Modeling Housing Affordability in Corpus Christi, Texas Christi Housing Affordability...in Corpus...
Transcript of Modeling Housing Affordability in Corpus Christi, Texas Christi Housing Affordability...in Corpus...
Modeling Housing Affordability in
Corpus Christi, Texas
December 13, 2018
Overview
I. Background
II. Owner-Occupied Housing Affordability
III. Renter-Occupied Housing Affordability
IV. Future Housing Needs
V. Housing & Neighborhood Quality
VI. Conclusion
I. Background
Demographic Characteristics (2017)
City of Corpus Christi Nueces County
Population 325,600 361,221
Households 115,797 128,490
Median Family Income $63,100 $63,100
Percent of Owner-Occupied Housing Units
57% 58%
Percent of Renter-Occupied Housing Units
43% 42%
Source: Department of Housing and Urban Development, U.S. Census Bureau
Owner-Occupied Housing Stock (2017)
Property Type Number of Owner-Occupied Units in theCity of Corpus Christi
Proportion of Owner-Occupied Units in the City of Corpus Christi
Number of Owner-Occupied Units in Nueces County
Proportion of Owner-Occupied Units in Nueces County
Single-family 82,996 92.6% 94,505 90.6%
Condominium 3,620 4.0% 6,352 6.1%
Townhouse 3,042 3.4% 3,491 3.3%
Total 89,658 100.0% 104,348 100.0%Source: Nueces County Appraisal District
Spatial Distribution of Owner-Occupied Housing Stock (2017)
Source: Nueces County Appraisal District
Renter-Occupied Housing Stock (2017)
Property Type
Number of Renter-
Occupied Units in the City of
Corpus Christi
Proportion of Renter-
Occupied Units in the City of
Corpus Christi
Number of Renter-
Occupied Units in Nueces
County
Proportion of Renter-
Occupied Units in Nueces
County
1-4 30,427 61.7% 33,415 63.5%
5-9 8,630 17.5% 8,733 16.6%
10-49 6,259 12.7% 6,447 12.3%
50 or more 3,977 8.1% 4,014 7.6%
Total 49,293 100.0% 52,609 100.0%
Source: U.S. Census Bureau
Spatial Distribution of Renter-Occupied Housing Stock (2017)
Source: U.S. Census Bureau
Income Cohorts (2017)
Income Cohort Percent ofMedian Family Income
Income Range Percent of Households in the City of Corpus Christi
Percent of Households in Nueces County
Extremely Low Income
0 - 39% $0 - $24,600 22.9% 23.6%
Very Low Income
40 - 49%$24,601 -$31,050
6.5% 6.6%
Low Income 50 - 79%$31,051 -$49,700
17.0% 17.4%
Workforce 80 - 120%$49,701 -$75,720
19.1% 18.3%
Market-rate 121%+ $75,721+ 34.5% 34.1%
Source: Department of Housing and Urban Development, U.S. Census Bureau
Income Cohorts by Housing Type (2017)
Income Cohort
Income Range Percent of Owner-Occupied Households in the City of Corpus Christi
Percent of Renter-Occupied Households in the City of Corpus Christi
Percent of Owner-Occupied Households in Nueces County
Percent of Renter-Occupied Households in Nueces County
ExtremelyLow Income
$0 - $24,600 16.3% 33.6% 15.7% 32.3%
Very Low Income
$24,601 -$31,050
4.9% 9.0% 4.7% 8.9%
Low Income$31,051 -$49,700
13.7% 22.3% 13.4% 21.7%
Workforce$49,701 -$75,720
19.1% 17.3% 19.4% 18.6%
Market-rate $75,721+ 46.1% 17.8% 46.8% 18.4%Source: Department of Housing and Urban Development, U.S. Census Bureau
Median Family Income in Nueces County by Census Tract (2016)
Source: U.S. Census Bureau
Defining Housing Affordability
• What does housing affordability measure for owner- and renter-occupied units?
Housing Affordability measures the relationship between home price or rent and
median family (or household) income.
