They weren't born here, but they got here as fast as they could. All of those Texas transplants who have been flocking here in recent years are starting to impact real estate in the Lone Star State. That is the conclusion of a new report by Texas A&M's Real Estate Center, which links the state's population growth to increased home and land prices.
The report shows the median home price in Texas has been steadily climbing over the past decade, especially since the end of the Great Recession in 2009. "One of the most important factors going into that increase in home prices, particularly for new homes, is the price of land," says Dr. James Gaines, chief economist for the Real Estate Center and co-author of the report. "The growth in our population has driven up the demand for housing, which then gets translated into driving up the demand for more lots and more land."
That isn't to say that Texas doesn't still have plenty of land available. "Even in our major metropolitan areas---Houston, Dallas and Austin---we've had abundant, available, relatively low-cost land," says Dr. Gaines. However, the cost of purchasing and developing that land has increased, both in raw price and as a percentage of the price of the home built on that land, according to the report.
Nevertheless, the report finds land and housing costs in Texas still very affordable compared with most other states. For instance, the ratio of land as part of the cost of a single-family home in Texas is about 20 percent, as opposed to 33 percent nationally and a whopping 61 percent in California. "Compared to California, to Florida, and to the Massachusetts-Connecticut-New York City area, our prices are still comparatively low," says Dr. Gaines.