Gone To Texas: Are High Taxes Driving People To The Lone Star State? Or is it The Real Estate Market?


Actually, it’s probably a combination of these factors, says Bloomberg News’ Josh Barro. States that have low or no income taxes such as Texas are also more friendly to developers, resulting in lower housing costs.

Trulia economist Jed Kolko found that for every 100 people who moved to California in 2011, 120 people left. Those people tend to be low-income and middle class residents whose bucks would get more bang in Texas.

Who leads the charge out of California? Even though California’s richer residents face high tax rates, lower-income households are more likely to leave. From 2005 to 2011, California lost 158 people with household incomes under $20,000 for every 100 who arrived, and 165 for every 100 people with household incomes between $20,000 and $40,000. In contrast, just slightly more people with household incomes in the $100,000-$200,000 range left than came to California (103 out per 100 in), and California actually gained a hair more people in the $200,000+ range than it lost (99 out per 100 in). The rich aren’t leaving California, but the poor and the middle class are. … What does Texas have that Californians want? Cheaper housing, more jobs, and lower taxes.

It’s Barro’s story, though, that draws party lines, showing the reader that both Texas Governor Rick Perry and his Californian counterpart, Jerry Brown, have a lot to learn from the effects of their policies on the housing market.

The conservative economic agenda tends to be driven by wealthy people who would benefit a lot from lower taxes, rather than middle-class people who would benefit a lot from lower housing costs. And lots of conservatives fail to identify restrictive planning and zoning policies, driven by local governments, as big government in action.

Some liberals have a gut-level distrust of the idea of housing as a market good. They look around and see new condominium buildings springing up in neighborhoods where prices are rising sharply, misidentify the cause and conclude that allowing development causes prices to rise.

In the end, it’s not that liberal or conservative policy is more effective or gets better results, its the misinterpretation that lower taxes brings people to Texas rather than its attractive housing market.

What neither story mentions is that so many people from tons of different demographics are moving to Texas, leaving us with just a 3 to 4 month inventory of existing homes. Unless inventory increases, we might see some level of housing scarcity soon, resulting in higher prices across the board.

That’s what James Gaines of the Real Estate Center at Texas A&M University said earlier this year. According to Candy’s post, we could see double-digit rate increases when it comes to North Texas home prices. Home prices are up 7.6 percent for the year ending in December.

What do you think?


Joanna England

If Executive Editor Joanna England could house hunt forever, she absolutely would. Instead she covers the North Texas housing market and the economy for CandysDirt.com. While she started out with the Real Estate Center at Texas A&M University, Joanna's work has appeared in The Dallas Morning News as well as several local media outlets. When she's not knitting or hooping, or enjoying White Rock Lake, she's behind the lens of her camera. She lives in East Dallas with her husband, son, and their furry and feathered menagerie.

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