Defining Housing Affordability
• Owner-Occupied Housing Affordability• Median family (or household) income as a percentage of
required income to qualify for a mortgage
• Calculates the required income to qualify for a particular home price based on the total monthly mortgage payment (monthly mortgage payment + additional expenses associated with homeownership)
• HAI = 1.10 means median income 10% > required income
• Renter-Occupied Housing Affordability• Rent as a percentage of median family (or household)
income (Example: Rent is 30% of median income)
II. Owner-Occupied Housing Affordability
Owner-Occupied Housing Affordability in the Corpus-Christi MSA
• Decline in owner-occupied affordability following the end of the Great Recession.
Source: Federal Financial Institutions Examination Council and Real Estate Center at Texas A&M University
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
$200,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Owner-Occupied Housing Affordability in the Corpus-Christi MSA
Median HomePrice
Median FamilyIncome
+31%
+39%
Widening gap between median home price and median family income diminishes affordability
Owner-Occupied Housing Affordability in the Corpus-Christi MSA
• However, the MSA remains relatively affordable with an HAI above 1.00.
Source: Federal Financial Institutions Examination Council and Real Estate Center at Texas A&M University
1.451.33
1.42
1.731.84
1.94
2.14
1.86
1.631.79 1.74 1.80
0.00
0.50
1.00
1.50
2.00
2.50
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Ho
usi
ng
Aff
ord
abili
ty I
nd
ex
Housing Affordability Index: Corpus-Christi MSA Increasing Affordability
Median Income > Qualifying Income
Median Income < Qualifying Income
Owner-Occupied Housing Affordability in Corpus Christi vs. Other Geographies
• While affordability has declined since the end of the Great Recession, Corpus Christi is relatively affordable in comparison to other geographies.
Texas Corpus Christi
Beaumont-Port Arthur
Brownsville-Harlingen
McAllen-Edinburg-Mission
San Antonio-New Braunfels
Victoria
2011 2.04 1.94 2.40 1.68 1.58 1.98 2.12
2017 1.54 1.80 2.01 1.54 1.54 1.59 2.06
Housing Affordability Index
Source: Real Estate Center at Texas A&M University
Home Price Appreciation in the Corpus Christi MSA
• Home price appreciation increased significantly following the Great Recession.
• However, the rate of increase has slowed over the past few years
-10%
-5%
0%
5%
10%
15%
20%
198
11
982
198
31
984
198
51
986
198
71
988
198
91
990
199
11
992
199
31
994
199
51
996
199
71
998
199
92
000
200
12
002
200
32
004
200
52
006
200
72
008
200
92
010
201
12
012
201
32
014
201
52
016
201
7
Annual Home Price Appreciation in the Corpus Christi MSA, 1981-2017
Source: Federal Reserve Economic Data
Historical average: 2.7%Seven-year average (2011-2017): 3.5%
Residential Sales Activity in Nueces County
• Decline in sales of lowest-priced homes ($0-$149,999)
• Rise in sales of homes priced $150,000+ strains housing affordability for lower-income households
Source: Real Estate Center at Texas A&M University
0%
5%
10%
15%
20%
25%
30%
2010 2011 2012 2013 2014 2015 2016 2017
Perc
ent o
f Tot
al H
omes
Sol
d
All Residential Sales in Nueces County (2010-2017)
$0 - $69,999
$70,000 - $99,999
$100,000 - $149,999
$150,000 - $199,999
$200,000 - $299,999
$300,000 -$399,999
$400,000+
Residential Sales Activity in the City of Corpus Christi
• Decline in sales of lowest-priced homes ($0-$149,999)
• Rise in sales of homes priced $150,000+ strains housing affordability for lower-income households
Source: Real Estate Center at Texas A&M University
0%
5%
10%
15%
20%
25%
30%
35%
2010 2011 2012 2013 2014 2015 2016 2017
Perc
ent
of T
otal
Hom
es S
old
All Residential Sales in the City of Corpus Christi (2010-2017)
$0 - $69,999
$70,000 - $99,999
$100,000 - $149,999
$150,000 - $199,999
$200,000 - $299,999
$300,000 - $399,999
$400,000+
Spatial Distribution of All Residential Sales
Source: Real Estate Center at Texas A&M University
