Texas wins on housing

By Leith van Onselen

Trulia yesterday published an interesting article on how thousands of Californians are emigrating to other states due to exorbitant housing costs, with many choosing to settle in Texas:

A constant debate in California politics is whether jobs and people are leaving the state…

Here are the basic facts. In 2011, 562,000 people left California, and 468,000 came, according to the Census’s American Community Survey. That means 120 people moved out of California for every 100 people who moved in. Out-migration reached its peak in 2005, when 160 people moved out of California for every 100 people who moved in. The California exodus rose with the housing bubble and subsided in the recession. Lower home values in 2008-2011 made California more affordable, encouraging in-migration and discouraging out-migration, as well as pushing some California borrowers underwater, further discouraging out-migration.

Who leads the charge out of California? Even though California’s richer residents face high tax rates, lower-income households are more likely to leave. From 2005 to 2011, California lost 158 people with household incomes under $20,000 for every 100 who arrived, and 165 for every 100 people with household incomes between $20,000 and $40,000…

Since 2005, far more Californians have turned Texan than the other way around: 183 Californians moved to Texas for every 100 Texans moving to California. (The average flow since 2005 between California and all other states – not just Texas – has been 133 out for each 100 in.)…

Let’s take a closer look at California versus Texas. What does Texas have that Californians want? Cheaper housing, more jobs, and lower taxes.

…housing costs matter the most: the exodus from California was strongest when and where the gap in housing costs between California and other states was biggest. This detailed analysis confirms what the above chart showed: outmigration from California was most dramatic in 2004, 2005, and 2006, which were also the years when California home prices were most expensive relative the rest of the country.

The below charts provide further insight into why Californians are migrating to Texas. First, house prices in California are very expensive (and volatile) compared to the national average, whereas Texas’ house prices are highly affordable (and stable), due to its permissive market-based urban planning system (see next charts).

Because housing is so affordable in Texas, the proportion of median household income chewed-up by interest payments is very low compared to both California and the national average (see next chart).

Amazingly, affordability and stability of Texan house prices has been achieved despite very strong population growth, with Texas’ population growing at more than twice the rate of both California and the national average between 2000 and 2012- a testament to Texas’ highly responsive urban planning system (see next chart).

Finally, affordable housing and below average unemployment are not the only things going for Texas. It also has experienced higher than average income growth (see next chart).

Chalk that up as a win for responsive land-use (planning) regulation.

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Leith van Onselen

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

Comments

  1. Another benefit is that in Texas you only pay fedaral tax and not state tax like the rest of the USA.

    • If you want a full (and colourful) explanation of why people are moving to Texas (“the migration of Americans to states with lower taxes and more liberty”), hear libertarian survivalist Jack Spirko raving about it here (right near the end of the podcast):

      Download/Listen

  2. Hugh PavletichMEMBER

    The normal (yes normal) housing markets of Texas has been staring the Australian Authorities and industry people in the face for years.

    But they have instead deliberately chosen to stay on the path of using housing to hold hands and milk the sucker Australian consumers for all its worth.

    The only mystery is how the docile Australian public and media have allowed them away with it for so long.

    Clearly, Australia is hopelessly internationally uncompetitive with its housing fiasco.No wonder Houston’s Gross Metropolitan Product grew by 8.5% last year … and the same the year before/

    Following a visit there in 2008, I wrote about Houston early 2010 with HOUSTON: WE HAVE A HOUSING AFFORDABILITY PROBLEM …

    http://www.macrobusiness.com.au/2013/02/texas-wins-on-housing/

    In contrast, the New Zealand Authorities are well aware of it – and most importantly – acting responsibly by genuinely learning from Texas.

    Hugh Pavletich
    Co author – Annual Demographia International Housing Affordability Survey
    http://www.cantabriansunite.co.nz/
    http://www.performanceurbanplanning.org/
    http://www.demographia.com/dhi.pdf

  3. Stability of house prices in Texas?

    After late 70s/early 80s bubble burst in Texas prices fell 35% (sea chart above). During that period people moved out from Texas to California.

    So there is no much difference between two except when bubbles happen. Read this good Scott Burns article from 2007
    http://www.chron.com/business/article/Burns-Housing-bubble-a-flashback-to-80s-Texas-1809020.php

    After IT burst and 9/11 Texans invested money in another, bigger and more profitable bubble: oil

    http://www.google.com/finance?chdnp=0&chdd=0&chds=0&chdv=0&chvs=maximized&chdeh=0&chfdeh=0&chdet=1360793085158&chddm=1048662&chls=IntervalBasedLine&cmpto=INDEXSP:.INX;NYSE:COP;NYSE:MRO&cmptdms=0;0;0&q=NYSE:XOM&ntsp=0&ei=DQ0cUaD1Dcf2lAXf4QE

    • Raveswei,
      Since you know so much about Texas real estate.
      During the boom what was the maximum price of an urban fringe block of land compared to wages? How long did this last?

      • Raveswei is a bright lad who makes a lot of valuable observations, but he seems to not understand the difference between a “house price bubble” and a “housing construction boom”. But he is far from alone in this; it is people like Claw and myself who are a minority of enlightened.

        Texas has NEVER had anything like California’s ridiculous “million dollars per acre” raw fringe land or house price median multiples of 8 plus.

        Of course house prices can drop following a construction boom, but they drop from “affordable” to “even more affordable”.

        California drops, after their house PRICE bubble, from “stratospherically unaffordable” to “severely unaffordable”. The fiscal damage is actually greater because of the vastly greater amounts of money that are involved relative to incomes and GDP, AND they still have all the disadvantages of unaffordable housing……!!!!

        Texas on the other hand, quickly rebounded with empty houses being filled via inbound migration and increased household formation. Georgia will do the same now.

        • “Raveswei is a bright lad who makes a lot of valuable observations, but he seems to not understand the difference between a “house price bubble” and a “housing construction boom”. But he is far from alone in this; ”

          did Arizona and Nevada enjoyed “house price bubble” or “housing construction boom” in 2000s?

          California cities with the largest price and construction boom in 2000s are very affordable right now. House prices in Stockton, Modesto, Vallejo, … are below 3 times median income and despite your theory nobody is willing to move there so prices are not recovering. People from these places are moving out of state (some to Texas). On the other hand, people from other states are moving to places with very unaffordable cities like San Jose, San Fran … Same things happened in Florida, Arizona, Nevada …

          I think you don’t understand that construction boom usually follows price boom (it would be impossible even to imagine other way around as you suggest). Construction boom helps burst a price bubble sooner and that helps because aggregate damage becomes smaller.

          Sometimes, construction response is not large of quick enough to burst bubble soon after. And that is the only difference between bubble here and bubble in Arizona.

          • You frame the theoretical background about the relationships between prices and construction different to what I would, but basically I agree with you on the theory. That is, “Sometimes, construction response is not large or quick enough to burst bubble soon after…..”

