1) A lot of its development is on flat undeveloped land. Many of the cities don't have natural barriers like rivers and coasts that other cities have as bottlenecks.
2) There is a lot of room to develop without going really far out from city center, unlike some of the established mega cities.
3) A lot of Texas development already takes car culture into account.
4) A lot of businesses these days already assume they will locate in the suburbs, making less of a strain on city centers.
5) In general the state is just extremely family friendly. No income tax. Maybe, got willing, universal school vouchers like Arizona. If you've got a decent income, big family, and want to send people to private school we may be approaching a situation where moving to Texas is the equivalent of winning a million dollars.
All these things are true, and Texas' high rent inflation over the past 15 years, reflected also in their worsening supply-related housing costs in the Erdmann Housing Tracker, shows how those things aren't the binding constraint that makes or breaks housing affordability. (Houston's a bit better than Dallas, though.)
It’s way easier to develop on unused land, as these cities run out of it it gets tougher, but that’s a bit newer problem for Texas relative to like NY or something.
Another issue that will pop up is that development sometimes outstrips the ability of government to keep up with roads and schools. My town has seen a lot of development and the brakes got put on it when the schools filled up. It’s basically like we are waiting For new schools and bypass roads to be built before anyone is comfortable allowing more building.
I think, on the margin, probably Texas' largest problem in the past decade has been that mortgage regulations have vastly cut down on the number of entry-level owner-occupied homes in the exurbs.
Every city has too many difficulties with infill building, and until the mortgage regs hit after 2007, a lot of cities could meet metro-level supply needs with greenfield development.
I live in a development in the exurbs and I went to visit a lot of them. I'm not sure "starter homes" is what people are looking for. When you move to the exurbs its always for:
1) Big house for big family
2) You have enough income to afford a long commute to work (the truly low income can't do this)
There are a lot of townhomes being build in these developments, and maybe that is the equivalent of starter homes.
When I got the breakdown of my cost, one thing you notice right away is that additional square feet really aren't that expensive to add. A lot of the cost is fixed (land, sales expense, town hookup fees, fixed building cost). Even out here were land isn't particularly expensive, it's just not that expensive to add more bedrooms once you decided to build. As such, few want to opt for a starter home. After all, if you have a bunch of kids (what everyone in the exurbs is going for) you'll just end up having to move out of that starter home.
Before 2005, there were regularly more than 500,000 new homes sold annually for less than $200,000. It's now less than 100,000.
The extreme shift in lending standards and the scars it left on American housing are not subtle.
To be blunt, I think this points to the weakness of the sort of narrative thought experiment approach you're taking in this comment, that you're able to talk yourself into missing what is arguably the most consequentially economic policy shift of a generation.
There has been a lot of inflation since 2005, but let's say that's true even after adjusting for that.
We don't want to lend to people who can't pay it back. We learned that in 2008.
People tell me that lending standards are super tight, but then I see friends get 3% down mortgages even though they are deep in debt and the prospects of their repaying seem slim to me. In fact in general I'm just amazed by how easy it is for people to get access to credit for a whole variety of things I don't think they should be able to get access to credit for.
Maybe I'm crazy, but only people with 20% down that have incomes which can comfortably afford projected payments should be getting a house. I don't even think the 30 year mortgage should exist.
If you get rid of all that credit, house prices will have to come down because nobody can bid it up. Adding more credit just seems like a zero sum game to me.
Texas has a lot of advantages.
1) A lot of its development is on flat undeveloped land. Many of the cities don't have natural barriers like rivers and coasts that other cities have as bottlenecks.
2) There is a lot of room to develop without going really far out from city center, unlike some of the established mega cities.
3) A lot of Texas development already takes car culture into account.
4) A lot of businesses these days already assume they will locate in the suburbs, making less of a strain on city centers.
5) In general the state is just extremely family friendly. No income tax. Maybe, got willing, universal school vouchers like Arizona. If you've got a decent income, big family, and want to send people to private school we may be approaching a situation where moving to Texas is the equivalent of winning a million dollars.
All these things are true, and Texas' high rent inflation over the past 15 years, reflected also in their worsening supply-related housing costs in the Erdmann Housing Tracker, shows how those things aren't the binding constraint that makes or breaks housing affordability. (Houston's a bit better than Dallas, though.)
https://fred.stlouisfed.org/graph/?g=UyGl
Seeing a lot of this garbage these days:
https://communityimpact.com/dallas-fort-worth/grapevine-colleyville-southlake/development/2021/05/18/update-grapevine-city-council-denies-proposed-475-unit-multifamily-development-near-mall/
It’s way easier to develop on unused land, as these cities run out of it it gets tougher, but that’s a bit newer problem for Texas relative to like NY or something.
Another issue that will pop up is that development sometimes outstrips the ability of government to keep up with roads and schools. My town has seen a lot of development and the brakes got put on it when the schools filled up. It’s basically like we are waiting For new schools and bypass roads to be built before anyone is comfortable allowing more building.
True.
I think, on the margin, probably Texas' largest problem in the past decade has been that mortgage regulations have vastly cut down on the number of entry-level owner-occupied homes in the exurbs.
Every city has too many difficulties with infill building, and until the mortgage regs hit after 2007, a lot of cities could meet metro-level supply needs with greenfield development.
I live in a development in the exurbs and I went to visit a lot of them. I'm not sure "starter homes" is what people are looking for. When you move to the exurbs its always for:
1) Big house for big family
2) You have enough income to afford a long commute to work (the truly low income can't do this)
There are a lot of townhomes being build in these developments, and maybe that is the equivalent of starter homes.
When I got the breakdown of my cost, one thing you notice right away is that additional square feet really aren't that expensive to add. A lot of the cost is fixed (land, sales expense, town hookup fees, fixed building cost). Even out here were land isn't particularly expensive, it's just not that expensive to add more bedrooms once you decided to build. As such, few want to opt for a starter home. After all, if you have a bunch of kids (what everyone in the exurbs is going for) you'll just end up having to move out of that starter home.
Before 2005, there were regularly more than 500,000 new homes sold annually for less than $200,000. It's now less than 100,000.
The extreme shift in lending standards and the scars it left on American housing are not subtle.
To be blunt, I think this points to the weakness of the sort of narrative thought experiment approach you're taking in this comment, that you're able to talk yourself into missing what is arguably the most consequentially economic policy shift of a generation.
There has been a lot of inflation since 2005, but let's say that's true even after adjusting for that.
We don't want to lend to people who can't pay it back. We learned that in 2008.
People tell me that lending standards are super tight, but then I see friends get 3% down mortgages even though they are deep in debt and the prospects of their repaying seem slim to me. In fact in general I'm just amazed by how easy it is for people to get access to credit for a whole variety of things I don't think they should be able to get access to credit for.
Maybe I'm crazy, but only people with 20% down that have incomes which can comfortably afford projected payments should be getting a house. I don't even think the 30 year mortgage should exist.
If you get rid of all that credit, house prices will have to come down because nobody can bid it up. Adding more credit just seems like a zero sum game to me.
Very simple and effective arguments!