Hot markets, high prices: soaring housing prices overtake the middle class | Local News

When Police Lt. Destin Sims and his wife started looking for a home in 2017, leaving the island was obvious.

Island-born Sims and his wife, Concetta, both worked in Galveston – and still do. The long-established Concetta family on the island owns Maceo Spice & Import Co. But when the time came to invest in real estate, they turned to the mainland.

“Based on what we wanted – we were very picky – we just knew that living on the island wasn’t an option, mainly because of the housing prices,” Sims said.

Sims works for the Galveston Police Department, values ​​the community and believes his hometown benefits middle-class residents, he said.

But for some, the cost of housing is simply insurmountable, he said.

“I don’t know if this is something that anyone can control,” Sims said. “Housing prices are what they are.

In Galveston, soaring house prices, rising rents, skyrocketing home insurance costs, stagnant wages, tight inventory and a host of other pressures have strained the housing market. driving many people off the island.

Galveston is not alone. Housing markets across the state and country are teetering under the same loads – or soaring on the same fuel, depending on how you look at it.

But for many Islanders, the near extinction of affordable housing has become an existential threat to Galveston’s future as a friendly, middle-class place to live and work, a change that could dramatically alter the character of the city. island of a real city where people live in a place where they work and play and then move on.

For those working on affordability, the stake is the future viability of Galveston as a diverse and eclectic city, as an attraction for innovative young thinkers, as an attractive place for business and as a community. alive and breathable.

DESIRE FOR COVID

The pandemic has exacerbated an old problem and helped make Galveston’s housing market hot.

In the first quarter of 2021, the median home price in Galveston was $ 272,000, up 11% from the same quarter last year, according to data from the Galveston Association of Realtors.

A frenzy has gripped the island’s real estate market over the past 18 months. People working from home for months suddenly realized they could take their virtual office to the beach. And they did.

“Things really changed dramatically on May 1 of last year when Gov. Abbott opened up the city,” Island realtor VJ Tramonte of Joe Tramonte Realty said.

Governor Greg Abbott eased pandemic restrictions in May 2020, which encouraged travel to reopen and kick-started the heated market.

“That’s when we started to boost sales again, especially with vacation rentals,” Tramonte said.

Local real estate agents were selling many houses picked up to be converted into short-term rentals, he said.

CATCHES ON THE THIRD CTE

The affordable housing inventory had been a concern in Galveston long before the pandemic.

City and community leaders had discussed and created a few programs to subsidize middle-income people, like the Sims, in an increasingly prohibitive market. These included items such as first-time purchase programs and allowances for city employees who lived on the island.

These had never been enough to solve the problem, however, defenders said.

“We didn’t have a deliberate view of housing,” said Betty Massey, who has worked on housing issues for years. Massey is vice-chair of the Galveston Housing Authority and a board member of the Vision Galveston community planning group.

“If you work on this island and choose to live on this island, there should be a place for you. “

Although various and complex factors are at the origin of real estate inflation, it often depends on demand.

“The third rib has spread,” Massey said.

Tourism – and therefore interest in the island – has increased dramatically over the years since Hurricane Ike in 2008. Lately the island has attracted 7.2 million visitors per year, a sharp increase from 4.5 million in 2009, according to the Galveston Park board of directors. The data.

Many of those visitors come back and buy second homes, Tramonte said.

WHAT IS AFFORDABLE?

The term “affordable housing” is nebulous and debatable.

“The word ‘affordable housing’ is a very broad term,” said John Paul Listowski, Councilor for District 5 and owner of Lux Custom Homes.

Listowski sees affordable homes as homes that families with teachers or firefighters could afford, he said.

“These are the people I would really like to keep on the island, the police, the teachers,” Listowski said.

HIGH CONSTRUCTION COSTS

The goal of providing affordable housing to everyone who works on the island might not be achievable, as it costs more to build on the island, Listowski argues.

“The prices of materials in general have gone so crazy last year,” Listowski said.

Builders need to cover the costs and make a profit, Listwoski said. High construction costs lead to high house prices, too high for many middle- and low-income families, he said.

“It would be difficult to produce a product without any subsidy for the service industry,” Listowski said. “I just don’t know if it’s even possible.”

Everything is more expensive for builders now, said Beau Yarbrough, CFO of island builder DSW Homes.

