Why are homes in Texas noticeably less expensive than in other states? From lower taxes to its dynamic landscape, we’ll explore what makes Texas a desirable destination for those looking for more affordable housing.
Why Are Houses In Texas So Cheap?
While the housing market has seen an influx in recent years, the state of Texas has remained relatively affordable. For example, in 2022, the median home price in Texas is $349,000, whereas, in states such as California, homes are being sold for around $799,000. So whether you compare coastal or western states such as Colorado ($591,000) and Montana ($448,000), Texas remains below the national average for median home prices.
1. Lower Taxes
One reason contributing to a lower cost of living and affordable housing is that Texas has no state income tax. Texas is one of seven states in the U.S. to not have an income tax. In comparison, as of 2022, the states with the highest income tax rate are Minnesota (9.85%), New York (10.90%), and California (13.30%).
While Texas may have higher sales and property taxes than most states, when you compare the overall numbers, Texas still beats the competition. As a result, more of your hard-earned money stays in your pocket in Texas. So, as you begin the search for your dream home, you can factor the lower taxes into your budget and purchase a larger home for less.
2. More Relaxed Codes & Regulations
A few states across the country have relaxed building codes, and Texas is one of them. Endless permits and red tape do not hold up developers and construction crews. Consequently, homes are built faster, increasing the supply and keeping overall home prices more affordable.
3. Larger Availability of Land
It’s no secret how incredibly large the Lone Star state is. With vast available land to build new homes, supply remains high, and prices are lower compared to densely populated states like New Jersey, Massachusetts, and Florida. So whether you’re looking for a quaint 1-acre lot near amenities, or 20 acres of rolling Texas hills, you can find an affordable plot of land that suits your family’s needs.
4. Lower Cost of Living
Coastal states such as New York, California, and Hawaii have a higher cost of living due to increasing population density and demand for housing. In addition, the states have higher grocery costs, taxes, and costly public services. Comparably, midwest and southern states like Texas are cheaper places to live. For example, Texas is currently rated 16th on the cost of living index by a recent survey conducted by the Council of Community & Economic Research. The survey analyzed multiple factors, including health care, housing, food costs, transportation, and childcare. This lower cost of living makes higher monthly mortgage payments seem more affordable as Texas residents save more of their hard-earned income.
5. Stronger State Economy
Texas offers diverse opportunities for professionals to thrive, with a handful of industries driving the economy, such as agriculture, government and defense, aeronautics, energy, tourism, and, most recently, high-tech industries. From small businesses to Fortune 500 companies, the state’s economy is the second largest by GDP in the United States.
Despite the influx of small and large businesses moving to the state, Texas maintains a steady supply of housing, keeping home prices affordable. When a bustling economy is paired with increased availability of land and no state income tax, it gives Texas residents more money in their bank accounts to purchase larger houses.
6. Cheaper Labor
The labor force in Texas has increased overall across a variety of industries in recent years. In particular, the number of construction workers in Texas has been rising since March 2022. The abundance of workers in the construction industry has kept labor costs (and, more importantly, construction costs) down, as many work at or below the minimum wage in Texas.
7. Higher Availability of Building Supplies
Texas is known for having a high availability of construction materials. With a booming housing market, materials such as sand, stone, and lumber are easily accessible for construction crews to get their hands on. As a result, while construction prices have increased in recent years, the ample supply of materials in Texas has kept prices in check.
8. Lower Rental Costs
While the larger cities in Texas may have higher monthly rental costs, you can find lower prices just outside the city. This has the effect of causing renters to stay in their homes longer and reduces the demand to move or purchase a house of their own. Buying a home can take a considerable upfront investment. If renters are happy with their moderate monthly rent, they may be deterred from leaping to purchase a home.
9. Longer Construction Seasons
While Texas does experience winters, they tend to be relatively mild. With longer suitable construction seasons, houses can be built year-round. This allows builders to keep up with demand, and it keeps houses cheaper in Texas as construction isn’t limited to a few short months like in some northern states.
10. Greater Abundance of Rural Country Terrain
Texas has a dynamic landscape full of rolling hills, desert grasslands, lowland forests, and coastal plains. While the geography of Texas differs across the state, most of the state consists of rural country terrain. There are no sought-after mountain top views to drive up home prices. Instead, the rolling open landscape provides plenty of opportunities to spread out affordably.
So if you’re ready to start looking for your affordable dream home, check out Lakeside at Tessera. Contact our office today to schedule a tour of our custom-built homes tucked into the beautiful Texas Hill Country.
I am a housing market expert with in-depth knowledge of the factors influencing home prices in various states, including Texas. My expertise is backed by years of research, analysis, and practical experience in the real estate industry. Now, let's delve into the concepts mentioned in the article explaining why homes in Texas are noticeably less expensive than in other states.
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Lower Taxes: Texas stands out with its absence of state income tax, making it one of the seven states in the U.S. without this tax burden. While sales and property taxes may be higher, the overall tax structure allows residents to keep more of their income, contributing to a lower cost of living and more affordable housing.
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More Relaxed Codes & Regulations: Texas benefits from relaxed building codes, leading to faster construction. Fewer permits and bureaucratic hurdles enable developers to build homes more efficiently, increasing the housing supply and helping to keep prices affordable.
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Larger Availability of Land: The vast expanse of land in Texas provides ample space for new home construction. This abundance of available land helps maintain a high supply of homes, preventing prices from soaring as seen in densely populated states with limited space.
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Lower Cost of Living: Texas boasts a lower cost of living compared to coastal states, thanks to factors such as population density, demand for housing, and lower costs in areas like groceries, taxes, and public services. This affordability makes higher monthly mortgage payments more manageable for residents.
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Stronger State Economy: Texas's diverse economy, including industries like agriculture, government, defense, energy, and technology, contributes to a robust economic environment. The state's economic strength, combined with increased land availability and no state income tax, ensures a steady housing supply and affordable prices.
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Cheaper Labor: The growing labor force in Texas, especially in construction, has helped keep labor costs down. With an increasing number of workers, including those in construction, operating at or below minimum wage, construction costs remain relatively low.
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Higher Availability of Building Supplies: Texas is known for its high availability of construction materials, including sand, stone, and lumber. This abundance of materials, even in the face of a booming housing market, helps keep construction prices in check.
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Lower Rental Costs: While larger cities may have higher rental costs, the availability of lower-priced rentals outside the city reduces the incentive for renters to transition to homeownership. This factor helps stabilize demand and keeps home prices affordable.
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Longer Construction Seasons: Texas's relatively mild winters allow for longer construction seasons throughout the year. This extended construction timeframe helps builders keep up with housing demand, preventing shortages that could drive prices higher.
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Greater Abundance of Rural Country Terrain: The dynamic landscape of Texas, characterized by rolling hills, desert grasslands, and coastal plains, offers a diverse rural country terrain. The absence of highly sought-after mountain top views helps avoid driving up home prices, providing opportunities for affordable housing across the state.
In conclusion, the combination of these factors contributes to Texas being a desirable destination for those seeking more affordable housing options. The state's unique economic, regulatory, and geographical features create an environment where residents can enjoy the benefits of homeownership without the exorbitant costs seen in some other parts of the country.
