Housing Affordability & Ownership

Housing is the single largest expense for most households and has become less affordable for renters.

Homeownership rates in Houston’s three-county region have not budged from what they were about a decade ago, and they remain disproportionately low among low-income and non-white households. More households are more likely to rent, reflecting lifestyle changes and barriers often associated with buying a home. However, because rents have risen across Houston and the percentage of affordable housing units has declined, half of Houston-area renters are burdened by housing costs.

The data

Homeownership rates ticked up in each of Greater Houston’s three counties in the pandemic’s immediate aftermath, but remain flat from a decade ago

There were over 2.4 million housing units in Houston’s three-county region, according to 2021 American Community Survey estimates, and more than 92% of them were occupied. This is two points higher than in 2019.

In 2021, nearly 60% of occupied housing units in Houston’s three-county area were occupied by homeowners and 40% were occupied by renters. The Houston region’s homeownership rate is below the state (63%) and national (65%) rate. Breaking down the data by county, homeownership rates in 2021 were 55% in Harris County, compared to nearly 79% in Fort Bend County and 74% in Montgomery County.

Between 2010 and 2019, the homeownership rate dipped in each county in the Houston region, Texas, and the U.S. overall. Despite climbing back up in 2021, the homeownership rate in the three-county area overall was still 1.5 percentage points lower from 61% in 2010. Homeownership rates in 2021 compared to 2010 were nearly one percentage point higher in Fort Bend County, 2.7 percentage points lower in Harris County, and flat in Montgomery. Homeownership rates in Texas dipped one point and remained flat in the U.S. during this time period.

Between 2010 and 2021, the number of occupied housing units in Houston’s three-county region increased by 29%, almost three times the national growth rate of 11%. The substantial increase in Houston-area rentals (34%) is the primary driver of the overall increase in occupied housing, though the number of housing units occupied by homeowners increased by 26% during this period as well.

As our region’s population has grown, the number of households that rent has increased faster than households that own, which contributed to the decline in overall homeownership rates over the last decade. Between 2010 and 2021, Fort Bend and Montgomery counties saw large increases in both homeowners and renters. Renter-occupied households increased by 49% in Fort Bend, 32% in Harris, and 44% in Montgomery counties. Owner-occupied households increased by 55% in Fort Bend County, 19% in Harris County, and 43% in Montgomery County.

In the time period after the 2008 financial crisis, the growth in rental units soared past houses. The number of occupied rental units in Fort Bend increased 40% while housing occupied by homeowners grew 35%; in Harris County rental units grew 29% compared to 10% for homeowners; in Montgomery County rental units grew 44% compared to 24% growth in homeowners. But, two years later in 2021, in the immediate aftermath of the pandemic — when the housing market grew at paces not seen in modern history — the number of units occupied by homeowners outpaced rental units, in some cases doubling and quadrupling.

Homeownership by Race/Ethnicity

There are racial and ethnic disparities in homeownership across Houston’s three-county area. The practice of redlining, combined with other discriminatory yet legal housing policies intent on racial exclusion, led to the systematic exclusion of Black households from homeownership for most of our nation’s history. We continue to see the impacts of these practices today.

In the Houston three-county area, 73% of white households, 69% of Asian American, 54% of Hispanic, and 41% of Black households were homeowners in 2021. The homeownership rate for white households is 31 percentage points higher than Black households and 18 percentage points higher than Hispanic households in the region overall.

This extreme homeownership disparity did not happen naturally. It is impossible to separate present-day homeownership rates from decades of racist, discriminatory housing policies that prevented Black, Indigenous, and other communities of color from owning homes in the past.

As we saw above, overall homeownership rates tend to be highest in Fort Bend and Montgomery counties and lowest in Harris County, and homeownership rates by race/ethnicity follow the same pattern: Rates for each race/ethnicity are highest in the outlying counties and lowest in Harris County. However, homeownership rates for Black and Hispanic households are consistently the lowest regardless of geography, revealing deeper disparities.

Between 2010 and 2019, homeownership rates declined for three out of the four major racial/ethnic groups in each Houston-area county. Comparatively, between 2019 and 2021, homeownership rates declined for Black households in Fort Bend and Asian American households in Harris — the other groups experienced an increase or no change in homeownership. Black households in Harris County saw the greatest decline in homeownership rates since 2010 of six percentage points despite experiencing an uptick between 2019 and 2021.

In Fort Bend County, where homeownership is consistently highest in the region, the homeownership rate gap between white and Black households was 16 percentage points in 2021. This is the smallest gap in the region. The difference in homeownership rates between white and Black households for the same year was 21 points in Montgomery County and 34 points in Harris County. Racial/ethnic disparities in homeownership have not narrowed in the last decade — this disparity has widened by six points in Harris County, grown by four points in Fort Bend County, and remained flat in Montgomery County. The gap also grew in Texas by three percentage points, but remained flat in the U.S.

