Rising Living Costs in Texas: Insights from the Latest Census Data

It’s becoming increasingly challenging to afford living in Texas, even as incomes rise and educational attainment improves while poverty rates decline.

Despite the state’s impressive economic growth since the beginning of the decade, recent data from the U.S. Census Bureau indicates that Texas incomes have not kept pace with national averages. Housing costs in the state have surged beyond income growth, resulting in a larger percentage of Texas renters and homeowners allocating a significant portion of their earnings to maintain their living situations compared to pre-pandemic levels.

Historically, Texas has been perceived as an affordable state, especially when compared to larger states like New York and California. Although housing remains less expensive here than in those regions, the affordability has diminished in recent years, coinciding with the state’s economic expansion.

“Texas is in no position to be taking a victory lap right now on housing affordability,” stated Ben Martin, research director for Texas Housers, a research and advocacy organization.

The median household income for the five-year period ending in 2024 is projected to be $78,476, reflecting a modest 3.1% increase from the previous five-year period. This figure falls short of the U.S. median household income of $80,734, which experienced a more robust growth rate of 4.4% during the same timeframe.

As the housing market in Texas flourished, the costs associated with renting or owning a home escalated more rapidly than incomes. Adjusted for inflation, the median rent surged by 9.1% between the two five-year periods. Homeowners also faced similar increases in their overall homeownership costs, which include expenses like insurance and utilities.

Currently, over half of the state’s 4.1 million renters are classified as “cost-burdened,” meaning they spend more than 30% of their income on rent. This situation leaves them with limited funds for essential household expenses such as groceries, childcare, transportation, or savings for a future home purchase. Before the pandemic, approximately 48% of Texas renters were considered “cost-burdened.”

A growing number of homeowners, who typically have better financial stability than renters, are also facing cost burdens. As of 2024, around 29% of homeowners with a mortgage are spending more than 30% of their income on housing. Rising home insurance rates have particularly contributed to this financial strain.

Because the Census data was collected over five years, it reflects significant rent spikes in Texas during 2021 and 2022, as well as subsequent stabilization and declines in rental prices. Notably, rents in the Austin-Round Rock area have decreased recently, attributed to a substantial boom in apartment construction.

In response to the housing crisis, state lawmakers enacted a series of laws last year aimed at alleviating the housing shortage, a primary factor driving high home prices and rents. These measures primarily focus on simplifying the process for constructing new homes and apartments. However, Martin emphasizes the need for lawmakers to implement strategies that assist lower-income households in finding affordable housing.

The percentage of Texans living below the poverty line has slightly decreased, now standing at 13.8% for the 2020-2024 period, down from 14.7% in the previous five years.

Educational attainment is also on the rise, with a larger proportion of Texans earning at least a bachelor’s degree. This increase is attributed to both an influx of college graduates moving to Texas for employment and more Texans pursuing higher education. Over a third of Texans aged 25 and older held at least a bachelor’s degree during the 2020-2024 period, up from 29.9% in the prior period. This growth has been particularly pronounced among women, especially Hispanic women, seeking degrees, according to state demographer Lloyd Potter.

“None of these changes are really dramatic, but they certainly are moving in the direction that I think we would like them to be moving,” Potter remarked.

This article first appeared on The Texas Tribune.

Topics
Texas

It’s becoming increasingly challenging to afford living in Texas, even as incomes rise and educational attainment improves while poverty rates decline.

Despite the state’s impressive economic growth since the beginning of the decade, recent data from the U.S. Census Bureau indicates that Texas incomes have not kept pace with national averages. Housing costs in the state have surged beyond income growth, resulting in a larger percentage of Texas renters and homeowners allocating a significant portion of their earnings to maintain their living situations compared to pre-pandemic levels.

Historically, Texas has been perceived as an affordable state, especially when compared to larger states like New York and California. Although housing remains less expensive here than in those regions, the affordability has diminished in recent years, coinciding with the state’s economic expansion.

“Texas is in no position to be taking a victory lap right now on housing affordability,” stated Ben Martin, research director for Texas Housers, a research and advocacy organization.

The median household income for the five-year period ending in 2024 is projected to be $78,476, reflecting a modest 3.1% increase from the previous five-year period. This figure falls short of the U.S. median household income of $80,734, which experienced a more robust growth rate of 4.4% during the same timeframe.

As the housing market in Texas flourished, the costs associated with renting or owning a home escalated more rapidly than incomes. Adjusted for inflation, the median rent surged by 9.1% between the two five-year periods. Homeowners also faced similar increases in their overall homeownership costs, which include expenses like insurance and utilities.

Currently, over half of the state’s 4.1 million renters are classified as “cost-burdened,” meaning they spend more than 30% of their income on rent. This situation leaves them with limited funds for essential household expenses such as groceries, childcare, transportation, or savings for a future home purchase. Before the pandemic, approximately 48% of Texas renters were considered “cost-burdened.”

A growing number of homeowners, who typically have better financial stability than renters, are also facing cost burdens. As of 2024, around 29% of homeowners with a mortgage are spending more than 30% of their income on housing. Rising home insurance rates have particularly contributed to this financial strain.

Because the Census data was collected over five years, it reflects significant rent spikes in Texas during 2021 and 2022, as well as subsequent stabilization and declines in rental prices. Notably, rents in the Austin-Round Rock area have decreased recently, attributed to a substantial boom in apartment construction.

In response to the housing crisis, state lawmakers enacted a series of laws last year aimed at alleviating the housing shortage, a primary factor driving high home prices and rents. These measures primarily focus on simplifying the process for constructing new homes and apartments. However, Martin emphasizes the need for lawmakers to implement strategies that assist lower-income households in finding affordable housing.

The percentage of Texans living below the poverty line has slightly decreased, now standing at 13.8% for the 2020-2024 period, down from 14.7% in the previous five years.

Educational attainment is also on the rise, with a larger proportion of Texans earning at least a bachelor’s degree. This increase is attributed to both an influx of college graduates moving to Texas for employment and more Texans pursuing higher education. Over a third of Texans aged 25 and older held at least a bachelor’s degree during the 2020-2024 period, up from 29.9% in the prior period. This growth has been particularly pronounced among women, especially Hispanic women, seeking degrees, according to state demographer Lloyd Potter.

“None of these changes are really dramatic, but they certainly are moving in the direction that I think we would like them to be moving,” Potter remarked.

This article first appeared on The Texas Tribune.

Topics
Texas