Since 2010, Galveston has lost an estimated net total of 775 families with children. For most of its history, Galveston has been a growing city of economic opportunity for businesses and families alike. Between 1960 and 2010, however, Galveston lost over 20,000 residents. The last ten years have seen a slight uptick of new residents but, notably, the number of families with children on the island has continued to decline.
The disappearance of young families on the island has been driven in part by the loss of cost attainable housing. For sure, Hurricane Ike and the threat of future storms have made island living less appealing for some families. But many who have left continue to work on the island and commute to work each day. For many of these families–who would otherwise live on the island–renting or buying a home in Galveston is increasingly difficult as the stock of low- and middle-income housing shrinks and prices continue to climb.
Left unaddressed, the affordable housing crisis in Galveston has the potential to transform the character of Galveston and exact a high economic cost on the city.
Vision Galveston is committed to the idea that everyone who works on Galveston Island and serves this community should be able to live here if they choose. In this blog post, we dive into the data to explore some of the trends in Galveston’s housing stock and its economic consequences for our community. We close by outlining some of Vision Galveston’s plans to increase the stock of affordable housing and bring more young families back to the island.
Young families and workers are moving off the island
Over the past ten years, the overall population of Galveston has been steadily increasing. The number of families with children on the island, however, has gone in the opposite direction. Between 2010 and 2019, Galveston lost an estimated 775 families, a 16% decline over ten years. That corresponds to a net loss of 1,500 children under 18 living on the island.
While Galveston has been losing children and families, many nearby cities and communities on the mainland have seen gains. The chart below compares the percent change in the number of families between 2010 and 2019 in Galveston to neighboring communities on the mainland. Higher-income communities like Pearland, League City, and Friendswood have seen large gains in their family populations. More families are also living in nearby communities like Alvin and La Marque.
Galveston, meanwhile, ranks near the bottom – only Santa Fe and La Porte have seen larger percentage losses in their family populations.
This exodus of families off the island does not appear to be due to a loss of job opportunities in Galveston. Instead, more people are living off the island and crossing the Causeway each day for work. As of 2017, approximately 65% of Galveston’s workers commuted onto the island. This represents more than a 17% increase in the commuter rate in the past fifteen years (54% commuters in 2002).
Many of Galveston’s largest employers have seen similar increases in the share of their employees who commute to work each day. For instance, the share of UTMB Galveston employees who work on the island but live off the island increased by six percentage points from 64% in 2010 to 70% in 2020. That amounts to an additional 689 UTMB employees commuting to the island.
Moreover, this shift is driven by UTMB employees leaving the island, not newer employees choosing to live off island at the start of their employment. Of the nearly 9,300 UTMB employees who started their employment living on the island during this period, more than 13% moved off the island and became commuters.
Other major public employers on the island are facing similarly high commuter rates. More than 7-in-10 Galveston Police Department employees and two-thirds of Galveston Fire Department employees do not live on the island, including 75% of police officers and 62% of firefighters. The City of Galveston and Galveston ISD have lower rates of commuting. Still, 46% of City employees and 36% of Galveston ISD employees live off the island.
Importantly, it is not the lower-income employees who are doing the most commuting. Overall, among these employers, around 60% of employees who made below $50,000/year commuted onto the island for work compared with 68%-70% of middle ($50,000-$149,999 per year) and high income ($150,000+) earners.
Where are these commuters living instead? The map below shows the concentration of employees who work on the island (as of January 2021) based on the zip code of their current residence. You can toggle between employers to see the different concentrations of workers. While there are slightly different patterns across employers, the zip codes around League City and Dickinson tend to have the highest concentrations of off-island commuters.
Priced out of Galveston
Why are families and workers leaving? In 2019, Vision Galveston asked dozens of former Galvestonians about the reasons they no longer live on the island as part of a larger study on housing affordability. 37% of respondents said one of their top three reasons for no longer living in Galveston was that their current area offered better housing prices.
This is born out in the housing market data. For too many families, rising rents and skyrocketing home prices are making island living unaffordable. Since 2010, home values and rents have increased at a faster pace than people’s wages. According to data from the American Community Survey, the median home value in Galveston has increased by 50% and median rent has increased by 30%. Meanwhile, median earnings have only increased by 19%.