            But prices inflated much further in Arizona and Nevada before “supply” response expanded, than in Texas. What is so extraordinary about Texas and Georgia and North Carolina (and perhaps some other US States) is that “supply” responds so fast to demand, that there is little observable price escalation.

            Even if eventually there is “oversupply” in these areas – eg Texas in the early 1990’s, Georgia now – there was no price bubble, no movement of median multiples above about 3.3 at any time, early or later.

            This is the essential difference between your interpretation of the market mechanism in Texas versus Arizona etc; and mine.

            One of my concerns is that policy makers will fail to realise just HOW “elastic” housing “supply” needs to be to avoid a price bubble.

            But it is also noticeable that house prices managed to remain remarkably stable in many developed nations for decades during the era that automobile based development was highly favoured by planners instead of opposed. There was no lack of what we would regard as “demand shocks” these days; demand side subsidies, cheap loans from government, population growth, etc. Yet “supply” was clearly elastic enough to avoid firstly, a run-up in prices, and secondly, speculation.

            But the UK is the exception that proves the rule. They have had the world’s most volatile house price cycle for decades, because they were “planning” urban growth containment since 1947. And in the UK, each cycle has a more volatile “price” response and a LESS volatile “supply” response, in spite of long-term shortage of homes worsening and deterioration of the existing stock of housing.

            This is what urban growth containment will do to Australia and other countries; they will just track the UK experience a few decades later.

          • at least we agree that we disagree 🙂

            I base my opinion on observation that elasticity of supply in Texas was not tested during 2000s because speculative demand didn’t existed (it was low compared to other states).

            Number of home sales in Texas almost didn’t increase in early 2000s. It grew only 10% between 2000 and 2003. Number of sales in Nevada or Florida, for example, almost doubled over the same period.

            Total number of sales in Texas at the peak was under 300k while Florida recorded almost 500k (Texas is 30% larger than Florida)

            When speculative demand existed in Texas in Late 70s “elasticity of supply” failed to act and Texas recorded 30% real price increase and than fall over the short periods. So when speculative demand existed, elastic supply failed to work in Texas. Difference between Texas and other parts of US is just timing of the speculative demand.

      • Since you asked … elevated real house prices in Texas lasted for a decade – everybody thought that’s new plateau supported by high income generated by commodity prices.

        Sounds familiar so far?

        Than prices quickly fell 30% in real terms although prices were lower than in other parts of USA. Real prices never recovered.

        Reasons why prices sky-rocketed in Texas in 80s were easy credit and greed. Reason why they didn’t in 2000s is still fresh memory and other option to satisfy greed – oil bubble.

        Supply, demand, regulation, … has secondary importance – it’s always psychology funded by easy money.

        • > Reasons why prices sky-rocketed in Texas in 80s were easy credit and greed.

          Look at the graph. In the 80s the median multiples of Texan cities were around 3-4.

          That’s still very affordable. You seem to be deliberately ignoring this point raised by PhilBest.

          • It doesn’t matter what the price is (compared to other places that are different in lifestyle terms), what matters is how prices change. Some places will always be more expensive because they offer better lifestyle for majority of people so people are ready to pay more.

            You seem to be deliberately ignoring this point. Texas prices jumped 30% in real terms for no reason (neither supply nor real demand changed substantially) and than fell 30% in real terms over short period. That was bubble driven by greed and easy credit (read a little bit about S&L in Texas).

            Next time aroud, in 2000s, Texans did stay away – they learned from their own mistake.

          • But Raveswei, there are plenty of “undesirable” cities in the UK where house prices still cycle between median multiples of 5 and 8; and this is for small, old, poor quality housing. And some of these cities even have had high unemployment and little economic growth and no population growth for a long time.

            It is urban growth containment planning that makes this difference.

            In fact, I think Australians flatter themselves too much about how “desirable” their cities actually are. Quite honestly, Australia’s climate and fauna and land type (dusty) resemble Texas far more than they resemble coastal California or Colorado or Switzerland – so why does Australia’s house prices have to be as expensive as those places rather than as cheap as Texas?

  4. Texas housing is different and that’s about all one can say.

    The complete absence of house speculation is part of the puzzle. The origins of this non-speculative behavior date back to the early 1980’s when Texas housing was a hot commodity and the Oil industry ruled. That all came to sticky end with the oil gluts of the late 80’s and the Texas savings’n’loan scandals.

    I think the recent memory of how badly housing can collapse prevents housing speculation in Texas. There are other very important factors including:
    – No real geographic differentiation
    (no harbor views anywhere)
    (Dallas/Huston downtown not desirable RE)

    – Very cheap building labor, Mexican laborers work hard for about $8/hour

    – School Busing resulted in white flight to new urban fringes of North Dallas (same in Huston)

    – Companies move with the workers (the Telecom corridor companies followed residents north to Plano/Allan)

    – Many Texas emigrants are just there for the job, they plan to return home at some time. This fact alone means they don’t think of Texas RE as a long term investment, its just Housing.

    So there are lots of factors that make Texas RE unique.

    • One other important thing is the way 10 to 15 year old Texas RE actually depreciated.

      Partly this was due to very low initial build quality, so houses required substantial upgrades after 15 years. As a result many people sold and moved to the newer suburbs. Investors often bought these older properties and rented them resulting in a quick decline in many otherwise good neighborhoods.

      This meant that holding on to RE past the initial development was generally a bad idea once the decline started the “land-bankers” would need to discount land to sell it, assuming there were any buyers (why build a new house for say $150K on a $20K lot in an area where housing is depreciating, better to buy a more expensive lot say $40K further out where housing is still appreciating.

    • But California had even greater house price volatility than Texas, back in the 1988-1992 episode. Look at the graphs….!!!!

      “Cheap labour” makes it even more remarkable that median multiples of 3 still reign, even with “cheap labour” dragging the income factor of the equation down.

      The “income” argument is a nullity when we are talking about median multiples. Many of the places with incomes 50% higher, have house prices 300% higher, cancelling out the advantages of higher incomes several times over.

      Why would emigrants to Texas be “just there for the job” when they can afford a decent house, and California emigrants be there to stay permanently when they need to be crammed 10 to a room to be able to afford the cost of housing for themselves and their families?

      Speculation is “endogenous” to the initial price rises that are endogenous to inelastic housing supply. It is not a question of whether it is “in the culture” or not.

      You are correct about the role that “undifferentiated land” plays. I have posed the question to the best expert academics, please quantify this effect – does it justify median multiples 10% higher? 50% higher? 100% higher? 200% higher? They cannot tell me.

      However, the UK proves that urban growth containment applied to ALL CITIES results in unaffordable housing in ALL CITIES, regardless of natural endowment, local amenity, etc etc etc.

      If the USA had urban growth containment applied to all cities, Houston, Dallas, Atlanta, etc would be more like Newcastle, Liverpool, Manchester, Sheffield, Birmingham, etc – undesirable cities with unaffordable housing and stagnant economies.