Nationally and locally, there is a marked decline in Black homeownership. Reasons for the decrease in Black homeownership include lack of affordable housing and lower access to credit. National research found Black residents were more than twice as likely to receive a subprime loan as white applicants.¹

Local research has shown similar patterns. Banks deny home loans from Black and Hispanic applicants at four times the rate of white applicants in the greater Houston region. In 2020, 25% of Black and 23% of Hispanic applicants were denied home loans compared with 8% of white applicants, according to the Kinder Institute’s 2022 State of Housing report. Further, the home loans that were approved for Black and Hispanic applicants were more likely to have unfavorable terms, including higher interest rates, higher loan-to-value ratio, longer loan terms and were far more likely to be heavily debt-burdened borrowers.

Homeownership by Income

One major obstacle to homeownership is having the means to afford a down payment and to maintain a mortgage, insurance, maintenance, utilities, and property taxes while balancing other expenses and debts. To illustrate the portion of households in need of housing assistance of some form, the Department of Housing and Urban Development (HUD) compiled Comprehensive Housing Affordability Strategy (CHAS) data, which provides counts of households that qualify for government housing assistance based on income. Households that make less than 80% of the HUD Area Median Family Income (HAMFI), begin to qualify for assistance at the local, state, and federal levels, though some programs are reserved for the lowest income households.

The CHAS data shows the proportion of homeowners by income group. Low-income families in Harris County are consistently the least likely to own their homes compared to the region, state, and nation. For example, 28% of households with 30% HAMFI or less were homeowners in Harris County, compared to 37% in Texas, and 35% in the U.S., according to HUD’s analysis of five-year estimates ending in 2019 from the American Community Survey.

Fort Bend County and Montgomery County see a different pattern. Low-income families in Fort Bend and Montgomery counties are more likely to own their home than their counterparts in Harris County, and are higher than the state and national averages. Among households with 30% HAMFI or less, 49% in Fort Bend County and 51% in Montgomery County were homeowners, compared to 28% in Harris County.

Home values have increased at a faster rate in Fort Bend and Montgomery counties than in Harris County, the state of Texas and the nation

The Houston housing market has a reputation for being affordable, especially compared to other metropolitan areas. But recent trends have put that reputation at risk as housing prices in the Greater Houston real estate market reach new highs.

Those wondering, “is now a good time to buy a house in Houston?” will find that the answer is never a simple yes or no. According to estimates from the American Community Survey, in 2021 the median home value in the U.S. was $265,500 (in 2019 dollars). The median home value in Harris County was $232,500, which was just below the state median value of $237,400. However, the median home values in Fort Bend and Montgomery counties — at $319,000 and $293,900, respectively — were well above the national median value.

Between 2010 and 2021, median home values increased by 48% across the nation compared with 75% in Texas. Despite this faster growth, the median home value in Texas is consistently lower than in the U.S. Locally, the median home value rose 71% in Fort Bend County, 66% in Harris County, and 74% in Montgomery County between 2010 and 2021.

The House Price Index in the Houston area has risen fastest in Harris County

The Federal Housing Finance Agency House Price Index (HPI) measures average price changes in repeat sales or refinancing on the same properties and serves as a timely indicator of house price trends. It provides a way to compare single-family house prices across different geographic regions that controls for distortions in the market.

In 2021, the HPI was highest in Harris County among Houston’s three counties and 18% higher than in Fort Bend and 25% higher than in Montgomery counties. Although median housing values are higher in Fort Bend and Montgomery counties compared to Harris County and the nation, the relative lower HPI indicates lower average housing prices in repeat sales or refinancing.

The index trends in Houston’s three-county region and Texas generally follow the national trend, but the national HPI surpassed our region just before the 2008 housing crisis, signaling that housing prices at the national level were rising faster than in our region. However, the Houston region eventually caught up: between 2010 and 2021, the HPI increased 84% across Texas, 66% in Montgomery County, 65% in Fort Bend County, 62% in Harris County, and 61% in the nation. More recently, between 2020 and 2021 alone, HPI increased 15% across the state, 14% nationally, 12% in Montgomery County, 10% in Fort Bend County, and 6% in Harris County.

Houston-area housing costs have increased for renters but declined for homeowners since 2010

Is rent expensive in Houston? While rent is still less expensive than the average housing payment with a mortgage, rents in Houston’s three-county area are higher than the national and state averages. Gross rent is the contract rent plus the estimated average monthly cost of utilities.

Median gross rents in the region were higher in 2021 than in 2010 (in 2019 inflation-adjusted dollars). They climbed fastest between 2010 and 2019 and then were relatively flat between 2019 and 2021 (except in Fort Bend County where median rents fell about 10 percent).