“Your underlying land here is so much more expensive,” Yarbrough said.

The cost of construction is skyrocketing everywhere, he said. Yarbrough estimates it costs him up to 30% more for materials than last year, he said.

‘IT’S A COMPANY’

It’s happening statewide, said Luis Torres, a research economist at the Real Estate Center at Texas A&M University.

The median cost of new homes statewide has fallen from around $ 195,000 to $ 295,000 since 2011 and from $ 140,000 to $ 300,000 for existing homes at the same time, according to university data. .

Nationally, equally dramatic jumps have pushed median new home prices from $ 225,000 to $ 380,000 for new homes and from $ 170,000 to $ 350,000 for existing homes, according to the data.

Supply is down and the cost of construction is on the rise, which means higher prices for housing, Torres said.

“Home builders have to make a profit,” Torres said. “It’s a business for them.

A BOM PEOPLE

In a state where everything is big, the population is also increasing, especially in metropolitan areas.

Austin, for example, has grown from 910,000 people in 2000 to 2.1 million in 2020.

Jobs and hot weather have led to a 40 percent increase in the population since 2000, from 20.9 million to 29.2 million, according to census data.

In general, Americans move south and west. Between 2010 and 2020, Texas’ 15.9% growth rate was exceeded only by Utah and Idaho; North Dakota was a good fourth.

This wild growth is placing a high demand on housing stock, pushing up prices, said Luis Guajardo, director of urban policy research at the Kinder Institute for Urban Research at Rice University.

“The developers, they’re only going to develop for the high end of the market,” Guajardo said. “If they’re on their own, they might not know how to deal with a community’s housing problem.

‘SEARCH AROUND’

Galveston is riding the wave of soaring house prices statewide, said Lesley Sommer, an association executive for the Galveston Association of Realtors.

“When you look at other markets, it’s as hot as the market here,” Sommer said.

Homes are leaving quickly and at the highest possible price, not only in Galveston but in League City, Santa Fe and other communities on the mainland, he said.

“I’m a bit on the defensive because I feel like people are really critical of what’s going on in Galveston,” Sommer said. “Look around you. Go and try to find a house in Houston in the loop, which was once full of affordable housing. Good luck.”

In some ways, Galveston is still catching up, he said.

INSURANCE FACTOR

What is peculiar to Galveston is the ever-increasing cost of wind and flood insurance, additional burdens needed in a Gulf Coast community where destructive storms are a matter of when, not if.

Island residents can pay over $ 700 per year for federal flood insurance and over $ 2,000 for coverage from the Texas Windstorm Insurance Association. Galvestonians pay thousands of dollars a year to insure homes against flood and damage and many worry rates will continue to soar as storms get stronger and more frequent.

“There’s no question that buying a home here costs a little more than building a home elsewhere,” said Mayor Craig Brown. “It’s the cost of the insurance, the storm, the taxes, the upkeep.”

Homes on the Gulf Coast, particularly the Galveston older housing stock, often require a significant ongoing investment to be held up against salt and inclement weather, he said.

Insurance costs definitely play a role in the decision to live off the island, Sims said.

“Where I live, my house has been flooded,” Sims said. “My flood insurance is only about $ 400 a year. A colleague of mine is selling his house on the island. Their flood insurance is $ 2,400 per year. They don’t live in a mansion.

‘ELITIST ISLAND’

The island faces what some see as an existential issue.

For anyone with a service industry job or a middle-income job, finding affordable housing on the island is becoming increasingly difficult, said Patricia Bolton-Legg, president of Galveston Housing Finance Corp. and Galveston Property Finance Authority.

Both organizations exist to build low to moderate income housing in Galveston.

“It has become an elitist island,” Bolton-Legg said. “People are going to have to live across the road to come and work at Jack-in-the-Box because you can’t afford to live here unless you live in a housing project. We want some of that traffic to stay here.

AND THE NEXT?

If the problem is clear, the solution may be less clear than it ever was.

It’s for Sims and his wife, who want to come back to the island.

“I just don’t see any option attractive enough to make me take this step,” Sims said.

He hopes that if the right people come together, something can be done to address affordability.

“I think housing prices are changing the community,” Sims said. “I can’t say it’s a bad thing and I can’t say it’s a good thing. It’s just what it is. “

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