      On the other hand, would not the UK benefit from having a city or two with undesirable natural attributes, affordable housing, and a booming local economy based on a diverse range of economic activities, many of which have currently been driven offshore?

      It is worth noting here that the main opponents of any proposed international financial transactions tax in current international crisis negotiations, is the Conservative government of the UK. They are well aware of what this would do to the economy of London. Oliver Hartwich in the “Business Spectator” 14 Dec 2011, comments:

      “……Merkel and Sarkozy could not have been under any illusions that Cameron would pave the road towards curbing the power and profitability of the City of London. Finance is the only major industry left in post-modern Britain. Besides, anything that weakens London’s position would automatically be a promotion of its closest European rivals in Paris and Frankfurt…..”

      http://www.businessspectator.com.au/bs.nsf/Article/euro-debt-crisis-Cameron-Merkel-Sarkozy-pd20111213-PH3ZP?OpenDocument

      • Phil, I’m not after an argument, just trying to add some value and give those that are interested some ideas to explain the differences.

        I gather from your comments that you have never lived in Texas. believe me there are many reasons why you do not want to retire in Texas, but if I had to pick just one it would be the insane summer temperatures, I seem to remember one year Dallas had 100 days above 100F. That sustained high temp is hard to take when you get older, you get up in the morning and its already 90F so forget early morning exercise.

        Texas is just not a pleasant environment, there are no beaches to visit, no mountains to climb, no forests to walk through and no way to ride a bike without getting run over by some pick-up truck driving redneck. Sure cheap housing is nice but it comes at a cost.

        • To give others some ideas of why Texas RE depreciates after 15 years I found an old quote for repairs to an Investment house I was considering buying in Richardson (North Dallas) in 2000.

          The house was built in 1982, so it was 18 years old at the time.

          New roof (second since it was built) $21K required replacing ply sheeting because the older really cheap MDF had disintegrated

          New AC (second unit since build) $5.5K

          Replace most of the windows $9K (some due to fogging of cheap double glassing most because cheap plastic frames were cracking, thanks to the Texas sun.

          Repairs to Cracked Slab $10K to $20K impossible to say till they started the job

          Cement rendering existing Brick work and painting $17K (brick surface was cracking off due to poor quality bricks, too much moisture, and freezing cold Dallas winter temps)

          Internal painting $3.5K

          There were other costs but these were the big ticket items.

          So Total estimated repair cost: $66K to $76K

          Repaired value would have been about $200K, the as-is ask for the house was $120K.

          I passed on the property, the guy that bought it (made a low-ball offer maybe $95K) and made only minor repairs (say under $15K) before renting it for $1500/week.

          These repair requirements were not that unusual for similar houses.

          • My Bad $1500/month,

            yield is still OK but Texas has high land taxes so these would have been $4K or maybe $5K per year.

            Gross :1500*12= 18k
            Taxes = $4.5K
            RE fees = $2K
            Min Repairs = $3K
            mortgage = $5.5K 5% for $115K

            Net Profit = $3k pa

            However note that the average depreciation of the house value is about $6K/year, meaning even Texas Re rental yield is still negative.

            This means it only really suits those that intend to self manage / rent the properties and do all the upkeep/repairs /updating themselves.

          • So it’s affordable because no one wants to live there – like Broken Hill.

            Houston and surrounds has a population of around 7 million and is now the 4th largest metropolitan area in the U.S.

            so yeah.. no one wants to live there…..

          • ChinaBob. I debunked the argument that Texas has high property taxes here. Your $4.5k figure seems overly excessive and not reflective of the situation in Texas more generally.

            It looks like the house you were looking at was a dud. Don’t worry, there are plenty like that across Australia that would cost three times as much, cost even more to fix, and offer an even lower yield.

          • St Rusty, that was really a question, however now that you have assured me that millions of people love living in Houston, I chose to have a quick look, although I’m sure that the residents of Broken Hill also have a special place in their hearts for their town as well.

            Here is a link full of bloggers who express their dismay at Houston being left off every list of liveable cities that has ever been compliled – some interesting reading here –
            http://houstonstrategies.blogspot.com.au/2009/08/why-livable-cities-rankings-are-wrong.html

            It’s nice to see that the citizens of Houston are layal to their city.

            Here is a less than glowing report on Houston – http://answers.yahoo.com/question/index?qid=20100127000024AAdZ5Sg

            and here is wher it’s ranked the second most boring city in the world – http://opentravel.com/blogs/worlds-most-boring-cities-to-visit/

            It shades out Wellington where visitors are advised to go to Sydney or Melbourne for a little excitement.

            Rusty I’m sure that you and the family will love Houston, it’s your kind of town.

          • China Bob usually makes realistic contributions and doesn’t exaggerate, so although it’s only anecdotal I’m not inclined to dismiss his view.

            Yes the internet searches are not absolute proof of anything and I’ve never been to or lived in Houston, but it doesn’t tempt me to go there either.

            I have often mentioned to people in Melbourne and Sydney that they could buy better in Brisbane for less money, but their answer is “Yes but I don’t want to live there”

            It may only be part of the answer, but desireability is still a factor in pricing.

          • Dubbo, Hobart, Adelaide, Albury, Alice Springs, and Darwin aren’t exactly “exciting cities”. Yet house prices in these places are outragous compared with anywhere in Texas. Interesting, don’t you think?

          • @UE
            “ChinaBob. I debunked the argument that Texas has high property taxes here. Your $4.5k figure seems overly excessive ”

            You need to be careful Texas land taxes have a reduction for residents (called Homestead exemption) but even then it is about 3% of the appraised value.

            This house with upgrades would have probably appraised at close to $140K or $150K so 3% = $4.5K that’s including the reduction called “Homestead exemption” I don’t remember the exact percentages for investment properties.

          • I don’t think that we need “excitement” as the primary and solitary unit of measurement when factors like “crime, family friendly parks and recreation, sporting facilities, good schools, good weather, shopping, neighbourhood, health facilities, leisure activities, access to interesting areas within an easy drive” and a host of other facilities are what normal families look for. If I wanted excitement then my vote would go to NYC.

            The Forbes list is predominantly concerned with high crime rates, a lack of sporting achievement, horrendous weather etc. With a few exceptions we don’t have those issues on the same scale – not even in Dubbo.

            I saw more police uniforms in those photos than I see here in a year, and I have two as close neighbours.

            It seems to have a high growth rate, so that’s in favour of your argument, but is that just a factor of the high Hispanic migration?

            I’m not arguing against your premise that better planning laws are the major factor, but as always there are multiple factors in pricing.

          • China Bob – is that tax over and above the municipal taxes – eg rates.

            If so then they really pay their tax on housing as they go along rather than upfront loaded into the sticker price and stamp duty as we do.

            Could you explain that please?

