In most places, saving up money for a down payment on a house can take several years. That’s not quite true for Northeast Texas, where saving up for a down payment, based on median earnings and median home prices, typically factors out to about a year and a quarter.
Those statements are based on a simple formula put forth by New York-based financial information and services firm MagnifyMoney, which calculates the median home price in a given market, as well as the median income in that market, then looks at how long it will take for someone to save a third of his or her income towards a 20 percent down payment.
According to the study, the most common time frame for the median buyer (between ages 25 and 45) is in the neighborhood of five-and-a-half years. In DFW specifically, the saving-up period is six years.
Magnify Money studied larger metro areas to get its numbers. But based on the latest U.S. Census data from 2015, the median prices and the median income in most counties in Northeast Texas show an average saving-up time of about 15 months. This holds true despite wide variations between median prices and median salaries in many markets.
The median home value in Rockwall County, for example, is about $188,000; the median salary is about $86,500. This means that the median earner putting aside a third ($28,500) towards a 20 percent down payment ($37,600) would need to save up for 1.3 years.
At the other end of the price/salary spectrum, the median home price in Cooper is $49,500; the median annual salary is $30,000, which spells a saving-up period of about 1 year.
So the question isn’t so much whether Northeast Texas is affordable to buy into, because by the median, it is. Rather, the question is, how long with Northeast Texas stay affordable? In the push of development from the DFW Metroplex, quiet, rural Northeast Texas could change. One of the areas primed for change is Fannin County, which borders Collin County on the east.
Collin County, once an open, agricultural afterthought to Dallas residents, is nearing build-out. And along State Highway 121, which connects the two counties, Fannin is surely in the crosshairs for development. Right now, Melissa (in Collin and the first town east of State Highway 75) is “growing by leaps and bounds,” according to Realtor Steven Powell.
Powell is an agent for JP&Associates in Frisco and a resident of Fannin County. He says that as 121 widens to four lanes (under construction in Melissa and Anna right now), there will be “exponential growth” as drive times from now-remote cities like Trenton and Leonard in Fannin will drop.
“People’s problem now is, whenever you’re driving from Trenton to McKinney at 6 a.m.,” he says, “you’re literally in a line of cars” on this one-lane thoroughfare. One person doing 55 mph on this 70 mph stretch can extend commute times by several minutes for several drivers.
“Once it hits four lanes and travel time goes from 35 minutes to 25 minutes,” Powell says, “then it becomes more feasible and all of these areas are going to open up.”
The basis for the disparity between saving up for a down payment in the Metroplex and saving for one in a place like Fannin County is that in the Metroplex, housing costs are rising faster than earnings. According to Zillow, the media price value of a home in Dallas proper is $150,000, and the median price of homes currently listed is $369,850. The median value is up 17 percent from a year ago and expected to increase nearly another 8 percent by next fall.
Earnings, on the other hand, are far less rosy. According to the U.S. Census, the median earner in Dallas City makes about $30,000 a year, barely above the national median. And that salary hasn’t moved much in recent years.
In Fannin county, Zillow reports, the median home value is $89,300, just shy of the Census estimate of $92,300. Zillow reports that this value point is 14 percent higher than last year. There is no data on a one-year forecast. The median salary, countywide, however, is $44,400.
The after-effect of rapid demand growth? As demand spikes, house values outpace wages in an area, and the people earn a living in that area can no longer afford to buy there. For now, Fannin County, like Hunt, Wood, Delta, Hopkins, and Kaufman counties, is still a place where earnings and property values are in sensible balance. But the coming decade or so could paint a vastly different picture.
“If that kind of demand hit these areas,” Powell says of Fannin County, “people working out here wouldn’t be able to afford houses.”