Yglesias

The Secret To Texas’ Success: They Build Houses There

I’ve been looking at this same issue from a number of different directions for a while now, but the key point is that when you hear about Texas’ economic success over the past decade it’s worth understanding what specifically has driven the growth. And to a large extent it appears to be the case that people are moving to Texas largely because Texas is where you can build houses.

Consider this chart looking at America’s largest Metropolitan Statistical Areas in terms of per capita income and in terms of average new home permits since 2003 (OMB changed the definition of metro areas that year, so it’s hard to get comparable data going further back):

The big East Coast metro areas are all richer than Houston, suggesting that something’s going right in the northeast. But DC, Philadelphia, and especially Boston were authorizing very little homebuilding during this period. By contrast, Houston, Dallas, Atlanta, and NYC are all acting like metro areas that want people to move to them. So in a sense, good for everyone! The places doing really poorly are places like Detroit that are neither rich nor growing. But from a national perspective, it’s a little perverse to have so many people moving to Dallas when the opportunities seem better in Boston or DC. These days most people work providing services to other people, so it’s generally advantageous to be providing those services someplace where incomes are high. But people can’t move to Boston, on net, if it’s not possible to build houses in the Boston area.