          • Hi PF,
            I don’t remember the exact breakdown of the tax bills
            but water / sewerage was definitely separate and Garbage collection was also separate.

            police roads etc were included except that we had an extra charge of a few hundred dollars per year for extra police patrols.

          • Thanks CB – I prefer to work on a 50 year time frame (buy at 30 die at 80) so the property tax makes a considerable difference over that time frame – well any time frame really whether you buy or rent you still pay.

            $4000 per annum would then add $200K to the effective house price, although the rate of tax would increase on a cpi style growth scale, so in effect it could end up being much greater than that and effectively the same as extra borrowed capital plus interest accrued, if you get what I mean.

          • @ peter

            why would rate of tax increase on a cpi style growth scale?

            nominal tax would increase with cpi but that doesn’t matter because you calculated aggregated cost in today’s dollars.

          • rav – I understand that tax is calculated on the house value which would appreciate over time, at or around the CPI rate.

            I used that as a rough guide, not as an absolute value.

            Given your comments to China Bob below, I’m quite surprised that anyone buys in Houston at all. I wouldn’t.

    • Very good points China-Bob.
      Whilst I generally agree with the contention that planning controls in most Australian, NZ and American cities are too restrictive, and that Texas provides some useful clues on how planning controls could be liberalised to assist with affordability, as you rightfully show there are a number of unique Texan factors that cannot be directly transferred to other cities.
      The low labour cost factor is a very important observation. The limited geographic differentiation is also important. Another very important factor is the good availability of flat expansive land – obviously in a large number of cities such land resource is a lot less available.
      Also factor in the high land taxes / rates in Texas.
      So in summary – yes we can learn a lot from Texas, but it would be wrong to suggest that all the Texan-speciifc approaches are fully transferable.

        • UE I think you are getting fooled by the numbers
          Firstly there are a lot of shacks in east and south Dallas that are “no-go” area for a white boy like me, in these regions I used to see houses advertised for under $60K sometimes under $40K. Big areas of housing like this shifts the averages.

          Secondly you are not including all the components of the property tax in Texas. There are 3 parts,

          http://www.ntc-dfw.org/northtexas/costsproptax.html

          So Richardson would be 2.6% according to this at appraised value of $140K that’s $3.65K (I cant find the amount to add for non-HS exemption)

          The $3K cost per year is from my own experience and includes things like repairs to sprinkler system, air conditioning repairs, plumbing problems, water heaters, stove problems..
          but no real household repairs or updates.
          At the low end my expenses were $1.5K and at the high end $4K.

          The $6K depreciation is too much for the rental house that has not been repaired. but is not unreasonable for a new $200K house. As you have said before this depreciation gets hidden in the land inflation of Australian house prices.

          • House depreciation is usually very high in Texas. Quality is poor, climate is harsh for the dominant construction type (wood and plaster in very humid climate, asphalt shingle roof exposed to Texas sun), neighbourhoods often turn into “ghettos” (once that doesn’t “socially decay” have very high HOA fees up to $1000pa). Property tax is low in poor but relatively high in good areas. There is a general opinion that a house becomes worthless in a decade if not maintained properly. It usually costs few thousands a year plus $10k once a five to 10 years.

          • But there are plenty of “undesirable” cities in the UK where house prices still cycle between median multiples of 5 and 8; and this is for small, old, poor quality housing. And some of these cities even have had high unemployment and little economic growth and no population growth for a long time. It is urban growth containment planning that makes this difference.

            In fact, I think Australians flatter themselves too much about how “desirable” their cities actually are. Quite honestly, Australia’s climate and fauna and land type (dusty) resemble Texas far more than they resemble coastal California or Colorado or Switzerland – so why does Australia’s house prices have to be as expensive as those places rather than as cheap as Texas?

            Urban planners and vested interests in urban growth containment and high economic land rent, like to mistake “economic rent” for “amenity value”.

          • Bear in mind, too, that California did NOT have a housing affordability problem back when it was growing faster than Texas is today.

          • less desirable cities in every country are cheaper than more desirable. Prices in less desirable parts of UK are less than half the price in more desirable cities – same as in USA.

            Manchester 150k
            London 460k

            Houston $150k
            New York $450k

            no restrictions in Houston make no difference

        • @UE Do you need more proof that Dallas property rates are around 3%? If so I’ll find the link for the Dallas appraisal web site, I know you can check rates on-line.

          BTW getting Dallas to reduce their appraisal values is very hard you can only apply once per year and they dont do it willingly. so for as-is sales the appraisal value can often be more than the real price.

    • A lot of what you’ve said really aren’t factors that affect aggregate prices…

      Now the first part of a local memory of speculative activity is a good thin, however…

      – No real geographic differentiation
      (no harbor views anywhere)

      That’s not mean, that premium property and are not that material. The premium buyers just spend it on something else.

      Very cheap building labor, Mexican laborers work hard for about $8/hour

      The epxerience here is that building in real terms isn’t the issue. I would also suggest the low cost labour would have a somewhat dminished productive output.

      The component here is land.

      – School Busing resulted in white flight to new urban fringes

      Now we are getting somewhere… flight means vacating dwellings in the city yeah? Also new estates mean pretty responsive zoning laws must exist. I would doubt restrictive zoning would allow new estates to be readily available, thus the populace would stay put.

      This outlines why they have it good.

      – Companies move with the workers

      Again about zoning. it is a lot cheaper to move the tall office building to the suburbs, than build the transit facilities to allow the suburban populace to commute each day to the centralised tall office building.

      I would say such outcomes exist, and make our outcomes they way they are, with captive consumers, is a form of rent-seeking.

      – Many Texas emigrants are just there for the job, they plan to return home at some time

      Many people are in Port Hedland just for a job, but we see what restrictive zoning does to housing prices. Transience isn’t an issue.

      So there are lots of factors that make Texas RE unique.

      yes, but the economic activity to provide shelter isn’t

      Putting a concrete slab down can be similar in every locale in the world in PPP terms, bar places like Hong Kong where there is a genuine land shortage.

      The time frame to commecne this can be as equally responsive, as i.e. get the concreter starting tomorrow.

      Puting four walls and a roof, likewise can be the same in PPP terms, as pretty much is.

      The qustion is, when unzoned farmland is very similar in PPP terms, why does it blow out from $30 for englobo land in texas, to $250k in Perth?

      There is no longer parity, there is $220k disparity, and following the money trail only shows social constructs.

      • I’m not sure how to reply Rusty.

        There are premium inner city suburbs of North Dallas (Highland park, Preston-Hollow, Mstreets, Lakeview….) but there are a heck of a lot more houses in the outer regions that 20 years ago were all flat undifferentiated prairie lands.

        Even geographically differentiated areas around the big lakes like Rockwell and Grapevine dont sell at substantial premiums compared the flat lands like Plano, Allan, Frisco, Murphy… (Probably because of traffic congestion in these areas)

        Different Builders build better quality (usually means larger houses) which sell for higher land prices but the new house build cost is somewhere between $75/sqft and $150/sqft.

