“If you are looking for affordable housing in Pearland, you aren’t going to find it,” said Shad Bogany, Realtor and past chairman at Texas Association of Realtors and Houston Association of Realtors.
Affordable housing—considered to be $200,000 and below—is difficult, if not nearly impossible, to find in the Greater Houston area, he said.
However, it may depend on type of home and the income of the buyers. Older homes in the Pearland area may be less than $200,000, but these older, more affordable homes are outnumbered 6-to-1 in terms of sales per year, according to data provided by HAR.
“If you can get an older home in [the Pearland area], then it might be affordable,” Bogany said.
But a search of homes in that price range yields very few results, he said.
“There is hardly nothing out there,” he said.
‘Affordable’ is relative
The Pearland Economic Development Corporation uses a ratio of median home value to median household income to compare the city’s affordability against other cities. The lower the ratio, the more affordable the home. In 2016, Pearland’s home affordability ratio was 2.55, lower than a state ratio of 2.86 and a national ratio of 3.56, making it more affordable than both the state and national average.
The average price of a home in sold in Pearland in 2018 so far has been $277,400. To buy a home at that price, a buyer would have monthly payments of a little over $1,400, assuming a 5 percent down payment and borrowed with a 5 percent interest rate for a 30-year mortgage. Residents of Pearland also pay around $500 a month in property taxes or more depending on where they live, which would make the monthly payments almost $2,000 a month, not including home, windstorm and flood insurance, homeowners association dues and other costs.
Home expenses should be 30-33 percent of one’s monthly paycheck, Bogany said. That means someone who wants to live in Pearland would have to make at least $6,000 a month, or $72,000 a year, to afford the average home. Pearland’s median household income was $91,010 for 2016, putting the average-priced home of $231,800 for that year within reach for its current residents, but potentially out of reach for those who want to move to the community.
Millennials falling behind
While homes are affordable in Pearland for the city’s average homebuyer, many wonder if homes will be affordable for the millennial age group, who made up 61 percent of home buyers in Houston in the last year, said MetroStudy Regional Director Lawrence Dean.
According to a study done by the U.S. Census Bureau, the median annual income for 25- to 34-year-olds was $34,837 in 2016. While this is not far off from what the same age bracket was earning in 1974, prices for homes have risen while wages have not, Bogany said.
Some millennials may be able to easily afford a Pearland home if they have high-paying jobs at the Texas Medical Center, are engineers or are in the tech world, Bogany said. However, many in retail or other lower-paying fields may be struggling to become homeowners–regardless of age, Bogany said.
Silvia and Fernando Sanchez were able to afford a more expensive home with the use of two budgets. The couple purchased a $250,000 home in west Pearland in 2016.
However, prices are still rising. A house on their street is going for $350,000—making it about $100,000 more than what the Sanchez’s home was just two years ago.
While home prices on newer homes are rising rapidly in Pearland, there are older, more affordable homes, if a buyer is lucky enough to find them.
Char Whitecotton is a 28-year-old working at a marketing firm. On her own, she was able to buy a Pearland home for $132,000. The home, located near Hwy. 35 and Broadway Street, was remodeled by its previous owners in 2016. Whitecotton chose Pearland for the area, as well as price range of the home.
“I was kind of worried, because in the rest of Houston, I had my budget to $160,000, because you couldn’t find anything decent for around $130,[000],” Whitecotton said. “But in Pearland, there are quite a few areas where you can find the safe neighborhood, the remodeled home or whatever you are looking for in a decent price range.”
While there are older homes in Pearland—Whitecotton’s home was built in 1946—her case is the exception rather than the rule, even for areas developing outside of Pearland.
While home prices continue to soar in Pearland and nearby cities, some builders are targeting younger buyers, hoping that location and amenities make a purchase more appealing.
Highland Homes, a builder for Pomona and Meridiana, the latter a new neighborhood off Hwy. 288, is hoping to appeal to millennials and young families. The neighborhood is complete with a fitness center, bistro and a conservatory. The average price of a home in Meridiana is $250,000.
“More and more millennials are buying rather than renting,” Highland Homes Sales Counselor Zibah Lakhani said. “They feel comfortable and say, ‘This is something I can actually afford.’”