New Residential Sales (MLS) Activityin Nueces County
• Virtually no new construction of lowest-priced homes (less than $99,999)
• Significant decline in new construction of homes priced $100,000-199,999
• Tremendous growth in new construction of homes priced $200,000-299,999
Source: Real Estate Center at Texas A&M University
0%
10%
20%
30%
40%
50%
60%
2010 2011 2012 2013 2014 2015 2016 2017
Perc
ent o
f New
Hom
es S
old
New Residential Sales Activity in Nueces County (2010-2017)
$0 - $69,999
$70,000 - $99,999
$100,000 - $149,999
$150,000 - $199,999
$200,000 - $299,999
$300,000 - $399,999
$400,000+
New Residential Sales (MLS) Activityin the City of Corpus Christi
• Virtually no new construction of lowest-priced homes (less than $99,999)
• Significant decline in new construction of homes priced $100,000-199,999
• Tremendous growth in new construction of homes priced $200,000-299,999
Source: Real Estate Center at Texas A&M University
0%
10%
20%
30%
40%
50%
60%
70%
2010 2011 2012 2013 2014 2015 2016 2017
Pe
rce
nt
of N
ew
Ho
me
s So
ld
New Residential Sales Activity in the City of Corpus Christi (2010-2017)
$0 - $69,999
$70,000 - $99,999
$100,000 - $149,999
$150,000 - $199,999
$200,000 - $299,999
$300,000 - $399,999
$400,000+
Spatial Distribution of New Residential Sales (MLS) Activity
Source: Real Estate Center at Texas A&M University
Summary
• Overall, housing remains relatively affordable in Corpus Christi.
• However, the decline in the supply of new homes in the lowest price ranges diminishes housing affordability, particularly for low-income households.
What Is Affordable?
How Much Home Can A Household Afford? (2017)
Source: CoreLogic, Real Estate Center at Texas A&M University
Assumptions:• Interest Rate: 4.28%
• LTV: 89.5%
• Qualifying Ratio: 39.75%
• Annual Expenses (Taxes, Property Insurance, and Utilities): 6.00% of Home Value
How Much Home Can A Household Afford? (2017)
Source: CoreLogic, Real Estate Center at Texas A&M University
Family Income Maximum Home Price Affordable
$20,000 $70,357
$30,000 $105,536
$40,000 $140,714
$50,000 $175,893
$60,000 $211,071
$70,000 $246,250
$80,000 $281,429
$90,000 $316,607
$100,000 $351,786
How Much Home Can A Family Afford? (2017)Income Cohort Income Range Range in
Maximum Home Price Affordable
ExtremelyLow Income
$0 - $24,600 $0 - $86,539
Very Low Income
$24,601 -$31,050
$86,540 -$109,229
Low Income$31,051 -$49,700
$109,230 -$174,837
Workforce$49,701 -$75,720
$174,838 -$266,372
Market-rate $75,721+ $266,373+
Source: U.S. Department of Housing and Urban Development, CoreLogic
Supply and Demand of Owner-Occupied Housing in Nueces County Based on Total Housing Stock (2017)
Income Cohort
Family Income
Range of Maximum
Home Price Affordable
Percent of Owner-
Occupied Households
Percent of Owner-
Occupied Units
Over or (Under) Supply
ExtremelyLow Income
$0 -$24,600
$0 - $86,539 16.3% 22.9% 6,892
Very Low Income
$24,601 -$31,050
$86,540 -$109,229
4.9% 9.7% 5,046
Low Income$31,051 -$49,700
$109,230 -$174,837
13.7% 30.5% 17,515
Workforce$49,701 -$75,720
$174,838 -$266,372
19.1% 22.8% 3,855
Market-rate $75,721+ $266,373+ 46.1% 14.2% (33,307)
Source: U.S. Department of Housing and Urban Development, CoreLogic, Nueces County Appraisal District, Real Estate Center at Texas A&M University
Supply and Demand of Owner-Occupied Housing in the City of Corpus Christi Based on Total Housing Stock (2017)
Income Cohort
Family Income
Range of Maximum
Home Price Affordable
Percent of Owner-
Occupied Households
Percent of Owner-
Occupied Units
Over or (Under) Supply
ExtremelyLow Income
$0 -$24,600
$0 - $86,539 15.7% 21.6% 5,251
Very Low Income
$24,601 -$31,050
$86,540 -$109,229
4.7% 10.1% 4,804
Low Income$31,051 -$49,700
$109,230 -$174,837
13.4% 32.8% 17,356
Workforce$49,701 -$75,720
$174,838 -$266,372
19.4% 23.7% 3,915
Market-rate $75,721+ $266,373+ 46.8% 11.8% (31,326)
Source: U.S. Department of Housing and Urban Development, CoreLogic, Nueces County Appraisal District, Real Estate Center at Texas A&M University
But wait!
