Home prices increasing at a higher rate than incomes and transportation costs above the national average are creating affordability challenges for residents in the Greater Houston area. However, experts have said the area is still more affordable than most other U.S. metropolitan areas. Hurricane Harvey also exacerbated affordability issues for some residents in the last year, presenting them with new challenges after cars and homes were damaged by floodwaters, said Debbie Peterson, director of the assistance department at Northwest Assistance Ministries—a nonprofit that helps families meet their basic needs. Although these affordability challenges are ubiquitous, a growing number of low-income neighborhoods are especially burdened by these issues. For example, Spring and Klein residents living in low-income neighborhoods concentrated along FM 1960 often need assistance paying for housing or transportation, Peterson said. “As we have more income disparity, we are going to see issues, particularly in the low-income people segments,” said Brett Perlman, CEO of the Center for Houston’s Future—a nonprofit that focuses on issues confronting the Greater Houston area.

Home values, income rates

Houston and the surrounding area has a reputation for having affordable homes, said Bobby Lieb, Houston Northwest Chamber of Commerce director of economic development. For example, according to U.S. Census Bureau data, the median home value in Harris County in 2016 was $145,600; meanwhile, the median home value in Los Angeles County, California, was $465,000. However, home prices continue to increase every year. For example, in ZIP code 77379, which comprises a large portion of Klein ISD’s boundaries, the median home value increased 11.6 percent between 2011 and 2016, while median income decreased 0.71 percent during the same time, according to U.S. Census Bureau data. Home appraisal values have also increased over the past five years. According to Harris County Appraisal District data, home appraisals within KISD have increased 41.21 percent from 2013 to 2017, while home appraisals in Spring ISD east of I-45 have increased 55.46 percent in that time. Residents began receiving their 2018 home appraisals in April, but the extent of how Hurricane Harvey affected appraisals is not yet known. Patrick Jankowski, vice president of research at Greater Houston Partnership, said the rate at which home prices increase compared to the rate income grows will play a significant role in how affordable the Greater Houston area’s housing market remains. “If incomes are flat and housing continues to increase in price, it becomes less affordable,” Jankowski said. “If ... they stay relatively within the same ratio, then we will be OK.” Increasing home prices could also create affordability problems because housing costs in 2015-16 were the largest share of an average Houston-area household’s expenses, according to a 2015-16 U.S. Bureau of Labor and Statistics report. In Spring and Klein, 29.47 percent of residents spent 30 percent or more of their household income on monthly housing expenses in 2016, according to U.S. Census Bureau data. Lieb said if the economy stays strong and the population grows at the rate many experts expect, home prices could continue to increase. According to a 2017 report by the Houston-Galveston Area Council, Harris County’s population could increase from 4.65 million in 2016 to 6 million by 2035. In addition to this projected population growth, the Greater Houston area’s economy is projected to create about 60,000 jobs this year. Jankowski said. However, even if this economic growth does increase home values, it could also increase wages. “Once more jobs are created, companies have to compete for workers,” Jankowski said. “And one of the ways you compete is to offer higher wages.”

High transportation costs

Because home values in the Greater Houston area are more affordable than other U.S. metros, focusing solely on housing prices does not give an accurate representation of the affordability challenges facing residents in the area, Perlman said. “While our housing tends to be relatively affordable ... when you include transportation, you get a slightly different picture,” Perlman said. According to the BLS report, households in the Greater Houston area spent more on transportation than the average U.S. household in 2015-16. The average Houston area household spent 21 percent of its income on transportation expenses, compared to 16.4 percent of the average household income nationwide. According to the BLS report, the Greater Houston area was the only one among the 22 metros studied to exceed the national average in transportation spending. Perlman said two of the factors that contribute to the higher transportation costs affecting Houston-area residents are its size and the limited public transportation options available. Because of this, many residents own a vehicle to drive to work. According to U.S. Census Bureau data, 92 percent of Spring and Klein residents drive to work, and the majority of residents commute more than 30 minutes. This is higher than the national average of about 86 percent of residents who drive to work, with an average commute of less than 25 minutes.

Low earners hit hardest

Although higher home prices and high transportation costs affect all Spring and Klein residents, vulnerable populations are even more burdened by these challenges, Perlman said. For example, residents who earn lower incomes tend to spend more of their earnings on housing. In 2016, the median income in ZIP code 77090—which is located near FM 1960 and I-45—was $39,583, and 46.39 percent of households spent 30 percent or more of their incomes on monthly housing expenses. Meanwhile, the median income in ZIP code 77379—which includes the area from Cypresswood Drive to the Grand Parkway—was $100,997, and 21.42 percent of households spent 30 percent or more on those expenses, according to U.S. Census Bureau data. Transportation costs also present a greater burden for low-income residents, said Brian Carr, NAM’s chief of operations manager. This is because some residents cannot afford their own vehicles for commuting, which is essential in a spread-out area with few public transportation options, such as Spring and Klein. He said some of NAM’s clients have reported difficulty reaching the nonprofit, which is located along a Metropolitan Transit Authority of Harris County bus route on FM 1960. Carr said these challenges are linked to unemployment, which is why NAM expanded its learning center last year, where the organization runs  vocational training programs and language classes. “[We offer these programs] so people can start working a livable wage,” Carr said.” The difference between earning the minimum wage and a livable wage can be significant, Carr said. For example, the Economic Policy Institute—a research group based in Washington, D.C.,—maintains an online family budget calculator, which outlines the costs associated with what the center describes as a “modest, but adequate standard of living,” EPI research assistant Zane Mokhiber said. According to the calculator—which uses various national and local data sets—a two-parent, two-child family in Harris County needs to have the ability to spend $73,010 a year on living expenses to meet the standard of living defined by EPI. This is significantly higher than the national poverty line for a family of the same size, which is $25,100. Four out of the nine ZIP codes that compromise Spring and Klein had median household incomes more than $73,010 in 2016, with median incomes ranging from $39,583 to $115,783. “We wanted to try to estimate what it would cost to have health care, child care … and you have the money to eat three healthy meals,” Mokhiber said. “You’re not in poverty but not middle class either.”