Confirmed: Home prices in Denton County have outpaced wage growth for 10 years

Home prices have increased 133% in that time, but wages have only gone up 52%, a new analysis by USAFacts found. The average price of a house in the county today is about $438,000, while annual wages average about $60,500, making Texas the seventh-least affordable state to buy in.

That’s in line with regional data that shows that a median household income of $97,400 is required to buy a home in the Dallas-Plano-Irving area, while a household income of just over $92,000 is required in Fort Worth-Arlington, assuming 5% down and 30% of qualifying income for a mortgage loan.

“While home prices have increased considerably in Texas, the price of a home did start out lower than in many other states,” Amber Thomas, data visualization engineer at USAFacts, told the Denton Record-Chronicle. “In 2022, rural regions remain affordable. But in more urban areas like Denton County, a single earner making an average wage would have to spend around 44% of their income to be able to afford the median home.

“Lenders generally require your housing expenses to make up no more than 28% of your monthly gross income, putting the median home out of reach for many single-earner families.”

Texas has had a reputation for being more affordable than states like California and New York, but as more new residents have moved to the state in part because of a lower cost of living, rising demand has pushed prices up. That trend accelerated during the pandemic, with migration to Texas rising 60% in the five quarters following the pandemic’s onset, according to new data from the Federal Reserve Bank of Dallas. With Dallas-Fort Worth among the most popular metropolitan areas for incoming residents, competition for housing has increased, causing affordability to fall.

“Fewer than one-third of homes were affordable for a family earning the area median income in Austin, Dallas, Fort Worth and San Antonio in fourth quarter 2022, down from around 60% in 2014,” the analysis finds.

That could slow both population and business growth in the state as prospective migrants choose more affordable areas to relocate to.

Increasing mortgage rates, driven up in response to the increased federal funds rate set by the Federal Reserve Bank to stabilize markets, have also squeezed buyers, deterring some from purchasing altogether.

Income gains of the past few years have been minimal nationwide compared to the increase in home prices, with data from the Atlanta Federal Reserve projecting that mortgages have increased nearly 80% in the three years of the pandemic. That’s pushed some buyers into renting while they wait for the market to cool, contributing to more competition — and higher prices — in the multifamily space.

As price pressures continue, people entering the market — if they can afford to — might opt for smaller houses or less expensive neighborhoods to meet borrowing requirements, making the traditional “starter home” the ultimate destination for many families.