Supply and Demand of Owner-Occupied Housing in Nueces County Based on MLS Sales (2017)
Income Cohort
Family Income
Range of Maximum
Home Price Affordable
Percent of Owner-
Occupied Households
Percent of Owner-
Occupied Units
Over or (Under) Supply
ExtremelyLow Income
$0 -$24,600
$0 - $86,539 16.3% 9.6% (6,951)
Very Low Income
$24,601 -$31,050
$86,540 -$109,229
4.9% 6.4% 1,648
Low Income$31,051 -$49,700
$109,230 -$174,837
13.7% 27.0% 13,836
Workforce$49,701 -$75,720
$174,838 -$266,372
19.1% 32.6% 14,076
Market-rate $75,721+ $266,373+ 46.1% 24.4% (22,608)
Source: U.S. Department of Housing and Urban Development, CoreLogic, Nueces County Appraisal District, Real Estate Center at Texas A&M University
Supply and Demand of Owner-Occupied Housing in the City of Corpus Christi Based on MLS Sales (2017)
Income Cohort
Family Income
Range of Maximum
Home Price Affordable
Percent of Owner-
Occupied Households
Percent of Owner-
Occupied Units
Over or (Under) Supply
ExtremelyLow Income
$0 -$24,600
$0 - $86,539 15.7% 9.8% (5,335)
Very Low Income
$24,601 -$31,050
$86,540 -$109,229
4.7% 6.7% 1,782
Low Income$31,051 -$49,700
$109,230 -$174,837
13.4% 28.6% 13,624
Workforce$49,701 -$75,720
$174,838 -$266,372
19.4% 34.7% 13,744
Market-rate $75,721+ $266,373+ 46.8% 20.2% (23,815)
Source: U.S. Department of Housing and Urban Development, CoreLogic, Nueces County Appraisal District, Real Estate Center at Texas A&M University
Summary
Affordability:
• The highest income cohort faces a supply shortage of owner-occupied units.
• This would suggest that households in the highest income cohort are “buying down”—i.e., they are purchasing lower-priced homes.
Availability:
• The lowest and highest income cohorts face a supply shortage of owner-occupied units.
• The lowest income cohort must spend relatively more to purchase a home.
Where Is the Supply of
Housing by Income Cohort?
Spatial Distribution of Homes Affordable toEach Income Cohort (2017)
Source: Nueces County Appraisal District
Spatial Distribution of Homes Affordable toEach Income Cohort (2017)
Source: Nueces County Appraisal District
Where Do Homebuyers
Purchase Homes?
