Risk of Major Home Price Decline Low in Texas

COLLEGE STATION (Real Estate Center) – A new study from the Real Estate Center at Texas A&M University explains why Texas’ housing market fared far better than other states during the current downturn. It also suggests why the state’s economy is expected to continue to do better than the rest of the nation in the coming months.

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

“These results illustrate one of the key reasons the Texas economy outperforms the United States in terms of job growth almost every year,” said Center Chief Economist Dr. Mark Dotzour. “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. Texas offers a lower cost of living than many places in the United States.

“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,” said Dotzour.

Since 1987, the average annual expenditure for shelter per consumer increased in every major American metropolitan market.

Texas data for the study came from the Dallas-Fort Worth and Houston-Galveston-Brazoria metro areas because they are among the major metropolitan areas for which consumer expenditure data are available. These two metros accounted for 60.3 percent of Texas labor force last year and 64 percent of Texas GDP the previous year.

“Houston and Dallas consumers spent the smallest shares of their incomes on shelter in 2008 (18.6 percent),” said Anari.

The two Texas metros in the study had virtually no increase in their shelter expenditure shares from 1987 to 2008. Houston’s share rose 1 percent while Dallas’ share increased 2.2 percent.

For more information on the study's findings, read the Center's news release.

San Antonio Ranked Eleventh Top Metros in Nation

In Case You Missed It... Texas Metros Top Best Performing Cities According to Milken Institute

Austin ranked number one.

November 11, 2009

AUSTIN – Several Texas metro areas have been ranked in the top spots of the 2009 Milken Institute/Greenstreet Real Estate Partners Best Performing Cities Index. The Lone Star State claimed four of the top five spots, including number one, and nine of the top 16 spots.

“When people across the nation look at Texas, they’re discovering that we’ve fostered an environment that encourages people to pursue their dreams, build businesses and create jobs,” Gov. Perry said. “Our low taxes, predictable regulations and diverse and educated workforce have propelled us to the forefront of the global economy, and Texas continues to be an example for the rest of the nation.”

The Austin-Round Rock area was named the number one Best Performing City, with Killeen-Fort Hood-Temple, Mc Allen-Edinburg-Mission and Houston-Sugar Land-Baytown claiming the second, fourth and fifth spots, respectively. Additionally, Houston-Sugar Land-Baytown was named one of the top five largest cities, and Midland was named the number one small metro.

The index ranks U.S. metro areas based on their ability to create and sustain jobs, and includes long-term (five years) and short-term (one year) measurements of employment and salary growth, and four measurements of technology output growth. The report credits Texas’ favorable business climate and ability to attract jobs and corporations away from higher-cost states with propelling metropolitan areas to the top of the index.

“Texas’ strong position in our ‘Best Performing Cities’ study demonstrates that a favorable business climate, combined with a low cost/low tax environment, is highly supportive of job creation,” Ross DeVol, senior economist at the Milken Institute and lead author of the report, said. “The state has diversified its economy by fostering several key high-tech clusters and the passage of Proposition 4, allocating $500 million in funding for research universities, will make Texas an even more formidable competitor in the future.”

To view a copy of the full report or get more information about the metros indexed, please visit http://www.milkeninstitute.org/publications/publications.taf?function=detail&ID=38801218&cat=resrep or http://bestcities.milkeninstitute.org/bestcities2009.taf.