Mischer News

In a recent study from the Real Estate Center at Texas A&M University new explanations are being offered as to why the Texas housing markets are proving to be much better than other states amidst the current real estate free-fall. And, it further suggests the reasoning behind their belief that the Texas economy will continue to fare better than the rest of the country in the upcoming months.

“Texas’ lower-than-national-average housing cost is one reason for the state’s higher-than-national-average growth rate,” says Ali Anari, Ph.D., one of the study’s authors and a Center research economist.  “When Texans are able to spend more on non-housing goods and services, the state’s economy is strengthened and more people attracted.”

Since 1987, the average, per consumer, annual income consumers delegate to their shelter has increased in every major American metropolitan market. But, according to Anari’s research, “Houston and Dallas consumers spent the smallest shares of their incomes on shelter in 2008 (18.6%).”

“These results illustrate one of the key reasons the Texas economy outperforms the United States in terms of job growth almost every year,” says Center Chief Economist Mark Dotzour, Ph.D. “The fact that Texans pay less of their income for housing means they have more to spend on other things that add to the overall quality of life.” Dotzour further explains, “This allows Texas employers to be able to attract workers at a reasonable wage rate that allows them to compete successfully in the global economy.”

Texas data for the study was compiled from the Dallas-Fort Worth and Houston-Galveston-Brazoria metro areas due to the fact that they are among the major metropolitan areas for which consumer expenditure data is available. These two metros accounted for 60.3% of Texas’ labor force last year and 64% of Texas’ gross domestic product (GDP) the previous year.

The good news here: Houston was the only metro area in the study to post appreciating home prices!