Home Purchase Originations in Nueces County (2011-2017)
Type of LoanNumber of
LoansPercent of
LoansMedian Loan
Amount
Median ApplicantIncome
EstimatedMedian Price-
to-Income Multiplier
Conventional 10,752 52% $161,000 $90,000 2.52
FHA-insured 6,294 30% $151,000 $63,000 2.60
FSA/RHS-guaranteed
10 0.05% $86,000 $52,000 1.79
VA-guaranteed
3,671 18% $198,000 $78,000 2.76
Total 20,727 $164,480 $79,657 2.59
Source: Consumer Financial Protection Bureau
Average loan-to-value ratio: 89%
Home Purchase Originations in Nueces County by Income Category (2011-2017)
• Majority of home purchase originations are for market rate housing (households earning greater than 120% of the median family income)
• In essence, homeownership is not an option for extremely low or very low income households (households earning less than 50% of the MFI)
Income CohortNumber of Home
Purchase OriginationsPercent of Home
Purchase Originations
Extremely Low Income 24 0.1%
Very Low Income 375 1.8%
Low Income 2,308 11.2%
Workforce 5,447 26.4%
Market-rate 12,472 60.5%Source: Consumer Financial Protection Bureau
Home Purchase Originations by Census Tract (2017)
Source: Consumer Financial Protection Bureau
III. Renter-Occupied Housing Affordability
An Overview of Renter-Occupied Housing Affordability
• The Department of Housing and Urban Development (HUD) defines cost-burdened households as those who spend more than 30% of their income on rent.
• We have adopted this methodology into our calculations of renter-occupied housing affordability.
How Much Rent Can A Family Afford? (2017)
Income Cohort Family Income ($) Monthly Rent Affordable ($)
Extremely Low Income $0 - $24,600 $0-$615
Very Low Income $24,601 - $31,050 $616-$776
Low Income $31,051 - $49,700 $777-$1,243
Workforce $49,701 - $75,720 $1,244-$1,893
Market-rate $75,721+ $1,894+
Median rent in Corpus Christi: $970
Source: Department of Housing and Urban Development
Supply and Demand of Renter-Occupied Housing in Nueces County (2017)
Source: U.S. Census Bureau, Department of Housing and Urban Development
Income Cohort
Family Income
Monthly Rent Affordable
Percent of Renter-
Occupied Households
Percent of Renter-
Occupied Units
Over or (under)supply
ExtremelyLow Income
$0 - $24,600 $0-$615 33.6% 20.5% (6,892)
Very Low Income
$24,601 -$31,050
$616-$776 9.0% 14.1% 2,692
Low Income$31,051 -$49,700
$777-$1,243 22.3% 34.4% 6,359
Workforce$49,701 -$75,720
$1,244-$1,893 17.3% 23.2% 3,112
Market-rate $75,721+ $1,894+ 17.8% 7.8% (5,271)
Source: Department of Housing and Urban Development, U.S. Census Bureau
Supply and Demand of Renter-Occupied Housing in the City of Corpus Christi (2017)
Source: U.S. Census Bureau, Department of Housing and Urban Development
Income Cohort
Family Income
Monthly Rent Affordable
Percent of Renter-
Occupied Households
Percent of Renter-
Occupied Units
Over or (under)supply
ExtremelyLow Income
$0 - $24,600 $0-$615 32.3% 19.8% (6,148)
Very Low Income
$24,601 -$31,050
$616-$776 8.9% 14.2% 2,619
Low Income$31,051 -$49,700
$777-$1,243 21.7% 34.4% 6,216
Workforce$49,701 -$75,720
$1,244-$1,893 18.6% 23.7% 2,469
Market-rate $75,721+ $1,894+ 18.4% 7.9% (5,156)
Source: Department of Housing and Urban Development, U.S. Census Bureau
IV. Future Housing Needs
Population Growth
• The expected population of Nueces County is 374,157 people by 2020 and 407,534 people by 2030 (average annual growth of 0.89 percent).
• Since 2005, the average household size has hovered between 2.64 and 2.78. Assuming an average household size of 2.71, the County needs, on average, 1,230 additional housing units each year to keep pace with population growth.
• Over the past seven years (since the recovery from the Great Recession), building permits averaged 1,441 annually.