        A typical west Plano Mcmansion is about 3500sq ft at say $100/sqft whereas a smaller 3 bedroom new brick home in say Murphy is probably 2400sqft at $75/sqft.

        • There are premium inner city suburbs of North Dallas (Highland park, Preston-Hollow, Mstreets, Lakeview….)

          Which would make sense, but in regards to harbour views.

          Rich people will always pick premium localities. One of the purposes is that it is a filter mechanism to keep riff-raff out.

          They will always demand premium locations as i said, its just where a harbour view is available, they will opt for that.

          But that doesn’t mean the rich in Sydney will voluntarily pay more for the utiltiy of a view with water.

          but there are a heck of a lot more houses in the outer regions that 20 years ago were all flat undifferentiated prairie lands.

          The same can be said ith Hoxton park in Sydney, Melton in Melbourne, Bulter in Perth. All equal fringe land, its just the quick response side quells demand in Texas.

          Extraordinary gain can’t be acquired in Texas because it will be circumvented by someone else selling land at a fair price.

          Even geographically differentiated areas around the big lakes like Rockwell and Grapevine dont sell at substantial premiums compared the flat lands like Plano, Allan, Frisco, Murphy… (Probably because of traffic congestion in these areas)

          There will always be above average prices, as there will be below average prices. They will be distributed accordingly.

          The question is why is every percentile of this distribution of Sydney much high that the equal percentile in Houston?

          I would assert the social construct embed an extraordinary price in all property, and not flat prairies andlack of ocean views.

          People will assign quality premiums with the arbitrage between prices to normalise.

          If Melton started selling homes for $90k, there would be a rush, relieving prices in say Altona, with people seeing the disparity between melton and Altona too great. With Altona declining, Coburg would drop, then Coburg affecting Richmond.. etc

          But for the $90k to arrivein fringe melton to begin with, the supply response can’t be impeded.

          Different Builders build better quality (usually means larger houses) which sell for higher land prices but the new house build cost is somewhere between $75/sqft and $150/sqft.

          No difference here, but it’s not the option for improved structures which prevents the supply response, it is the land zoning.

          A typical west Plano Mcmansion is about 3500sq ft at say $100/sqft whereas a smaller 3 bedroom new brick home in say Murphy is probably 2400sqft at $75/sqft.

          What a great starting size for a family. If widely available, and affordable, and cnseuently all the financial stresses diminished, one might think people may free up their mind to think up things, be creative, invent and create more wealth, instead of stepping on egg shells try to avoid another financial induced argument with the spouse.

          No one ever thinks high priced energy is good, I can’t see why this conclusion isn’t extended to housing.

  5. It is basic commonsense that choking the supply of extra housing will drive up prices and drive away poorer people to cheaper areas (if they exist).
    If the supply of extra housing falls short of the need for extra housing (both suiting society norms) then a SHORTAGE is created and price will be higher than it otherwise would be.

    To simplify, if only 8 extra houses are provided for 10 extra families then 2 families must miss-out and 8 families must pay more than they otherwise would have. The shortage hurts both those who miss-out and those who pay-up. The shortage hurts all young first home buyers.

    Although understanding the situation is extremely easy, there is a huge group of people, who I call SHORTAGE-DENIERS who, for various reasons, deny the simple truth of the shortage.

    A common trick used by the shortage-denier is to compare numbers of extra houses with numbers of extra people AFTER HIGH PRICE HAS FORCED MANY PEOPLE OUT. By removing many of the victims from the data set under study, the shortage-denier is able to claim that a sufficient number of dwellings exist. They then claim something other than a shortage has driven up prices and rents.

    • And it gets worse…..!!!

      Because RE prices are “downwards sticky”, you can get large numbers of empty properties and undeveloped brownfields sities and unrenewed blighted areas, with the property owners “holding out” for what they perceive to be “normal” prices. Which prices make any resulting development and habitation by the large numbers of “unhoused”, an impossibility.

      This is a pandemic in the UK. Of course the vested interests in growth containment point to the empty properties and say, “see, we have an oversupply already”. The unhoused can go and eat coke. I sometimes call this, “Marie Antoinette” housing policy advocacy.

      • I have often pointed out that much of the illusion of “balanced supply” and “sustainable rising prices” is caused by leaving income levels out of the “demand” picture.

        In China, for example, this would result in assuming that “housing” (mostly apartments, at that) prices can continue rising, through $500,000 to $600,000 and beyond, indefinitely, “because there are 250 million people still not housed”.

        The situation in Australia (and the UK) is not quite this ridiculous, but the point is still valid.

        • The fact that there is “X” number of people still needing to be housed, is a justification NOT for continued price rises, but for “supply” of “X” homes at PRICES that “X” people can AFFORD.

  6. “Mexican laborers work hard for about $8/hour”

    We could do with a few of those here. How about it, all you Victorians?

  7. While housing affordability is undoubtedly a strong directional motivator, there are even more powerful forces at work.

    Who is leaving, who is coming?
    http://www.dof.ca.gov/research/demographic/state_census_data_center/census_2010/

    Population change 2000-2010:
    Hispanic 27.8% 3,047,163,under 5 13.6%, under 18 17.4%
    Non-Hispanic White -5.4% -860,537,under 5 -18.2%, under 18 -21.0%

    Whites tend to be Tax Payers.
    Hispanics tend to have a high welfare dependence.
    California is broke & destined to get broker!!

      • “Dirty secret” for “urban density” figures, celebrated by urban planners, for London and Vancouver especially (and perhaps Sydney?).

        Gross overcrowding among recent immigrants from developing countries.

    • and another thing from John Mauldin’s latest…

      “Let’s start with a few paragraphs that appeared in the Wall Street Journal. Carl Demaio writes this week:
      Consider California, where just 10 individual pensioners will cash $50 million in pension checks from state and local governments over the next 25 years. Already some 30,000 retired California government employees pull in pensions higher than $100,000 a year. One retired librarian in San Diego receives a $234,000 annual pension. Beach lifeguards in Orange County are retiring at age 51 with $108,000 annual pensions plus health-care benefits.
      Note that those benefits are cost-of-living-adjusted. But the problem is not just in California; it is nationwide.
      A 2011 study by the Congressional Research Service pegged the combined liabilities faced by state and local pension funds at over $3 trillion. That is more than all the bonded debt officially listed on state and local balance sheets combined. To put the issue in perspective, all the federal tax hikes approved by Congress on Jan. 1 would pay less than 20% of America’s state and local pension debt over the next 10 years. (Wall Street Journal)
      Another study by the Congressional Budget Office comes to the same general conclusion. You can read it here.
      Steven Malanga wrote a powerful essay for the City Journal exposing the huge problems in just one California pension fund, CalPERS (California Public Employees’ Retirement System). It is a well-written chronicle of how one fund has locked California into a debt spiral that threatens the solvency of the state: The Pension Fund that Ate California.”

      but I digress.