Overall, among Houston’s three counties, Fort Bend had the highest median gross rent, growing 10% to $1,406 in 2021 from $1,275 in 2010. The median gross rent in Harris County increased to $1,101 from $980, up 12% since 2010. During the same time period, median gross rent in Montgomery County rose 22% to $1,215 in 2021 from $992 in 2010. For comparison, gross rent rose 17% for the average Texan and 12% for the average American during this time period. As rents increase, opportunities to save for homeownership become more difficult. Additionally, median housing costs for homeowners across the three-county area are higher than the national and state average. These cost estimates include the total sum of payments made for mortgages, real estate taxes, insurance, utilities and fees.

In 2021, the median monthly housing cost for the average homeowner in Houston’s three-county region was lower than it was in 2010 (in 2019 inflation-adjusted dollars). Between 2010 and 2019, housing costs for homeowners fell in Fort Bend and Harris Counties but ticked up in Montgomery County. Between 2019 and 2021, housing costs across the region fell further. The median monthly housing cost for homeowners in Fort Bend and Montgomery counties was 8% lower in 2021 from 2010 and 15% lower in Harris County.

Interact with the chart to explore differences in households with a mortgage and ones without.

One out of two Houston-area renters are burdened by housing costs

How is housing affordability defined? The U.S. Department of Housing and Urban Development considers affordable housing as not more than 30% of income. If a household spends 30% or more of their income on housing costs, they are considered to be “housing cost-burdened.” Households that are severely cost-burdened spend 50% or more of their income on housing costs. These thresholds, established in the 1980s by the federal government, indicate when housing is considered affordable.

Renters are more likely to be burdened (spending 30% or more on housing) by housing costs than homeowners. While this has been true for at least a decade, this trend has worsened in recent years — particularly for the most vulnerable residents. The total number of housing cost-burdened owner households in 2021 compared to 2010 was 19% lower in the U.S., 5% higher in Texas, flat across the three-county region, 20% higher in Fort Bend, 6% lower in Harris, and 20% higher in Montgomery. Comparatively, the number of housing cost-burdened renter households increased 41% overall in the region, 57% in Fort Bend, 40% in Harris, 28% in Montgomery County, 30% across Texas and 8% in the U.S.

Homeowners were struggling with housing costs in 2010. It was the time just after the worst of the Great Recession, and 29% of homeowners in Houston’s three-county region were spending 30% or more of their income on housing. Over time, the situation improved for some of those who were able to keep their homes, and by 2019, the proportion of homeowners that were cost-burdened had fallen to 20%. Before the arrival of COVID in Houston, these households were in much better financial shape, including having built home equity, which provided a buffer to the worst of the economic effects. In 2021, the proportion of homeowners that were cost-burdened ticked up only 3 percentage points to 23%.

But households that rented most likely had a different experience. Back in 2010, 47% of households that rented in Houston’s three-county region were burdened by the amount spent on housing — that’s nearly one in two renter households. By 2019, that hadn’t changed. Because these households were just as burdened by housing costs nearly a decade later, they were still in tough financial shape heading into the worst global public health crisis in a century. And after the first year of the pandemic, one in two renter households in 2021 were burdened by the amount they spent on housing. The pandemic tipped us over to the mark where the majority of households that rent in our region are burdened by housing costs. However, there are differences by county — the proportion of households that are cost-burdened in Fort Bend County is 45%, in Harris County 51%, and Montgomery County 40%.

Essentially, homeowner households were less likely to be cost burdened after the first year of the pandemic compared with 2010, while renters were more likely to be cost-burdened.

Households that are severely cost-burdened spend 50% or more of their income on housing costs. According to the National Low Income Housing Coalition, severely cost-burdened renter households are more likely than other renters to sacrifice necessities like healthy food and health care to pay the rent and are more likely to experience unstable housing situations and evictions. These are the most vulnerable among vulnerable households, and housing costs for this group have only become more burdensome.

Renters are more likely to be severely cost-burdened than homeowners. About 25% of renter households in Greater Houston were severely housing cost-burdened in 2021, similar to 24% statewide and nationally but more than double the rate for homeowners. About 10% of homeowners in the Houston three-county area were severely housing cost-burdened in 2021, about one percentage point higher than the state and national averages.

The proportion of renters that are severely cost-burdened is 22% in Fort Bend, 26% in Harris, and 19% in Montgomery County, whereas the proportion of homeowners who are severely cost-burdened is 12% in Fort Bend, 10% in Harris, and 9% in Montgomery County.

Just like the proportion of renter households that spend 30% or more of their income on housing increased between 2010 and 2021, renters were more likely to spend 50% or more on housing in 2021 than in 2010 (despite a decline in 2019).

The proportion of severely cost-burdened renter households in Houston’s three-county region was two percentage points higher than it was in 2010, whereas the proportion of severely cost-burdened homeowners was a point lower.

