The Secret To Texas’ Success

I think this Kevin Williamson piece about the Texas economic model is mostly wrong (via Tyler Cowen), but this is completely right:

The typical owner-occupied home in Brooklyn costs well over a half-million dollars. In Suffolk County it’s nearly $400,000. In Houston? A whopping $130,100. Put another way: In Houston, the median household income is 39 percent of the cost of a typical house. In Brooklyn, the median household income is 8 percent of the cost of the median home, and in Boston it’s only 14 percent. When it comes to homeownership, $1 in earnings in Houston is worth a lot more than $1 in Brooklyn or Boston. But even that doesn’t really tell the story, because the typical house in Houston doesn’t look much like the typical house in Brooklyn: Some 64 percent of the homes in Houston are single-family units, i.e., houses. In Brooklyn, 85 percent are multi-family units, i.e. apartments and condos.

I don’t want to say much more about this because, again, I want people to buy THE RENT IS TOO DAMN HIGH. But suffice it to say that Paul Krugman is right that Texas largely has a low-wage economy. But Williamson is right that Texas makes up for this by also having a cheap housing economy. But imagine a world in which houses in Brooklyn and Boston and the Bay Area were nearly as cheap as houses in Texas. That would be a lovely world indeed! And it’s not a world we’re technologically incapable of building. California, in particular, has almost all of the same geographical advantages as Texas. And for a long time, California enjoyed Texas-style growth. But today unduly strict building permitting in the desirable coastal locations is preventing the state from taking advantage of its favorable situation and, more importantly, prevent too many middle income Americans from taking advantage of the opportunities that ought to exist there.