The rent is too damn high. Why? First up to the plate, Edward Glaeser:
Low taxes, decent schools, and a comfortable commute are important, but if the key factor making Houston a middle-class magnet is its plentiful and inexpensive housing, that raises the question: Why is it so cheap? The low cost of homes reflects the low cost of supplying homes in Texas. Building an “economy” 2,000-square-foot house in Houston costs about $120,000, and a slightly larger “standard” one about $150,000. Add a developer’s profit and land costs, and you can figure that supplying a new middle-class home costs between $140,000 and $190,000. Since housing depreciates over time, it’s possible to buy older houses below construction costs, and that’s exactly what middle-class families are doing. Supplying housing in New York City costs much, much more—for a 1,500-square-foot apartment, well over $500,000 in construction costs alone.
Emphasis added. Glaeser is making the case for Houston’s lax zoning code. In doing so, he lassos in the entire state of Texas in the benefit of cheaper housing. Freedom to build means economic freedom for the middle class. Everyone leaves New York City and moves to Houston, where real estate developers call the shots. Yes, I see you New York City real estate developers smiling.
Turn that frown upside down, Houston real estate developers. Richard Florida rides to your rescue:
The places where housing costs are super high are generally where you would expect: the East Coast corridor, from Maine through the Boston-Washington corridor, and in Southern Florida. New Orleans, Dallas, Austin, Denver, Chicago, Minneapolis-St. Paul, Salt Lake City, Phoenix, and many of the West Coast metros also have housing costs that are considerably above the national average.
Houston, we have problem. Earth to Richard Florida, who expects housing costs to be “super high” in Dallas? I know, Dallas and Austin aren’t Houston. But Edward Glaeser was the one who pointed out cheap building costs in Texas. Go knock on his door at Harvard University. Regardless, Florida’s rent map shows considerable variance within Texas and Houston is grouped with Dallas and Austin.
Austin has a gentrification problem. Dallas has a gentrification problem. Houston has a gentrification problem. On the other hand, Brownsville looks dirt cheap. If cost of rent drives migration, then everyone in Austin should move to Pittsburgh, or Brownsville (which offers even cheaper rent than Pittsburgh).
Summary: Renters can find both Brownsville and Manhattan in the Houston region. The bulk of the cost hinges on quality of demand. Game, set, match, Richard Florida.
