As Texas homeowners wrestle with escrow notices and higher monthly mortgage payments due to skyrocketing property appraisals, the Federal Reserve Bank of Dallas says the high price of housing, especially starter homes, is threatening to destroy the state’s cost-of-living advantage which has been Texas’ key advantage in growing and sustaining a decade and a half of unprecedented economic growth, News Radio 1200 WOAI reports.
Economist Laila Assanie says throughout the Great Recession and right through the historic growth of the state’s booming tech sector, the fact that homes were prices affordably was the major draw for companies from Facebook to Toyota in their decision to locate operation in Texas.
“Declining housing affordability has eroded the state’s cost of living advantage, calling into question whether Texas can maintain its long term economic and population growth,” Assanie said.
Assanie says Texas’ nominal median income has increased 14 percent since 2011, while the median existing h ome sales price rose 34 percent during the same time.
She says the biggest culprit is a huge decrease in the price of ‘starter homes,’ priced below $250,000, between 2011 and 2016.
She blames several factors for the loss of the ‘Ray Ellison style’ low priced new home model. They include new mortgage requirements imposed following the housing crash of 2008 which have priced may of the young families that used to buy those homes out of the market.
I n addition, local governments have piled new regulations onto home construction, from ‘tree preservation’ laws to SAWS ‘impact fees.’
When combined with the fall in oil prices and the decrease in energy sector employment, the result may be the end of the state’s economic advantage.
Several bills are in the current session of the Legislature designed to fight back against skyrocketing home prices. Some would cap spending and property tax increases by city and county governments.
Others claim the fix is in and county Appraisal Districts are complicit, pointing out that Appraisal District boards are made up of elected officials who stand to have their organizations profit by higher property values.
There are bills in the works to mandate that Appraisal District boards not be made up of elected officials, and to establish a non political appeals office for property appraisals in the State Comptroller’s office.