No, Californians Aren't Driving Up Texas Housing Costs, New Data Suggests
It's a popular perception, but increased numbers of people moving into Texas from out of state, especially California, are likely not the reason why housing prices are increasing in Texas.
Booming house prices and rising rents are not growing at the same pace as domestic migration, according to new data from the Texas Real Estate Research Center at Texas A&M University, which placed the blame on other factors, including rapid business expansion and a lack of housing supply that predates a spike in costs.
Median home prices have risen steadily since the 2010s, hitting a 2013 peak of 9% growth, while domestic migration, or people moving within the U.S. to Texas, has been steady at 100,000 net new residents for about a decade, according to Wes Miller, senior research associate at TRERC, citing U.S. census figures, MLS listings and proprietary data.
“There is essentially no correlation between Texas’ statewide home-price appreciation and migration patterns over the past 15 years,” Miller said in a release. “The composition of interstate movers shifted to higher income earners, but their home-purchase decisions exhibited no such change."
As businesses relocate to Texas and the state becomes a popular mecca for those seeking warmer weather and an affordable cost of living, public attitude to new transplants from coastal metros has soured from fear that they are driving up home prices. That attitude, Miller told Bisnow, is what jump-started the research.
People moving into Texas has some effect on costs and development, but Miller thinks the ire about high home prices is disproportionally focused on new Texans. If it has an impact, it could be on what, where and when developers decide to build, though Miller doesn't think definitive predictions can be made yet.
TRERC found the median income of new Texans has outpaced their native counterparts since 2014, but there was no corresponding shift in what newcomers were willing to pay.
That could be because the demographics of Texas newcomers argue against their impact on housing prices. About 73% of native Texans own homes, and those homeowners have a median age of 41. Just 43% of new Texans are homeowners and their median age is 29. This, Miller said, is because those moving to Texas tend to be younger people chasing jobs, who may not be at a life stage to buy a home.
A large majority of Texas movers also tend to be people moving between Texas cities, according to Miller — a situation that holds true for both buyers and renters. A combination of coronavirus pandemic-fueled remote work and climbing rents saw more than 30% of Houston apartment hunters looking to move out of the city as of late 2021, mostly elsewhere in Texas, according to Apartment List.
Miller said there is also no evidence from his research that new-to-Texas homebuyers are throwing down unusually high down payments and inciting bidding wars, another common perception.
Higher home prices stem from a variety of sources, Miller said, adding the landscape is shifting with fewer people looking to move now, creating a lack of new listings. Though new homes are being built, it's not on pace with population growth and demand.
But, Miller said, it's easier to point the blame at a sea of California license plates than examine economic climates.
“For explanations of the broad-based boom in Texas housing prices over the past decade, it may be more useful to look at the expansionary business cycle, strong labor markets, and mortgage interest rates,” he said. “Persistently low housing inventories and supply were a major contributor as well.”
