Record-low interest rates and low median home prices have made Texas the state with the most affordable homes, according to the Real Estate Center at Texas A&M University. Fort Worth is the stateâ€™s most affordable major metro, while Austin has the highest median home price.
â€œThe home purchasing power of a dollar in income increases dramatically as interest rates fall,â€ says Jim Gaines, research economist with the Real Estate Center. â€œWith an 80% loan at 10% interest, $1 of income buys about $3 of housing. At 7%, it buys $4 of housing. At 4%, it buys nearly $5.50.â€
But the gap between Texas and the rest of the nation is narrowing. The national median home price fell 25% from 2006-2011, while the median price in Texas increased 4%. Gaines says that Texas affordability may soon decrease as home prices begin to rise faster than incomes in some areas of the state.
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Source: Texas Association of REALTORS