Why is housing in Texas so much cheaper than in California?
How is it that two large states, such as Texas and California, can differ so much in the cost of something like housing? Well, there are quite a few factors that go into the difference in housing costs for each state. Even the same salary in different states can vastly affect the quality of life for an individual. According to 2019 figures from Massachusetts Institute of Technology (MIT), housing costs in California are 59.1 percent higher than housing costs in Texas. Let’s explore how this happened.
What is Causing the California Exodus?
The high price of housing is causing more Californian residents to move to states where they can become homeowners and raise families. Even many companies are moving their headquarters to Texas where they receive incentives for the move and it is cheaper for employees to find affordable housing. While California has a high state-income tax, Texas has no state-income tax. Due to high rent, more Californians are renting homes versus buying homes. It’s even a difficult process if you are looking to build a home instead of buying an existing home.
Why is Housing So Expensive in California?
With housing being scarce in California, becoming a homeowner is tough. The following are some of the reasons that housing is so expensive in California:
Lengthy permit delays make it hard to build in a timely manner;
There are separate permit fees for planning, building, impact, etc.;
The California Environmental Quality Act looks at the environmental impact of a project to decide if building is possible;
Certain mountain, coastal, and hilly land is undevelopable—so land is limited;
The cost of many of the above goes to the potential homeowner.
All of this makes it tough for homes to be built to meet the overall demand for housing in California. The competition for existing homes raises the price to buy or rent.
What Makes Texas More Affordable?
Despite the high property taxes, it is much more affordable to build on your lot, if you have one, or buy an existing home. The companies moving to Texas for the incentives are bringing in more employees that are looking to purchase a home. Unlike in California, Texas makes it easier to meet the housing demands. Other factors that add to the affordability of Texas are:
It’s easier to get a building permit in a timely manner;
Rent is lower than California;
No state-income tax makes your income go further;
Texas has a robust economy and population growth;
The cost of living in Texas is lower than in California; and
There is more buildable land in Texas.
The housing boom in Texas is tied to the growing economy according to the Texas A&M Real Estate Center. With the economic growth in Texas, it is easier to have employment as well as affordable housing options. In fact it is so much more affordable that you can make the leap from home renter to homeowner—if that is what you are looking to do.
Why Should I Consider Moving to Texas?
Now is the time, if you are looking to make the move from California to Texas. California may have good economic growth, but it is harder to get one of the coveted homes without jumping through lengthy and expensive hoops. So, no matter which part of Texas you move to, you can find affordable housing to rent or buy.