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Gap between incomes, home prices is critical issue facing Texas housing market, economist says

Affordability is a key part of the housing market right now because household incomes are not rising as quickly as home prices.

That’s what economist James P. Gaines from the Texas A&M Real Estate Center told a gathering of government officials and the Tyler Area Builders Association at Willow Brook Country Club on Wednesday.

Gaines pointed to a chart showing the rise in median household income and the rise in home prices since 1989, and a steep rise in home prices in the past few years relative to household incomes.

“That’s the issue of affordability, and affordability now is one of our more critical issues — probably in the top four or five issues that the state really faces is housing affordability,” he said.

“Our incomes are lower in Texas than the national levels,” he said. “House prices relative to those incomes is getting higher, and the further that spread gets, the bigger this separation between the red line and the blue line, then the more and more (important) the affordability issue becomes.”

Gaines said the affordability of homes starts with the price of the empty lot. He said a home usually sells for five to six times what the lot costs. That means a $50,000 lot would likely yield a $300,000 home, he said.

“So can you get a $50,000 lot?” Gaines asked. “That’s the problem.”

He said it might be possible for builders to find cheaper lots outside of city limits in unincorporated areas of Smith County. He said cities usually charge for a permit, but counties will let you build on unincorporated land without a permit.

He said homes are affordable when prices are between 3.2 and 3.8 times a household’s income, but unaffordable when they get upward of four times a household’s income. During the years leading up to the Great Recession, people were being sold unaffordable homes.

“People in some communities were paying as much as 15 times their income to buy a house,” Gaines said. “It doesn’t work. I mean, it doesn’t take a genius to figure that one out. I don’t care how exotic, erotic or anything else the financing is. That doesn’t work.”

Gaines said the Real Estate Center is projecting a 5% downturn in single-family homebuilding in part because of the lack of availability of affordable retail lots. He said data from building permits show this trend is coming true.

On building permits in Tyler, he said, “I don’t think they were that strong, but I don’t think they were that weak either.”

TWITTER and INSTAGRAM: @_erinmansfield

Tyler teen's comedy coming to Tyler Civic Theatre stage

Lila Katz says she has a 50-50 brain.

The analytical and logical side of her brain, the left, offers a nice balance to the more creative and emotional side, the right. The two typically work in harmony, she says.

In her first play, “A Mind of My Own,” Katz presents Ross, an awkward high-schooler. His left and right sides of the brain are at war.

Thanks to the conflicting voices in his head, poor Ross isn’t sure what to do. It doesn’t help that his two best friends constantly offer their two cents about how he should live his life.

So when Ross has a crush on Shira, the girl who has it all together, and has to figure out who to listen to as he tries to navigate the minefield of teen romance, comedy ensues.

The one-act play will be staged by Tyler Civic Theatre in performances 7:30 p.m. Thursday through Saturday and 2:30 p.m. Sunday at 400 Rose Park Drive.

Tickets cost $12.50 and are available at or by calling the box office, 903-592-0561.

Katz knows a thing or two about the challenges of trying to figure things out while in high school. She is a 16-year-old student at Robert E. Lee High School.

She entered her play in Tyler Civic Theatre’s annual playwriting competition. Audience members who saw readers’ theater performances of all the finalists’ works selected her play as best.

Katz has been performing in theater and writing stories since she was a young girl. She said she was intrigued with exploring the inner conflict that everyone experiences.

“In Ross, neither the analytical or emotional has full control,” she said.

She began to develop characters, based in part on some of her fellow classmates.

Watching the characters come to life has been an “amazing experience,” she said. “They (cast members) are doing a great job.”

Luke Pearson, 15, plays Ross. He attends Lee and is a friend of Katz.

“Ross is awkward and struggling just to get through the day,” Pearson said.

Pearson said Ross is attracted to Shira because she is everything he is not and that Ross doesn’t have a clue how to show Shira his feelings.

Having moments of feeling unsure and lacking confidence are things most students in high school are familiar with, he said.

“I have been in his shoes,” Pearson said.

Hannah Claire, the director, has known Katz for years.

Claire said one of the first things she did was sit down with Katz and talk about the play. “We went through the show and all the characters.”

Claire quickly realized how relatable the characters are.

“We’ve all had that awkward first date,” she said. “No matter how old you are, you will find a connection to the characters.”

Claire said the play will have audiences thinking about which side of their brain is in control and the role all have in helping friends make good choices.

TWITTER: @Tylerpaper

Tyler mayor defends proposed tax increase to real estate group

Tyler’s mayor defended a recommendation to raise property taxes in the face of opposition from a prominent real estate group’s lobbyist.

Mayor Martin Heines made the comments Wednesday to Shelia Torres, the director of government relations for the Greater Tyler Association of Realtors.

Torres, who also spoke against the Smith County government’s property tax rate increase this month, told the City Council that rising property taxes are bad for her industry.

“Property taxes will impact the real estate market, and buyers and sellers alike will be forced to factor estimated taxes to make purchasing decisions,” Torres said. “Even if the tax rate goes down from last year, it is still a property tax increase, if it brings in more revenue.”

Heines questioned her logic.

“I would assume that being in a real estate industry it’s a good idea to have nice streets to sell a house on, is that correct?” he said.

Torres responded: “Yes, sir.”

Heines asked: “So how do we pay for streets?”

Torres responded: “There should be another avenue without raising property taxes.”

“Well there’s not,” Heines said. “Because if you have reviewed our budget, our budget has no extra fluff in it. We have a history in this community of when we add extra money to put it into streets.”

The proposed increase from 24.4452 cents per $100 of property valuation to 25.99 cents would include about $600,000 per year for street maintenance. The rest would be spread among different purposes.

The amount going into the street maintenance fund is 1 cent of the tax rate. That’s in addition to another 1 cent increase in fiscal-year 2017 for the same purpose. Heines said he has pushed the dedication of 2 cents of property tax revenue for streets.

“When I came to this council we were putting maybe $300,000 (a year) into streets,” he said. “When we did that, we were not keeping up with the quality of our streets. So if you want to sell houses, if you want your customers to be happy, which I want them to be, we have to have money to take care of the streets.”

Heines pointed to the consultant the City Council hired in 2016 to assess the streets. At the time, the city had seen a decrease in an index that measures the quality of the streets.

He also described the struggles the city went through when sales and use tax revenue declined. That revenue source has traditionally brought in more money to the city’s general fund than property taxes, but is known for volatility.

The booms and busts in sales and use tax have often been blamed on the volatility of the oil and gas industry. The city of Tyler saw sales and use tax revenue declines during the oil bust of 2015 and 2016, and imposed a hiring freeze that was not lifted until this year’s budget, which started Oct. 1, 2018.

“Your homebuyer expects the great quality of fire department work and police work that we do,” Heines said. “We are never going to cut that budget again. So yes, we have some excess from the last two years. We are putting that in a reserve fund.”

He also said: “I will spend as much time as you want, if you want to go over the budget line by line. There is not fluff in this budget.”

Councilwoman Shirley McKellar agreed with Heines.

“I live in north Tyler, and my streets have been in disrepair for some time,” McKellar told Torres. “By the time I pay for new tires that I buy very frequently because of bad streets, or when I pay for vehicle maintenance, I embrace the increase.”

TWITTER and INSTAGRAM: @_erinmansfield