Since the days of the Republic of Texas in 1836, through its admittance into the Union as the 28th State in 1845, and until today, there are a few things that Texans have prided themselves in: Individualism and Leading by Example. This has led to great Texas economic development.
Some of the main tenants of success that Texas has implemented and protected throughout its history include: No state income taxes; Predictable regulation; a Fair legal system; and a Skilled workforce.
It is well documented, that the 2010 total U.S. tort costs exceeded $264 billion. Recently, Texas enacted “Texas Tort Reform” to reduce and cutback on frivolous lawsuits by enacting a “Loser Pays” system.
So what has made Texas so attractive for businesses? The opportunity to succeed! Where some people see the flat and boring high plains, others see the opportunity to harness the wind energy prevalent in our state to make Texas not only the nation’s leader in oil reserves, but also in wind energy production with over 10,130 MW of capacity. With the businesses comes the capable workforce looking for their own opportunity to find success.
Everything is bigger in Texas, right? Well, not everything.
Texas is only the 2nd largest state in the Union with over 25,145,000 residents. However, Texas’ massive population growth is indicative that Texas must be doing something right! Over the past decade, Texas has added over 4.3 million new residents, a 20.6% growth rate (and approximately the current population of Kentucky), double that of the 9.7% U.S. average. Texas added over 408,000 just in the last 12 months (that is just under the current population of Wyoming).
Even more amazing is that while Texas’ population was growing at such a rampant pace, the state has been successful at getting its unemployment rate, currently 7.8%, to well below the reported 8.5% U.S. unemployment rate. Where does this rank Texas in unemployment rates? 25th, but remember this is while absorbing the fastest population influx in the country.
Some critics of the Texas economy say that Texas isn’t creating “quality jobs” and we lead the country in minimum wage jobs. Yes, when your population grows at the rate that Texas has experienced over the past 10 years, you will have a lot of new restaurants, retail centers, and other minimum wage jobs to support that growth.
As a result of Texas’ low regulations, Texas has the 5th lowest Cost of Living Index (“COLI”) in the U.S. at 91.04. When you apply that to our Average Annual Income per capita of $39,493, Texas residents have over $43,300 of purchasing power, the 8th highest in the U.S. Interesting statistic: Which State has the highest purchasing power in the U.S.? None! District of Colombia does…the federal government takes care of its own.
So what does all of this mean for the real estate industry in Texas? Good things! Population growth is the main driving force behind real estate. If you are watching what is going on in Texas, you will see that construction jobs are already starting to pick up increasing about 3% in 2011.
While the last four years have not been pleasant for anyone, anywhere in this country, ask yourself: Given the freedom from current obligations and geographic or financial constraints and with the benefit of perfect hindsight, in what state would you want to attempt to live through this exact same economic event? Texas or one of the other 49 colonies?