Trends in home sales prices – that is, how much people have been willing to pay for homes – paint an even starker portrait: between 2011 and 2020, the median sale price in Galveston increased by 80%, from $149,900 in 2011 to $270,500 in 2020.
Moreover, Galveston’s housing market is changing more rapidly than many of its neighbors. Galveston’s 50% increase in median home values is the one of the highest increases in the region, second only to Webster. Similarly, Galveston is among the top cities in rent growth.
For many low- and middle-income families with jobs on the island, renting in Galveston is tough and owning a home is nearly impossible.
To illustrate this point, consider two different families – a police officer making $63,050 a year with a spouse and two children (80% of Area Median Income), and a waiter and home health care aide with two children making $47,280 a year (60% of Area Median Income). Taking into account their incomes (30% towards housing), interest rates (4.5%), wind & flood insurance and taxes, and a 2.01% downpayment, these two families should be able to afford homes that cost up to $200,000 and $150,000, respectively.
The number of homes selling for those prices in Galveston, however, is dwindling. Back in 2011, nearly two-thirds of all homes on the island sold for less than $200,000. By 2020, that share had been cut in half – just 32% of homes sold in that price range.
But what are these homes like that sell for less than $200,000? A recent survey of the local housing stock, commissioned by Vision Galveston, discovered that the supply at the bottom of the housing market consists mostly of homes that are in dire need of repairs and would require significant repairs to house a family. For families with young children looking to move to the island, the costs and time associated with these types of home repairs would be challenging.
What’s going on?
Why has Galveston gotten so expensive? Some of the factors behind this trend are national. Across the US, the cost of building new homes and renovating older ones has increased as land, labor, and materials have gotten more expensive. Shortages of raw materials like lumber and bricks as a result of the COVID-19 pandemic are set to exacerbate this problem.
Nationwide, the pandemic has also drastically shrunk the inventory of available housing, as many homebuyers, especially older adults who might normally decide to downsize, remain reluctant to leave their homes during the health crisis. Lack of supply can drive up prices. At the same time, places like Galveston are seeing greater demand from prospective homebuyers who are now working remotely and hoping to escape the crowds and congestion of larger urban centers.
Local factors are also at play. In the wake of Hurricane Ike, flood and wind insurance costs have increased, making homes that might otherwise be affordable out of reach. Stricter flood-protection regulations have also contributed to rising housing costs.
Dr. Julia Ramirez, current principal for grades 7-12 at Galveston ISD’s SAIL remote learning program summed up her experience with Galveston’s housing market like this:
We looked for a home in Galveston for about 6 months. We ended up having to make a choice: a home on the island that needed extensive repair due to age, or the insurance costs were as much as the mortgage—or—a brand new home with warranties and cheaper insurance up the road. We chose to live up the road.
In addition, the growth of short-term rentals and influx of investment capital has also contributed to booming housing prices. While Galveston has always been a tourist town with vacation rentals, the rise of short-term rental sites like Airbnb have made them much more ubiquitous. Since 2016, Galveston has seen a 120% increase in the number of short-term rental listings (2,938 in Nov 2016 to 6,534 in Sept 2020), the overwhelming majority of which are entire homes or housing units. As a result there are fewer homes and rentals available for current and prospective residents, and greater competition for what’s left.
Why it matters
Regardless of the reasons, there are costs to working families getting priced out of Galveston’s housing market. One set of costs has to do with the character of Galveston as a community. Does Galveston want to be a playground for tourists where only the rich and retired can afford to live? Or does it want to continue to be a diverse, civically engaged, future-oriented city that makes room for the people who serve the community as firefighters, teachers, and health care workers? Moreover, if Galveston loses its authenticity and character, will tourists still want to come? The stock of cost attainable housing will determine the answers to these questions.
There are also real economic and financial costs to losing young families. As one example, fewer families means fewer students in Galveston ISD, which means less school funding rom the state. The Texas Education Agency’s Basic Allotment to school districts (based on average daily attendance) is currently set at $6,160 per student. The loss of 1,500 children from the island, then, represents over $9.24 million in lost revenue for Galveston ISD.
