Texas Has a Debt Problem

Texas' population has been booming over the past few years, with the state adding hundreds of thousands of new residents attracted by its growing job market and relatively affordable housing.

Yet three of the Lone Star State's biggest cities—Austin, San Antonio and Houston—were the most debt-ridden in the country, according to a recent study by online marketplace LendingTree.

An analysis of the anonymized credit reports of about 210,000 LendingTree users from April 1, 2024, through June 30, 2024, found that Austin had the highest non-mortgage debt in the nation at $45,920. This included auto loan debt, personal loan debt, student loan debt, credit card balances and others.

By comparison, the average of non-mortgage debt for residents of the 50 largest metropolitan areas in the country was $37,827.

The Texas capital also had the second-highest average auto loan debt at $17,144 after San Antonio at $18,303 and the fifth-highest average personal loan debt at $4,638.

San Antonio was the second-most debt-ridden city in the country after Austin, with residents owing an average of $44,812 in non-mortgage debt. Houston followed with an average of $44,640.

Dallas was in the top 10 as the city with the sixth-highest level of non-mortgage debt in the country after Miami and Atlanta. The average non-mortgage debt in the city was $43,901—still higher than the national average.

Why Is Texas' Non-Mortgage Debt So High?

"Auto loan debt is a huge reason why Texas cities have such high non-mortgage debt," LendingTree's chief credit analyst, Matt Schulz, told Newsweek. "San Antonio, Austin and Houston have the highest average auto loan debt among the cities we looked at, and Dallas wasn't far behind.

"The truth is you generally need a vehicle to get around the biggest cities in Texas. That puts many Texas in a tough position, especially with vehicle prices and interest rates at today's sky-high levels."

While auto debt isn't the only factor contributing to the high level of non-mortgage debt considering that these cities rank highly for other types of debt as well, "auto loan debt is the biggest contributor," Schulz said.

What About Mortgage Debt?

While housing is relatively affordable in terms of housing, a new report from LendingTreefound that Texans pay an average of $2,182 per month in mortgage payments, which ranks 16th nationally. That's above average but still far less than some of the other biggest states in the country, Schulz said.

"As someone who has lived in Texas for most of the past 40 years, I can tell you that while housing is still relatively affordable, it certainly isn't inexpensive everywhere," he said. "My hometown of Austin, in particular, has seen housing prices skyrocket as people have moved into the state in droves."

In addition to Texans' housing costs, there are also property taxes. While Texas doesn't have a state property tax, local governments collect property taxes for public services like schools, streets, roads, police and firefighters.

According to WalletHub's 2024 property tax report, the state had the seventh-highest property taxes in the country, with the average Texan paying an estimated $3,872 in property taxes.

Wasn't Texas Booming Because Of Its Affordability?

In a recent article, Newsweek covered a new report by Realtor.com which said that the factors that fueled the state's massive population growth in recent years—affordable housing, jobs and good weather—will continue in the future, making Texas the largest state in the union by 2045.

Even while highlighting the appeal of the state, the report mentioned that Texas might be more affordable for those coming from out of state than local residents because of its relatively low wages. According to a new study by Oxfam, Texas is among the states with the highest proportion of low-wage workers, with nearly one-third of workers in the state—or 4.5 million—earning less than $17 per hour.

Texas is also one of 20 states that still have the federal minimum hourly wage of $7.25; 23 other states will be raising their minimum wage this year.

"While Texas has been booming in recent years, salaries are still generally lower than those found in the biggest American cities, especially those along the coasts," Schulz said.

"That's especially true in San Antonio, which is one of the lowest-income big cities in America. While the cost of living in San Antonio is also one of the lowest among the biggest U.S. cities, that lack of income still creates real challenges. It means there's less expendable income to put toward buying a car. It may mean more reliance on credit cards to make ends meet. It may mean more need to lean on personal loans."

Texans also tend to have lower credit scores, Schulz said.

"That means fewer borrowing options, but it also means that if they're able to get a loan, they're likely to face higher interest rates and other costs," he added. "That's a big deal."