but lending regulations often pose an obstacle for low-income families. Nationally, although the credit conditions tightened in the last few years, the number of mortgage loans increased significantly, according to a recent report on housing finance by the Urban Institute.5
Assistance for first-time homebuyers, particularly low-income and minority households, help to ensure homeownership is accessible to more people.
In Harris County, the number of home purchase loans increased by 48% between 2010 and 2017, compared to 52% in Fort Bend and 77% in Montgomery. The median household income of home purchase loan applicants in Harris was $91,000 in 2017, compared to $108,000 Fort Bend and $104,000 in Montgomery.
- Joint Center for Housing Studies of Harvard University “The State of the Nation’s Housing 2019,” Cambridge (2019).
- Young, Caitlin (2019). “These Five Facts Reveal the Current Crisis in Black Homeownership.” Urban Institute.
- Faber, Jacob. (2013). Racial Dynamics of Subprime Mortgage Lending at the Peak. Housing Policy Debate. 23. 328-349. 10.1080/10511482.2013.771788.
- U.S. Department of Housing and Urban Development, “HUD’s Public Housing Program.”
- Goodman, Laurie, et al. “Housing Finance at a Glance: A Monthly Chartbook, June 2019.” Housing Finance Policy Center, Urban Institute (2019).