  8. Hugh PavletichMEMBER

    Within this article – HOUSING BUBBLES: JUMBO MORTGAGES = JUMBO PROBLEMS and based on Federal Reserve figures adjusted for population (California 37 million – Texas 25 million), California has a million less houses than Texas …

    http://www.scoop.co.nz/stories/WO1003/S00019.htm

    After the bubble crashed in California 2007 – triggering the Global Financial Crisis, in 2009 the residential consenting rate had collapsed to 1 per 1000 population per annum – 37,000 consents for a population of 37 million. I understand in contrast Houston is currently running at 15 / 1000. Go figure.

    If Australia consenting rates fell to California 2009 levels of 1 / 1000, that would mean about 22,500 residential consents would be issued on a year – for New Zealand about 4,500.

    At the peak of the California bubble in 2007, lending got up to 11 times annual household incomes. Those on $US90,000 a year were borrowing a million bucks.

    Lending Multiples must reflect of course the Median Multiples of specific markets (refer Demographia Survey http://www.demographia.com ). In normal markets – such as Texas – 2.5 times annual household income is the norm.

    Herb Greenberg of MarketWatch explained the idiotic California lending soon after the crash in MORTGAGE MESS …

    http://blogs.marketwatch.com/greenberg/2007/12/straight-talk-on-the-mortgage-mess-from-an-insider/

    New Zealand and Australia’s Lending Multiples too are well outside onormal market levels of 2.5 times annual household income. “Mortgage slavery” is probably the best way to describe it.

    Remarkably, Californians haven’t learnt a thing and have instead tightened land use regulation ! Not surprisingly, the mistakes of recent history are being repeated, as BUBBLE 2 is now well underway in California, as the Demographia Surveys illustrate.

    Hugh Pavletich

  9. Keep on pushing that Demographia barrow !!! After all, the ONLY difference between Texas and California is the planning system so it is the ONLY reason why Americans might move between these two states. Complex issue, simple “solution” = Wrong. Take off the blinkers.

    • Magafo,
      You are right that the issue is complex. However simple folk often need things to be discussed one aspect at a time.

      Since you are clearly intelligent enough to handle 10 or so at once, here goes:

      10 Steps to a Housing Disaster

      Starting with only 21 million people and a giant island with 100 acres of land per person, how could we engineer some of the least affordable housing on the planet?

      Here is a recipe to make housing unaffordable:

      Step 1 – CHOKE NEW CITIES

      Divide the island into 7 states and create one giant city per state. Force almost all the people into the giant cities with policies such as:

      * All business zoned in the centre of the city
      * All government departments must be in the capital city
      * Non-giant cities given terrible infrastructure

      With decent transport this gives 7 areas with 40km radius, approximately 1700 square metres per person. Still too much land to create a crisis!

      Step 2 – CHOKE TRANSPORT

      Neglect the transportation system so that it is not practical to live more than 20km from the city centre. This cuts us back to 400 square metres per person. Still plenty of space on average, but the largest cities will need some high-rise housing to get by.

      Step 3 – CHOKE HIGH-RISE

      Refuse permission for high-rise in many cases. Old suburbs must be preserved for the old people who still live there. No extra housing to be built for young families.

      Step 4 – CHOKE LOW-RISE

      Much land within range of the city to be kept off the market in the form of national parks, government land and farms without permission to subdivide. If you have 5 acre or 25 acre farms within reach of CBD then declare the area semi-rural and don’t allow extra housing there. With policies like this even low-population cities like Darwin and Hobart can have a housing crisis!

      The first four points will choke-off all avenues of extra housing supply, so now let’s increase the need for extra houses – one house per family – by increasing the number of families.

      Step 5 – HAVE LOTS OF BABIES

      In 20-30 years they will leave home to start extra families.

      Step 6 – INVITE IN MANY IMMIGRANTS

      Why not increase the immigrant intake to record numbers?

      Step 7 – DIVORCE IN RECORD NUMBERS AND LIVE LONGER

      This will result in a declining number of people per household. We need more dwellings for a given number of people.

      Now with the supply of extra houses choked and the need for extra houses increased, price will race upward, as the poorer families are priced-out of housing. Now let’s goose the price even more with idiotic economic “demand side” techniques

      Step 8 – LOWER INTEREST RATES AND LOWER LENDING STANDARDS

      Instead of paying off a $100,000 house at 13% interest, why not service a debt of $500,000 at 7%. Why not use 80% of two incomes and eat poverty food for the rest of your life?

      Step 9 – FIRST HOME BUYER’S GRANT

      It won’t create a single extra house, but it might drive existing house prices up.

      Step 10 – TAX ADVANTAGE TO SPECULATORS

      With prices racing up, beyond the reach of first home buyers, give more money to those people most capable of driving prices even higher. Use government tax money to encourage rich people to borrow money and buy existing housing to rent-out to poor people. We can pretend that this creates extra cheap housing and is good for the poor people.

      Step 11 – A WORLD-WIDE CREDIT BOOM AND ASSET BOOM

      Improper to include in the list of 10, but it doesn’t hurt to mention it.

      …..

      Poking Demand and Choking Supply

      Government has done something very bad to the supply and demand of starter homes which has led to outrageous prices of starter homes, and supported much higher prices of better homes. In short, government has poked the demand and choked the supply of starter/marginal/extra homes.

      Poking Demand:

      * Government brings in many immigrants

      Choking Supply:

      * Government rations permission to build extra housing on the fringe or extra units in the city, and new cities
      * Government adds taxes, charges and levies to extra housing
      * Government requires onerous compliance with regulations
      * Government creates delays in approving dwellings.
      * Government neglects transport and other infrastructure which reduces the area in which well-located and well-serviced homes can be built

      • Great summary Claw.

        One to add to your 10 steps.

        Step 12 – Tax advantage to a cartel of large landbankers/developers to encourage a “buy, hold and drip feed” strategy on as much of the best residential land the can buy.

        • how about this:

          Choking Supply:

          * Government rations permission to build extra housing on the fringe or extra units in the city, and new cities
          * Government allows landbankers to monopolise the permission and dribble it onto the market to inflate prices
          * Government adds taxes, charges and levies to extra housing


      • Poking Demand – easy credit, greed and tax benefits

        Choking Supply – land hoarding driven by easy credit, greed and tax benefits

        Here is a 5 ingriedients recipe to make housing unaffordable:
        GREED, TAX BENEFITS, EASY MONEY, EASY MONEY, EASY MONEY

    • Hugh PavletichMEMBER

      Madafo …the problems and solutions are simple, because there is nothing complex about supplying new affordable housing today.

      We can thank the founders of the modern production construction industry, Bill and Alfred Levitt for that.

      It is a ho hum formulaic business and on the front page of my website Performance Urban Planning www,PerformanceUrbanPlanning.org you will find information on the Levitts and a clear definition of an affordable housing market.

