GALVESTON

When police Lt. Destin Sims and his wife started looking for a house in 2017, moving off the island was a no-brainer.

Island-born Sims and his wife, Concetta, both worked in Galveston — and still do. Concetta’s family, long established 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 housing prices,” Sims said.

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

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

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

In Galveston, soaring home prices, mushrooming rents, skyrocketing property insurance costs, stagnant wages, scant inventory and a multitude of other pressures have strained the housing market, driving many people off the island.

Galveston isn’t alone. Housing markets across the state and country are staggering 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 middle-class- friendly place to live and work, a change that could drastically alter the character of the island from a real city where people actually live to a place where they just work and play, then leave.

For those working to address affordability, at stake is the future viability of Galveston as a diverse and eclectic city, as a draw for young and innovative thinkers, as an attractive place for business and as a living, breathing community.

COVID CRAZE

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 percent from the same quarter last year, according to data from the Galveston Association of Realtors.

A frenzy seized the island’s real estate market in the past 18 months. People working from home for months on end 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 V.J. Tramonte of Joe Tramonte Realty, said.

Gov. Greg Abbott eased pandemic restrictions in May 2020, which encouraged reopening of travel and initiated the heated market.

“That’s when we started to kick it in again on sales, especially with the vacation rentals,” Tramonte said.

Local Realtors were selling many houses scooped up to be converted into short-term rentals, he said.

THIRD COAST CATCHES ON

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

City and community leaders had talked about and created a few programs meant to subsidize middle-income earners, like Sims, in an increasingly cost-prohibitive market. Those included things such as first-time buyer programs and stipends for city employees who lived on the island.

Those had never been enough to solve the problem, however, advocates said.

“We have not had a deliberate vision for housing,” said Betty Massey, who has worked on housing issues for years. Massey is vice chairwoman of the Galveston Housing Authority and on the board of community planning group Vision Galveston.

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

Although varied and complex factors drive housing inflation, it often comes down to demand.

“The third coast has caught on,” Massey said.

Tourism — and thus interest in the island — has increased dramatically in the years since Hurricane Ike in 2008. Lately, the island has been attracting 7.2 million visitors annually, a steep climb from the 4.5 million in 2009, according to Galveston Park Board of Trustees 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, District 5 city councilman and owner of Lux Custom Homes.

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

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

HIGH BUILDING COSTS

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

“Material prices in general have gone so crazy in the last year,” Listowski said.

Builders have to cover costs and make a profit, Listwoski said. High building costs drive high home prices, too high for many middle- or low-income families, he said.

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

Everything is more expensive for builders now, said Beau Yarbrough, chief financial officer for island-based builder DSW Homes.

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

Everywhere the cost to build is skyrocketing, he said. Yarbrough estimates it costs him as much as 30 percent more for materials than just last year, he said.

‘IT’S A BUSINESS’

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

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

Nationwide, equally dramatic jumps have brought new home median 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 to build is up and that means higher prices for housing, Torres said.

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

A PEOPLE BOOM

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

Austin, for example, swelled from 910,000 people in 2000 to 2.1 million by 2020.

Jobs and warm weather fueled a 40 percent increase in population since 2000, from 20.9 million to 29.2 million, according to census data.

In general, Americans are moving south and west. Between 2010 and 2020, Texas’ 15.9 percent growth rate was outpaced only by Utah and Idaho; North Dakota was a close fourth.

That wild growth puts high demand on the housing stock, forcing prices up, said Luis Guajardo, urban policy research manager at the Kinder Institute for Urban Research at Rice University.

“Developers, they’re only going to develop for the top end of the market,” Guajardo said. “If they’re left to themselves, they may not know how to address a community’s housing issue.”

‘LOOK AROUND’

Galveston is riding the statewide wave of skyrocketing housing prices, said Lesley Sommer, association executive for the Galveston Association of Realtors.

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

Houses are going quick and for the highest possible price, not only in Galveston but in League City, Santa Fe and other mainland communities, he said.

“I get a little defensive because I feel like people are really critical of what’s happening in Galveston,” Sommer said. “Look around. Go try to find a home in Houston inside the loop, which used to be full of affordable housing. Good luck.”

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

INSURANCE FACTOR

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

Island residents can pay more than $700 a year for federal flood insurance and more than $2,000 for Texas Windstorm Insurance Association coverage. Galvestonians pay thousands of dollars annually to insure homes for flood insurance and casualty insurance, and many worry rates will only continue to skyrocket as storms become stronger and more frequent.

“There’s no doubt that buying a home here is a little more expensive than building a home somewhere else,” Mayor Craig Brown said. “It’s the cost of insurance, windstorm, taxes, maintenance.”

Gulf Coast homes, especially Galveston’s old housing stock, often require a significant amount of ongoing investment to maintain against the salt and weather, he said.

Insurance costs definitely play into the decision to live off island, Sims said.

“Where I live, my house flooded,” Sims said. “My flood insurance is only about $400 a year. One of my co-workers is selling their house on the island. Their flood insurance is $2,400 a year. They don’t live in a mansion.”

‘ELITIST ISLAND’

The island faces what some consider an existential question.

For anyone in service industry jobs or middle-income jobs, finding affordable housing on the island is becoming more difficult, said Patricia Bolton-Legg, chairwoman of the Galveston Housing Finance Corp. and Galveston Property Finance Authority.

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

“It’s become an elitist island,” Bolton-Legg said. “People are going to have to live across the causeway to come to 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.”

WHAT NEXT?

Although the problem is clear, the solution is perhaps less so than it ever has been.

It is for Sims and his wife, who want to move back to the island.

“I just don’t see any options that are attractive enough to make me make that move,” Sims said.

He hopes that if the right people put their heads 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 just is what it is.”

Keri Heath: 409-683-5241; keri.heath@galvnews.com or on Twitter @HeathKeri.

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(4) comments

Carol Dean

Did I miss the mention of ever rising Property Taxes in this article? Mark Henry and Council can brag about having reduced the "Tax Rates" all they want to. Most of us know that essentially when combined with increasing property Values, they are doing nothing but presenting a false image.

Demand significantly lower Tax Rates. It's a "No-Brainer".

Walter Dannenmaier

Amen to that Carol Dean! You beat me to it! It seems the Central Appraisal District intends to tax the former residents of Galveston right off the island! And where will that windfall of tax money go? Do we yearn for increased school spending to continue production of sub-par graduates?

Carol Dean

The GCCAD are NOT exclusively responsible for rising taxes. The Texas State Comptroller's Office sets the boundaries. Also, local taxing entities are involved. Very few people attend the meetings when the new taxes are discussed and voted on. ie. Schools, roads, city, etc. These meetings usually occur on the September time range. Do NOT let your local or County Government mislead you.

Leigh Gottlob-Cowart

https://www.facebook.com/groups/EliminatePropertyTax/?ref=share

Also www.eliminatepropertytax.com

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