The National Affordability Headlines Do Not Apply to Houston the Way You Think

A big article over the weekend declared that renting is now less expensive than owning a home. Rich Bonn at Habayit Home Loans ran the numbers for Houston specifically and wants local buyers to understand where the national narrative breaks down before it influences a decision that deserves a more precise analysis.

What the Houston Numbers Actually Show

For buyers who are not itemizing on their federal taxes the national framing holds up reasonably well. Based on Houston’s median home sales price it costs approximately four hundred and eighty-seven dollars more per month to own than to rent when you do not account for tax benefits. That is a real number and it is worth acknowledging honestly.

But the story changes for self-employed buyers. Rich and his team ran these calculations and the result is striking. A self-employed buyer using a bank statement loan and putting twenty percent down is looking at approximately eight dollars less per month to own than to rent. That is a marginal difference but it tilts in favor of buying.

And that is before accounting for principal amortization. Every month a homeowner makes a payment a portion reduces the loan balance. In this scenario that amounts to approximately two hundred and eleven dollars per month in equity being built that a renter never captures. Add the potential of home appreciation on top of that and the financial case for self-employed buyers to act now becomes significantly clearer than the national headlines suggest.

Home appreciation is not guaranteed and Rich states that plainly. But it is a benefit of ownership that renters do not access regardless of what the market does.

What the Houston Market Data Shows Right Now

All figures are year-over-year comparisons from HAR.com.

Listings are down three point one percent. Fewer homeowners are bringing properties to market which makes sense heading into the holiday season. Pending listings are down approximately twenty-two percent. With affordability pressure keeping some buyers on the sidelines fewer homes are going under contract. Off-market listings are down about eighteen and a half percent. Closings are down approximately eleven and a half percent. Showings are down and HAR listing views are down as well.

What these numbers tell a prepared buyer is that competition is lower than it has been. Sellers who are listing during this period have real motivation to transact. The combination of motivated sellers and reduced buyer competition is exactly the environment where negotiating leverage exists.

What Happened in the Mortgage Market Last Week

The producer price index came in as a significant surprise. Wholesale inflation increased one point three percent in September, which was well above expectations. Retail sales also rose. Normally a hot inflation report would push mortgage rates higher. That is not what happened.

Rates actually moved down slightly. The reason is tied to AI debt dynamics that are becoming increasingly relevant to the bond market.

AI companies have issued substantial debt in recent years and that debt has been competing with US Treasuries for investor capital, contributing to upward pressure on the ten-year Treasury yield and mortgage rates. Gartner’s research suggests that through 2030 AI companies will need approximately eight and a half trillion dollars to service their debt obligations while projected revenues come in around three point six trillion. That gap is significant enough that this debt category is starting to look like it could face a junk grade downgrade.

When that AI debt started looking shaky investors moved their capital in what is called a flight to quality, purchasing US Treasuries and mortgage-backed securities instead. That increased demand for those instruments pushed yields down and brought mortgage rates with them even as inflation data came in hot.

Geopolitical factors are also in the mix. Oil prices are moving higher again amid rising tensions between the US and Iran including discussion of potential action near Kharg Island and Iranian attempts to move ships through the blockade. A volatile Middle East means continued uncertainty in energy prices which feeds into the inflation picture.

What Self-Employed Houston Buyers Should Do Right Now

The combination of motivated sellers, reduced competition, a marginal financial advantage over renting, and principal equity building every month creates a compelling case for self-employed buyers who have been on the sidelines. Rich is also clear that the potential tax advantages of homeownership for self-employed buyers including the possibility of writing off part of the home as a business expense are a conversation for a CPA, not a number to build into a purchase decision without professional advice.

This is Rich at Habayit Home Loans. Check out the new website launching this week. Have a great week Houston and call 281-841-1723 to talk through your specific numbers.

Sources

HoustonAssociationofRealtors.com
MortgageNewsDaily.com
ProducerPriceIndex.BLS.gov
TreasuryDirect.gov
Investopedia.com