• In Fort Bend, the proportion of severely cost-burdened households increased two percentage points among renters and remained flat among homeowners. 
• In Harris County, the proportion of severely cost-burdened households increased two percentage points among renters and fell two points among homeowners. 
• In Montgomery County, the proportion of severely cost-burdened households increased two-and-a-half percentage points among renters and didn’t change among homeowners.

Not only are households in the Houston region more likely to be severely cost-burdened in 2021 than in 2010, there are also more households that are severely cost-burdened. The total number of severely housing-cost-burdened owner households increased 14% in the three-county region between 2021 and 2010, and the number of severely housing cost-burdened renter households increased 45%. 

• The number of homeowner households that were severely cost-burdened in 2021 compared to 2010, increased 48% in Fort Bend, 5% in Harris, 38% in Montgomery, 15% in Texas, but declined 14% nationally. 
• The number of renter households that were severely cost-burdened in 2021 compared to 2010 increased 66% in Fort Bend, 42% in Harris, 67% in Montgomery, 31% across Texas, and 6% nationally.

More than one out of every two dollars in income goes to housing and transportation costs in Fort Bend and Montgomery counties

Just as there is more to the cost of living in Houston, there is more to housing affordability than mortgage, rent or utilities. For most households in the United States, housing and transportation represent the largest and second-largest expenditures, respectively. The Housing and Transportation (H+T®) Affordability Index estimates the percentage of a household’s income that will be spent on housing and transportation costs in a given location, which can help people make better-informed decisions about where to live and work. Here we show the cost burden of the combined expenses in each county.

Fort Bend residents spend a higher share of their income on housing and transportation than the other Houston-area counties and compared to other populous counties in the state. Fort Bend County residents spent approximately 58% of household income on combined housing and transportation costs in 2019, compared to 53% of household income for residents in Montgomery County and 46% of household income for residents in Harris County. The percentage of income spent on housing and transportation costs in each Houston-area county is higher than the H+T cost-burden threshold of 45%, especially in Fort Bend and Montgomery counties, driven primarily by exorbitant transportation costs.

Fort Bend County residents also spend a larger share of their income on housing and transportation than residents of Cook County, Illinois (Chicago), Fulton County, GA (Atlanta), and Los Angeles County, which is infamous for its expensive housing market and congested freeways.

A comparison with the previous H+T Index release shows residents in Fort Bend and Harris counties spent slightly less of their income on housing and transportation in 2019 than in 2015. In 2015, Fort Bend residents spent about 36% of their income on housing and 24% on transportation; and Harris residents spent 27% and 21% on housing and transportation, respectively. Montgomery County residents spent slightly less on housing (29%) but slightly more on transportation (24%) in 2015.

The available supply of housing for low-income households in the Houston region ranks second-worst in the nation

Some low-income households are able to access rental assistance programs to afford safe and adequate housing. Subsidized rental housing assistance programs include subsidized housing, locally run public housing units, federal Housing Choice Vouchers (HCV), federal Low-Income Housing Tax Credit (LIHTC) units, and a plethora of other smaller HUD development programs. Formal subsidized units are funded and distributed by government entities and require residents to meet specific income eligibility requirements as they are aimed toward alleviating housing cost burdens for low- to moderate-income households.

Across the nation there is greater need for subsidized housing for low-income households than there is availability. According to the 2022 Gap report from National Low Income Housing Coalition, the U.S. has a shortage of 7 million affordable rental homes available to extremely low-income renters (i.e., household incomes at or below the poverty guideline or 30% of their area median income). This translates to 36 affordable and available rental homes for every 100 extremely low-income renter households. For Texas and the Houston Metropolitan Area, the scarcity is worse. Texas has 29 affordable and available units per 100 extremely low-income renters. In the Houston MSA, the rate is 19, ranking our region second-worst in the country.

In 2021, there were 42,207 subsidized units available across the three counties, 90% of which were located in Harris County. And 93% of those subsidized units were occupied, higher than the state average (87%) and the national average (89%). Altogether, those units serve 89,854 low-income residents. Between 2010 and 2021, the number of subsidized housing units in the Houston three-county area increased by 900 units (or 7%), while the number of subsidized housing units nationally remained flat but increased by 5% in Texas.

Low-Income Housing Tax Credits (LIHTCs) are among the most important sources to creating affordable housing. Created by the Tax Reform Act of 1986, the LIHTC program gives State and local LIHTC-allocating agencies the equivalent of nearly $8 billion in annual budget authority to issue tax credits for the acquisition, rehabilitation, or new construction of rental housing targeted to lower-income households.

In 2020, there were 24 LIHTC projects and 2,175 LIHTC units in Fort Bend County, 36 projects and 3,312 LIHTC units in Montgomery County, and 362 projects and more than 48,000 units in Harris County.

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