According to a recent study completed by the Real Estate Center at Texas A&M University, the Texas housing market has managed to fare far better than other states throughout the country during our recent economic troubles. Furthermore, the report indicates that the Texas economy is likely to continue to do better than the rest of the country over the next several months.
Texas has an average housing cost that is lower than much of the nation, and that gives residents more freedom to spend on non-housing items and services. A lower cost of living attracts new employers to the area that in turn bring new residents. Texas does not have a state income tax for personal or corporate income, and again that leaves more discretionary income for residents. These are just some of the reasons why the Texas economy should be able to thrive in the coming years.
According to the report, the average expenditure for shelter per year for each customer grew within every major metropolitan market in the country since 1987. The data for Texas is gathered from the Dallas-Fort Worth and Houston-Galveston-Brazoria metro areas because expenditure data is readily available for these areas, which account for 60.3% of the Texas labor force as well as 64% of the state’s GDP. The researchers found that consumers within these two metro areas spend the smallest shares of their incomes on shelter in 2008. Furthermore, the researchers found that there was virtually no increase in shelter expenditure shares in these two metro areas from 1987 through 2008. While the Dallas share rose by 2.2%, the Houston share rose by just 1%. The National Association of Realtor also reports that Houston was the only metro area to post an appreciation in home process, while Dallas has the smallest home price decline at just 3.8%.
As certain categories within the consumer budget take over a larger share of the overall expenses, consumers begin to look for less costly alternatives. As a result, there is a decreased demand for more expensive services and goods, which lowers the price for these items. This concept translates into the housing market, where consumers have to choose between buying and renting. Similarly, if housing prices go down, consumers have more money to spend on other goods and services, which results in regional economic growth. Looking at all these factors it is clear that Texas has better prospects than most states when comparing future economic outlooks.
Ryan Lynch runs the marketing department for Cantera Real Estate located at 6836 Austin Center Blvd., Suite 120, Austin, TX 78731 http://www.jimolenbush.com
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