Source: Texas Water Development Board
Building Permits in Nueces County
0
500
1000
1500
2000
2500
3000
3500
4000
198
0
198
2
198
4
198
6
198
8
199
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199
2
199
4
199
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199
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200
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200
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200
4
200
6
200
8
201
0
201
2
201
4
201
6
Nu
mb
er o
f P
erm
its
Single family units
Multifamily units
Source: U.S. Census Bureau
Single-Family Median Lot Size Fairly Constant
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
YEAR BUILT
Median Lot Size (SF) by Year Built
Source: Nueces County Appraisal District
Increase in Single-Family Median Living Area
-
500
1,000
1,500
2,000
2,500
YEAR BUILT
Median Living Area (SF) by Year Built
Source: Nueces County Appraisal District
What Does This Mean?
• Median Single-family Lot Size – Since 1992 builders have reduced median lot by 1,121 SF• 1992: 7,983 SF
• 2016: 6,862 SF (-14.0%)
• Median Single-family Living Area – Since 1992 builders have increased median living area by 206 SF• 1992: 1,746 SF
• 2016: 1,952 SF (11.8%)
• To supply affordable housing, builders may have to reduce lot size or living area.
V. Housing & Neighborhood Quality
But Wait!
• Thus far, we have ignored housing and neighborhood quality.
• However, just because a home is affordable does not mean that it is of adequate quality or that it is located in a neighborhood with access to good schools, jobs, healthcare, amenities, etc.
• Housing and neighborhood quality is more likely to be an issue for lower-income households.
Why Is This Topic Important?
• Place matters: the neighborhood in which a household resides significantly effects the opportunities and life outcomes of that household.
• Homeownership in high-quality neighborhoods, which offer households access to better schools, jobs, health care, and amenities and reduces exposure to crime, is more likely to enhance the opportunities and life outcomes of that household.
• However, low-income households are less likely to be able to afford homeownership in high-quality neighborhoods.
Neighborhood Matters
Limited financial
resources, lower
educational status
Faces lower access to
good schools, jobs, and
health care; higher
exposure to crime
Resides in a neighborhood
of poorqualityLow-
income household
Resides in a high-quality
neighborhood
Faces greater access to good schools, jobs,
and health care; lower exposure to
crime
Fewer opportunities
for upward mobility;
lower household outcomes
More opportunities
for upward mobility; improved household outcomes
Age of Owner-Occupied Housing
Source: Nueces County Appraisal District
Age of Owner-Occupied Housing
Source: Nueces County Appraisal District
Travis County - Land Value & Location
$0
$20
$40
$60
$80
$100
$120
$140
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
$45.0
MEDIAN IMPROVEMENT VALUE PSF
MEDIAN LANDVALUE PSF
Single Family 2017 Appraised ValueBy Year Built
Median Land Value PSF Median Improvement Value PSF
Travis County - Land Value & Location
Single Family Land >= $25 PSF
Single Family Land < $7 PSF
Nueces County - Land Value & Location
$0
$20
$40
$60
$80
$100
$120
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
MEDIAN IMPROVEMENTVALUE PSF
MEDIAN LANDVALUE PSF
Single Family 2017 Appraised ValueBy Year Built
Median Land Value PSF Median Improvement Value PSF
Nueces County - Land Value & Location
Single Family Land >= $4 PSF
Single Family Land < $3 PSF
Summary
• Gentrification makes housing unaffordable for longtime residents with lower income
• In Corpus Christi:• Higher value homes are located next to water or in the
suburbs.
• Lower value homes are located near downtown closeto the most jobs
• Increasing the housing quality and access to opportunities (i.e., good schools, jobs, healthcare) of homes close to downtown could improve household outcomes for low-income households.
VI. Conclusion
Final Thoughts
• Huge strain on housing affordability for the lowest income cohort (extremely low income families).
• Declines in the construction of new single-family homes affordable to the lowest-income cohort will worsen affordability.
• Highest priced homes are in the suburbs.
• Final thought: how can we increase the supply of affordable housing while enhancing neighborhood quality?
Thank you!