      I set out the solutions (refer Section 4) – specifically relating to Christchurch – within CHRISTCHURCH: THE WAY FORWARD …

      http://www.scoop.co.nz/stories/AK1206/S00251/christchurch-the-way-forward.htm

      I have often referred to this as a “nonsense issue” in that the issues are by no means complex.

      What part of 3 don’t you understand ?

      The only “problem” I’m aware of is political – How do we get snouts out of the trough ? The politically well connected industry guys and the politicians they own.

      Hugh Pavletich

  10. Hugh PavletichMEMBER

    The latest Houston Association of Realtors Monthly report is well worth a read …

    http://www.har.com/mls/dispPressRelease.cfm

    New home prices. Note in stating floor area, it is living space only. Add double garaging say at 6×6 m = 36 sq m. Then divide sq ft by 10.764 to get sq metres. Compare the ALL UP per square metre rate with Australian and New Zealand pricing …

    http://www.newhomesource.com/communityresults/market-279

    The above examples are simply normal pricing for housing.

    It use to be like this in Australia and New Zealand.

    Hugh Pavletich

  11. So rising incomes yet housing staye stable… who would have imagined that could be possible when supply side policy allows it to be responsive enough hey?

    Extra income doesn’t have to be captured by dwelliing prices and offer gratuity to bottom feeders….

  12. Texas prices jumped 30% in real terms for no reason (neither supply nor real demand changed substantially) and than fell 30% in real terms over short period.

    Another poster above made this claim.
    Firstly for prices to change 30% there must be a considerable change in supply and/or demand. But instead of quibble over definitions there let us discuss the claim about “prices” changing 30%.
    Did every price go up by 30%? How much did the price of empty fringe land go up? Did upmarket houses go up the most?

      • Hugh PavletichMEMBER

        My understanding is that in Dallas Fort Worth through the S&L frenzy was that they issued 111,000 residential consents in one year. The population at the time was about 3 million. Thats a consenting rate of 37 per 1000 population per annum.

        If Australia with its population of approx 22.5 million was consenting at 37 / 1000 … 832,500 consents wouled be issued in a year. New Zealand with 4.5 million people some 166,500 .

        I was told yesterday Houston is currently consenting at the rate of 15 / 1000 … with its population of a whisker higher than 6 million, that would suggest about 90,000 .

        This may in good measure explain why Houstons Gross Metropolitan Product grew by 8.5% last year …and 8.5% the year before.

        At the other end of the spectrum we have the disaster called Britain where the build rate per 1000 population sits at an appalling 1.6 .

        Hugh Pavletich

        • And this in spite of “price” volatility at every new “demand shock” being higher and higher……. Raveswei, please explain.

          The actual housing shortage in the UK gets higher and higher, the average age of the “never owned a home” cohort rises, the unrenewed housing stock gets older and worse in condition, and the space per person falls…..

  13. Hugh PavletichMEMBER

    Centre for European Reform … WHY BRITISH PROSPERITY IS HOBBLED BY A RIGGED LAND MARKET ( Juust like Australia and New Zealand – Hugh Pavletich comment )….

    http://centreforeuropeanreform.blogspot.com.au/2013/02/why-british-prosperity-is-hobbled-by.html?spref=tw

    The problem is just political …how is it best to get the political and politically well connected industry noses out of the trough ?

    That where the focus should be in solving this “nonsense issue” of housing.

    Hugh Pavletich

    • Texas economy is not healthy one. It grows but Irish economy was growing as well in mid 2000s so … Texas state gov cut taxes but continued spending and it runs huge budget deficit since mid 2000s. Texas economy is also enjoying oil boom at the same time.

      Most of new jobs in Texas are “spending” jobs or bubble jobs: health care, administrative and energy.

      So, all these stories how Texas is example to follow are only based on current GDP growth and unemployment. People who claim this do not look into structure and future prospects of the economy. From that prospective California still looks better than Texas

      • Not sure I’d quite so down on Texas, there are problems for sure.

        A lot of the traditional industries are not what they once were
        Airlines industry has problems
        Semiconductor also not great
        Telecoms is dead
        Defense is past its peak
        Oil&Gas is mixed
        but other sectors like Medical, consumer goods, food and finance are doing very well based on what I hear.

        Many of the cities made big bond issues to cover schools, lite-rail and mega-freeways and these are difficult to maintain with shrinking house valuations bases, so there are fiscal problems with the cities.

        • Hugh PavletichMEMBER

          China Bob …My sense is that a family living on $US50,000 a year in Houston would need about $NZ120,000 in Aucklqand and $A150,000 in Sydney – to be on a par.

          Local Government inflation triggers housing inflation which in turn triggers general inflation.

          I outlined this within HOW HOUSING BUBBLES ARE TRIGGERED …

          http://www.scoop.co.nz/stories/HL1111/S00011/how-housing-bubbles-are-triggered.htm

          if ONLY we had Texas problems here in the Antipodes !

          Hugh Pavletich

          • A family on $50K pa would not have an easy life in Huston or Dallas but it might be manageable.

            My guess is that they would pay about $7K maybe $10K in Federal Taxes so that leaves about $40K

            In Texas you absolutely need a good reliable car or Two, so that probably costs no less than $5K /year with repairs / petrol/ insurance. Double that for 2 cars. $10K

            Food is certainly cheaper in Tx, maybe as little as 1/2 the cost of Sydney especially if you include eating out, Dallas has lots of good cheap TexMex.

            State schools are free but many select private schools (probably not those on $50K)

            I’d say all in all Texas cost of living is less than 1/2 Sydney cost of living and housing cost is less than 1/3 especially if you include interest costs.

            This living cost advantage really shows up in the employment risks that people are prepared to take. Most Startup engineers that I know live of their wife’s income and basically gamble that this startup will be the next Facebook, Google whatever. This arrangement is not feasible in Sydney so Startup’s paying mainly in options are not able to attract much interest in Sydney.

          • China Bob …My sense is that a family living on $US50,000 a year in Houston would need about $NZ120,000 in Aucklqand and $A150,000 in Sydney – to be on a par.

            My experience living in Phoenix (well, Scottsdale) on around $100k was that I’d need a salary somewhere between 75% and 100% higher to enjoy the same lifestyle here in Brisbane.

          • In Texas you absolutely need a good reliable car or Two, so that probably costs no less than $5K /year with repairs / petrol/ insurance. Double that for 2 cars. $10K

            That sounds like an awful lot to run a car in the US. Or are you assuming it’s bought with a loan and including payments ?

          • China-Bob; what makes you think there is any MORE need to own and run a car in a Texas city, than anywhere else; even the UK or Australia?

            In fact, average trip-to-work travel TIMES are LOWER in Texas than in either the UK or Australia (or New York).

            The simple secret to this is that employment is highly dispersed, and few people are prevented from living closer to any particular job they might get, by the price of housing.

