Texas' reputation as a place where homeownership is still within reach is starting to slip.
A study has found that when homeowners insurance is included, nearly two-thirds of Texas households cannot afford a typical home in their county.
What's happening?
The analysis from Rice University's Kinder Institute for Urban Research and Texas 2036 suggested insurance costs are increasingly reshaping Texas' housing market, as Newsweek reported.
Using the report's affordability benchmark of spending no more than 30% of gross income on housing, researchers found that in 2024, more than 7 million Texas households, about 64% statewide, could not afford the median-valued home in their county once insurance and other ownership costs were counted.
One reason is that key costs have risen much faster than income. After inflation, the average homeowners insurance premium in Texas increased 30%, from $2,296 in 2019 to $2,983 in 2024.
During that same stretch, the state's median home value rose 31% to $169,250, while median household income went up only 3% to $65,035.
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As that mismatch widens, more buyers are being pushed past the affordability threshold.
Tracy Ayrhart, vice president of data and research at Texas 2036, said the impact is already significant enough that "a single year's increase can price tens of thousands of households out of buying a home."
Why does it matter?
The pressure reaches well beyond Texas' priciest housing markets. Although Austin, Dallas-Fort Worth, Houston, and San Antonio posted large affordability gaps, the study also found serious gulfs in smaller cities and rural areas.
In some lower-value counties, insurance premiums now make up an unusually large share of home value, and researchers pointed to places where those premiums are rising even as home values fall.
The report also found that modest additional increases could make things worse. For example, a 4% premium hike would price out another 20,077 households, and a 10% increase would push nearly 49,900 more out of the market.
Lower- and moderate-income households are expected to face the biggest hit, while higher-income households are better insulated from the rising costs.
Those effects are not evenly distributed either, with Black and Hispanic households showing wider homeownership affordability gaps than white and Asian households.
What can I do?
A home's listed price is only part of the picture, since insurance, property taxes, mortgage insurance, and borrowing costs can all sharply affect the monthly bill.
The study highlighted the communities where insurance costs are biting hardest, including places that do not always draw the same focus as Texas' largest cities.
"Texas is a huge state with very different housing markets and climates that can affect insurance prices, but one thing remains consistent across the state," Steve Sherman, associate director of research at the Kinder Institute's Center for Housing and Neighborhoods, said in a statement.
"Homeowners insurance costs have become a growing affordability challenge nearly everywhere."
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