On Sept. 16, Zillow’s Housing Roadmap to 2016 tour stops in Houston, one of America’s fastest-growing cities and also — mostly — one of its most affordable. But despite its successes, Houston is not immune to the many challenges facing other rapidly growing American cities, including rising income inequality, emerging rental affordability concerns and ongoing efforts to diversify its economic base.

In advance of our visit, Zillow Research will be publishing a series of Houston-focused research briefs aimed at shedding light on some of the unique trends we’re observing in the area. All of our Houston research can be found here, and we encourage you to please join us on Sept. 16 if you can. If you can’t, please join in the conversation on social media with the hashtag #HousinginAmerica.

On most comparisons of housing affordability across the United States, Houston is a rare oasis: A big, growing city where buying a home is very affordable. But are Houstonians really living in this oasis, or is it a mirage?

Using Zillow home value data and data from the Census Bureau’s American Community Survey we compared Houston to the rest of the top 100 metros areas across the United States. First, we focused on low-income owner households and high-income owner households.

We compared metro areas along three dimensions:

• The historic share of income necessary for a typical mortgage payment in the metro
• The current (2015 Q2) share of income necessary for a typical mortgage payment in the metro
• The most recent (2014 Q2) share of income necessary for a mortgage payment on a bottom-tier home in the metro area

Next, we looked across ZIP codes within the Houston metro area to compare incomes, mortgage affordability and commute times. What we found is that while buying a home in Houston is, indeed, extremely affordable compared to other parts of the country, Houstonians – especially low-income Houstonians – are clearly making some sacrifices when it comes to commutes and living conditions.

Homeownership

As might be expected, the homeownership rate among low-income households is higher in more affordable metro areas across the country (figure 1). Based on a very simple relationship between current mortgage affordability and the homeownership rate among low-income households, for every 1 percentage point increase in the share of median income required for a typical mortgage payment, the homeownership rate among low-income households is 0.22 percentage points lower.

For example, in Los Angeles, where households currently dedicate about 40 percent of their income to a standard mortgage payment, the homeownership rate among low-income Angelenos is 21 percent. But in Atlanta, where households currently dedicate 12 percent of their income to a standard mortgage payment, the homeownership rate among low-income Atlantans is 34 percent.

In Houston, the typical household needs to spend about 15 percent of its income on a mortgage payment to buy the median-valued home, and a low-income household would need to spend about 22 percent of its income to buy the typical bottom-tier home. The homeownership rate among low-income Houstonians is 36 percent – slightly higher than what might be expected from a simple linear relationship.

Commute

It is common to say that homebuyers drive to affordability – that is, they move progressively farther away from (typically pricier) job centers until they get to a location or community where homes are affordable. This suggests that commute times should be longer for lower-income households.

But in reality, the relationship between housing affordability and commute times is not that straightforward.

At the metro level, the most affordable cities tend to be smaller communities where nothing is very far from anything. In the least affordable cities, higher-earning workers tend to prefer both the dense urban core, with access to city amenities, and distant suburbs with larger homes. This leaves the intermediate, grey zones between city and suburb as the province of lower-income workers.

At the household level, commute times tend to be shortest for households with the lowest and the highest housing-cost burdens (the share of income dedicated to a mortgage or rental payment). The highest-income households, which tend to have lower housing-cost burdens, are able to pay a premium to live in desirable locations near job centers. Housing options for the lowest-income households, who tend to have the highest cost burdens, are often so limited that lower-income residents have no choice but to live in denser or less-desirable locations, which are also often relatively near to job centers.

By contrast, the longest commute times tend to be endured by middle-income households struggling to simultaneously maximize the quality of their home and minimize their housing costs relative to income.

On average, commute times increase up to a certain point as the share of income dedicated to the typical mortgage payment rises, after which commute times start to decrease. This simple model suggests that commute times are longest in metros where the typical household spends about 26 percent of their monthly income on a mortgage payment, and low-income households spend about 50 percent of their income on a mortgage payment for a bottom-tier home.

On this measure, low-income households in Houston endure exceptionally long commutes, especially given what might be expected based on mortgage affordability in the metro alone. The quadratic relationship suggests that, given bottom-tier affordability in Houston, the typical low-income household should have a commute of around 19 minutes. Instead, they have a typical commute of 30 minutes.

Of course, commutes are also very long for high-income workers in Houston as well. However, commute times for high-income workers suggest a more traditional pattern – commute times are generally longer in less affordable metro areas. And Houston is less of an extreme outlier on this comparison.

In the inner ring of urban Houston, commute times are shorter in the more affluent corridor to the immediate west and southwest of the city center (figure 2), but affordability is among the worst in the area (although, admittedly, fantastic compared to other metro areas). In the suburbs, commute times tend to be longer in the more affluent, and also more affordable, northwestern and western suburbs.

In urban Houston, commutes are longest in more affordable communities while in suburban Houston, commutes are longest in ZIP codes with moderate mortgage affordability – neither the most nor the least affordable communities (figure 3).

Crowded Housing

Finally, in less affordable communities, a common coping strategy is to fit more people into homes. In the extreme, this strategy leads to crowded housing, officially defined as a home with a ratio of people to rooms in excess of one. By this definition, about 9 percent of low-income Houston households are crowded households – an elevated rate given the metro’s level of affordability and a rate similar to much pricier Honolulu and Los Angeles (figure 4).

Conclusion

The above data suggest that while, yes, Houston does appear to be an extremely affordable place for low-income households (indeed, all households) and boasts a very high homeownership rate among these low-earners as a result, this success does come at a cost. Commutes are long, although they are relatively long for both low-earner and high-earner households. A meaningful share of low-income households also appear to achieve affordability through traditional strategies such as doubling up.