Fewer housing options and rising prices will also make it harder to recruit and retain a talented workforce on the island. A 2019 survey by Randstat US and Apartment Guide, 57% of US employees surveyed said they would quit working for a great employer if their commute was significantly increased and remote work was not an option, including 69% of younger adults. If Galveston becomes a more and more unaffordable place to live and raise a family, key island employers like UTMB and Galveston ISD may find it harder and harder to find and hold onto great workers.
The Executive Vice President and CEO for the UTMB Health System, Dr. Tim Harlin, put the challenging facing Galveston businesses like UTMB this way:
UTMB has called Galveston island home for 130 years. Our future success depends on our employees being able to do the same. We need to ensure for them affordable and desirable housing and quality of life options so that we can continue to attract and retain the best and brightest here in Galveston/UTMB.
More broadly, fewer families on the island and more workers commuting to Galveston also means that more of the money generated by business on the island is being spent elsewhere. To estimate the scale of these economic losses we used data from the Bureau of Labor Statistics’ 2020 Consumer Expenditure Survey (methodology here) on the total consumer spending by category and income group and applied it to the income profile of Galveston from the 2015-2019 American Community Survey.
The data suggests that Galveston is potentially missing out on up to $50 million in consumer spending each year from having 775 fewer families living on the island. That breaks down to almost $16 million in housing-related spending (mortgage, rent, utilities, repairs), $8.6 million in transportation-related spending, $6 million in food spending.
Of course, not all the money spent by families who live in Galveston is spent on the island, but these numbers are a rough estimate of how much consumer spending Galveston is missing out on due to fewer families living here.
BUILD Galveston’s vision for the future
How do we get those families back and continue to be a city where families want to live? How can we ensure that our teachers, firefighters, public servants, and health care workers can afford to live on the island?
Visions Galveston has started an initiative – Build Galveston – tasked with addressing the lack of cost attainable housing in Galveston. Build Galveston exists as a newly established Community Development Corporation that is seeking to construct or renovate affordable homes in vibrant neighborhoods for a diverse and civically engaged population of workers.
Build Galveston has a goal of increasing the supply of workforce housing by developing and preserving more than 196 apartments and houses over 5 years. These new housing options will include rental units and ownership properties.
To be clear, these units will not be public housing. After Hurricane Ike, Galveston lost some 500 public housing units on the island and is only now in the process of rebuilding them in the years since. That hole at the bottom of the housing market not only drove many families to leave the island but it has also been a factor behind increased competition and rising rents in the middle of the market. Although Build Galveston’s plan does not address this issue directly, increasing the supply of cost attainable housing in the middle of the market should relieve pressure on the housing market overall and help stem the tide of rising rental rates.
The ultimate goal of Build Galveston’s housing plan is to bring back more young families with children to the island. The loss of hundreds more families and children in the coming years to more affordable nearby cities is not inevitable. Galveston stands to benefit from a workforce that is able to live on the island and fully engage in its community and contribute to its economy.
If keeping Galveston affordable and family-friendly is important to you, Vision Galveston asks you to engage with your civic leaders and city council members and ask them to support attainable housing policies and sustainable neighborhood development. You can find contact information for your city council member here.
To stay engaged with what Vision Galveston is up to, sign up for our mailing list here.
References:
Unless otherwise noted, demographic data come from the Census Bureau’s American Community Survey, 2015-2019.
These income groupings come from Pew Research Center’s 2018 report on the Middle Class (here: https://www.pewresearch.org/fact-tank/2018/09/06/the-american-middle-class-is-stable-in-size-but-losing-ground-financially-to-upper-income-families/).
Data come from the Texas Real Estate Research Center.
https://comptroller.texas.gov/economy/fiscal-notes/2018/march/housing.php;
https://www.wsj.com/articles/commodities-boom-hits-home-11615973404;
https://www.nytimes.com/2021/02/26/upshot/where-have-all-the-houses-gone.html
https://www.galvnews.com/news/specialreports/free/article_291ded3f-cd7f-597b-ac10-610e0c9d74d8.html