            Ultra long “drive to qualify for a mortgage” commutes are UNIQUE to inflated-house-price cities. This is because “housing plus transport costs” still end up inflated the LEAST at fringe and beyond-fringe locations. Just another unintended consequence of “growth containment” urban planning which allegedly is meant to reduce commute distances and times.

            The famous “Costs of Sprawl 2000”
            report included a chapter on this phenomenon. So did Anthony Downs in the book “Still Stuck in Traffic” (2004). In fact Peter Hall et al noted this phenomenon back in their 1973 report, “The Containment of Urban England”.

            Not that “planners” EVER LEARN from real world evidence……!

          • Just to back-up Phil’s point, here are the average commute times in the USA, with Texas ranking BELOW the US national average (click here). Not a bad outcome give Texas has two of the five biggest metropolitan areas (Dallas and Houston). Note that Californian average commute times are higher.

          • Hugh PavletichMEMBER

            Great comments … thank you …

            Houston …a break from all the reading guys …here are a couple of videos …

            A British travel writers 48 hour visit to Houston …

            http://www.youtube.com/watch?feature=player_embedded&v=UBYqZM3uSwI

            Housing Video .. Lennar Homes …

            http://www.youtube.com/watch?v=sXnJX4HpCWo&feature=bf_next&list=UUGuN7Y79ioS4-8yS3JE1YfA

            …now back to some reading …

            Cruise deals out of US ports are …um … pretty reasonable (compare Princess out of Sydney ) …Vacations to Go is a massive e cruise reatailer founded by Alan Fox and based in Houston. Best I have ever dealt with incidentally …

            http://www.vacationstogo.com/ticker.cfm?id=npfy

            …and I do wish economists in Australia and New Zealand would follow up on this type of research work fone by colleagues of Joel Kotkin … CITIES WHERE THE PAYCHECK GOES THE FURTHEST …

            http://www.newgeography.com/content/002950-the-cities-where-a-paycheck-stretches-the-furthest

            …just so we can get a more accurate “fix” on the standards of living in our “severely unaffordable” major citiies here in Australia and New Zealand. Just to see how accurate my guesstimate of Houston $US50,000 – Auckland $NZ120,000 – Sydney $A150,000 is somewhere near the mark or not. Please help us economists !

            Hugh Pavletich
            http://www.PerformanceUrbanPlanning.org

          • Going to Dallas without a car is like going to Fraser Island without a 4 wheel drive. (its possible but why would you do it)

            Maybe if you work downtown and can catch the lite-rail then you can live without two cars but a family with any car, not likely. Jobs are dispersed and public transport only really runs towards the city center. Also there are very few footpaths so even if you want to walk you cant. Taxis are in theory available but I dont believe I ever caught one on the street, you need to order well in advance and sometimes they might actually turn-up. No in Texas the car is king.

            I dont think my $5K estimate is to high for the all-up costs of a reliable car

            Insurance and reg about $1K
            12kmiles/year @20miles/gal = Gas 600gal ^ $3/gal = $1800
            Maintance say $500/year
            Depreciation say $2K/year on $20K purchase price

            I think thats over $5K already.

          • $50k in Houston is not much. A family needs three cars (if has one teenager over 16) running a car is expensive because of high insurance and large distances (houston is 100km across), health insurance is at least 5k pa – employee contributions + at least 1k in out of pocket costs. Groceries are less expensive but very poor quality, food of equivalent quality in AU costs just a bit less. Restaurant food is really bad quality with exception of mexican food. Living in texas is maybe 30% less expensive than in Sydney for renters.

            50k in Houston is more like 75k or 80k in Sydney

          • China-Bob; what makes you think there is any MORE need to own and run a car in a Texas city, than anywhere else; even the UK or Australia?

            I can’t speak for Texas, but I’ve lived in Brisbane, Sydney, Zurich and Scottsdale, and spent enough time in London and Paris to feel justified in talking about what it would be like to live there.

            In Sydney I lived for a good year without a car, and for probably 12 months with only a motorbike. For all its faults, public transport there is good enough that living without a car is feasible with only minor sacrifices.

            The same is true, though much more dependent on location, for Brisbane (disclosure: I currently live in Brisbane, and my wife and I share a car – but we generally don’t use it for commuting). I wouldn’t want to live in Brisbane without a car, but I think it’s doable, with some sacrifices.

            In Zurich we lived for two years without a car. I think we rented cars or trucks about half a dozen times to move house, buy furniture, or to do some travelling. With that said, public transport in Switzerland (as a whole country) is unmatched compared to anywhere else I’ve spent time.

            In London and Paris living without a car seems quite feasible, based on the time I’ve spent there.

            I cannot imagine living in Scottsdale without a car, however (nor any other American city I’ve spent time, with the exceptions of New York and San Francisco). Public transport is dismal (to say the least). Even though I used to ride (a pushbike) to work for maybe 3/4 of the year, that’s a relatively minor issue compared to all the other things – shopping, socialising, etc – that are all but impossible without a car because residential areas tend to be substantially separated from everything else.

            Which leads me to the main point I want to make: measuring commute times is somewhat useful, but ignores all the other stuff that cars are useful/required for – in particular things like shopping for food, which in car-centric cities, tends to be something you _need_ a car for, but in other cities (like, say, Zurich) it’s less important because there tend to be a wider distribution of smaller grocery stores between wherever you are and wherever you need to be, rather than a handful of super-malls mostly in the middle of nowhere.

          • Yes, but my argument has always been that in cities with expensive housing thanks to growth containment planning, every first home buyer faces a range of choices which involve that buying a home where there IS public transport and “walkability”, is even more unaffordable than buying a fringe McMansion and running a car.

            I very much doubt that many households formed in recent years and with growing children attending schools, could exist in these alleged utopian public-transport-and-walking neighbourhoods you guys are talking about. It is these people that we need to be having a conversation about, NOT young people doing OE, DINKIES (Double Income No Kids), and/or the top 5% of income earners.

  14. Ironically, the ability of people to afford a house close enough to work to be able to walk there, is reduced considerably by price-inflatory urban planning.

    “Dispersed” urban form and low house prices is a perfect fit with “walkability” objectives, at absolutely nil public cost; whereas “transit oriented” planning (and subsidies) come at massive public cost and are actually inimical to “walkability”.

    The logical consequence of this kind of planning, is people priced out of the “walkable” locations where the employment is deliberately centralised – but they CAN catch a massively subsidised train 50 miles from somewhere that housing is “least unaffordable”!

    I pick that the potential for “walk to work” mode share is at least as high as “catch a train”; but “walk to work” costs the taxpayers nothing, and “catch a train” costs them HEAPS. And the policies that maximise “catch a train” mode share potential (still derisory), minimise “walk to work” mode share potential.

  15. Hugh PavletichMEMBER

    All a car is is convienient mobility…. something the vast majority of people find essential today.

    Cities that fail to recognise this are sowing the seeds of their own failure.