Texas has a housing problem. According to a study by Bank of America, the three most populous cities in the state (Houston, San Antonio and Dallas) are among the four metropolises with the greatest shortage of homes. The fourth is Orlando, Fla. There are three factors that have been decisive in causing this crisis.
The first is population growth. The United States Census Bureau details that, as of July 1, 2022, there were 30,029,572 people living in Texas. That is, almost half a million more (470,708) than in 2021, per The Texas Tribune. It appears that this trend will continue due to the immigration levels in the state.
By city, the United States Census estimates that on that same date (July 1, 2022), Houston had a population of 2,302,878 people; San Antonio had 1,472,909 and Dallas had 1,299,544. Houston and San Antonio have seen massive growth from April 2020 to July 2022. Dallas, by contrast, saw a population decline of 0.4% but remains one of the most populous cities in the country.
Texas has one of the highest rates of wage increase
The second factor that explains the growing problem that The Lone Star State has with housing is related to its economy. According to the Bank of America report, Texas is becoming "a hot state."
This means that the region is experiencing wage growth at an even higher rate than the national average. The report highlights, for example, that "in June 2023, total nonfarm payrolls by season were 14% higher than the January 2019 level in Dallas, and 10% higher in Orlando." This is compared to the "4% increase" nationwide.
Texas' benefits aren't just limited to payroll growth. It was also considered in 2022 as "the best state to do business" according to a survey conducted in December by Chief Executive Magazine. The state earned that title for the 18th consecutive year based on "the business climate, workforce and quality of life of each state."
Governor Greg Abbott said the state has achieved this qualities by maintaining their efforts to "deliver a world-class business climate and develop the skilled and diverse workforce in our state":
In 2022, Texas was named the BEST state for business… for a record-smashing 18th year in a row!
Lower taxes and less regulation make the Lone Star State the #1 choice for businesses large and small. pic.twitter.com/E5jhJlrBgS
— Gov. Greg Abbott (@GovAbbott) December 26, 2022
Being the best state for business also led Texas to experience greater population growth. In 2022, the region attracted many high-income families. According to a report by financial advisory company SmartAsset, The Lone Star State welcomed 5,356 new families between January and September 2022.
It's not all good news. Despite population and income increases, the state faces a significant problem in the housing market since the demand for homes in the region exceeds the number being built. That problem is partly solved since, the Bank of America report points out, "the four cities recorded an above-average number of permits per capita during the first five months of 2023, with Houston leading the way."
However, giving more permits does not necessarily mean that the prices decrease. In fact, they have increased. Fox Business reports that home prices have seen fairly high growth in Houston, Dallas, San Antonio and Orlando compared to 2019. Home prices in Orlando "increased by 58%," while in Dallas prices rose "by approximately 49%."
This increase could soon slow in Texas. A month ago, it was announced that state lawmakers reached an agreement to carry out the largest housing tax cut in the state's history. The plan, which is comprised of SB 2 and SB 3, includes an extraordinary budget package of $18 billion.
Of that money, more than $5 billion will go toward easing the tax burden on the state's 5.7 million homeowners and help build more homes to help solve Texas' housing crisis.