Growing number of Central Texans are

house poor

More residents pay more than 30 percent of income on housing

By M.B. Taboada, Claudia Grisales
AMERICAN-STATESMAN STAFF
Saturday, October 07, 2006

Central Texans, following a national pattern, are spending a higher percentage of their income to keep a roof over their head than they did five years ago, reflecting both higher housing costs and the boom and bust of the local economy.

About one in three Central Texas homeowners spent 30 percent or more of their income on monthly mortgage payments last year, up from about one in five in 2000

In Bastrop County and in Round Rock, the proportion more than doubled, from 21 percent to 44 percent for the county and from 16 percent to 37 percent for the Williamson County city.

The nationwide figure rose to 35 percent from 27 percent in 2000.

The census figures are based on a survey, not hard data. But the pattern is clear: Housing costs are rising faster than Americans' ability to pay them.

From 2000 to 2005, the median home price grew twice or three times as fast as the median family income in most of Central Texas, the survey found. The only exception was in Hays County, where both incomes and home prices grew at 15 percent.

Economists and real estate experts say one factor is Americans' appetite for bigger, better homes and rising construction costs.

"There is a greater awareness . . . that when people buy a house, it's not just a place to live," said Lawrence Yun, economist for the National Association of Realtors. "People are willing to make that additional payment because it's an investment."

They are looking at housing as a future asset for retirement, Yun said.

Harry Savio, executive vice president of the Home Builders Association of Greater Austin, said one factor at work in parts of Central Texas is a concentration of first-time buyers who are stretching to buy a home.

A growing number of little- or no-money-down mortgage programs have made it easier to buy a house but have also made monthly payments bigger.

Ryan Robinson, City of Austin demographer, said the sharp jump in Bastrop reflected the arrival of higher-priced housing in the rural county east of Austin.

"Bastrop has only recently become part of the high-growth story" for Central Texas, Robinson said.

The community is growing at a clip, with major new developments such as the Hyatt Regency Lost Pines Resort, said Joe Newman, president and chief executive of the Bastrop Economic Development Corp.

Two area subdivisions could add 7,000 homes in the next five to seven years.

"We still have bargain-priced housing here," Newman said. But "the cost of materials is so much more now. Those prices have all escalated."

The increase in Round Rock, however, reflected the drop from the fat paychecks of the tech boom to the huge loss of family income during the downturn that started in 2001.

"The tech recession did suppress median income growth in Round Rock," Robinson said.

Chris and Amy Rabel know that story all too well. Their Bradford Park subdivision was once filled with tech workers. Now, about half of their original neighbors have moved away.

The downturn "hit the neighborhood pretty hard," Amy Rabel said.

The Rabels moved into their three-bedroom house in 1999. With a combined monthly income of more than $4,000, they had no problem making the $900 mortgage payment. They even added a swimming pool.

When Amy Rabel was pregnant with their first child in 2003, however, she lost her job as a drafter at Siemens AG. She found another job, but it paid much less.

In July, Chris Rabel got sick and lost his job as a Texas Department of Public Safety trooper.

Today, they are trying to sell their home for $135,000.

"We still haven't recovered," Amy Rabel said. "We're scraping by, and we can't make it. And this is our dream house. It's perfect."

Renters also confronted rising costs, the survey found.

Round Rock and Williamson County had the biggest increases in the proportion of renters spending 30 percent or more of their income on housing. In Williamson County, the figure rose to almost 50 percent of renters in 2005, compared with about one in three in 2000.

Robinson, however, predicts that the latest economic expansion will usher in bigger incomes.

"Home prices are more volatile," Robinson said. "The median income is more of a function of the area's economy, which now is heating up like crazy. Median incomes are accelerating. Now, the median incomes will catch up."

Lora Dhamanwala hopes to avoid the housing-cost trap. Two years ago, she and her family moved from the Dallas area, where they had a 2,200-square-foot house that they bought for $135,000.

Dhamanwala, a dental hygienist and her husband, a computer engineer, have delayed purchasing a home.

For now, they're renting a home in Cedar Park. She doesn't want a mortgage that eats too much of their income.

"I don't want to have that over my head," Dhamanwala said. "I'd rather have a cheap mortgage home where they still have a nice school district . . . and be able to afford to go on vacations and enjoy life and get little things I want without worrying about having the money."

cgrisales@statesman.com, 912-5933; mtaboada@statesman.com,