Why is Texas dirt cheap compared to California for real estate?

[seattle-relo]

Last year when my engineer husband was looking for a new position outside of Seattle, we had 2 places on our list – Texas and North Carolina (the headhunter also had San Diego – we had to be convinced). Being the engineer that he is, he did various spreadsheets on the different aspects in regard to the cost of living and the different salaries that he was able to get in each area. After doing the numbers, Texas (Dallas) wasn’t that great. In both areas (NC and Texas) the available salary wasn’t as high has he was getting in Seattle and not nearly as high as he was offered here. I really wanted to like Texas, but I was just spoiled by areas with natural beauty and outdoor recreation. Living in a 4,000 sq ft mcmansion in Dallas wasn’t worth the extra 250 dollars a month that we’d have living there. We’d rather live in our little house and go sailing and mountain biking every weekend. Which you can’t do in Texas! My very good friend moved to Austin 2 years ago, and she’s already wanting to move back to the West coast…I guess her 4,000 sq ft house with pool and outdoor kitchen hasn’t really bought her happiness…

[LA_Renter]

I moved to Washington State from Texas and then to So Cal. I like Texas especially San Antonio and Austin. Dallas is a little too pseudo snobby for me and Houston a little too Good Ole Boy Ool (oil) country for me. People wise I guess you could say Texas is the west coast of the south. They don’t seem to have the social regimentation that you find east of there. It’s a little wilder. I love the outdoors and once you make the move west it is very difficult to go back. You do pay a quality of life premium out here (within reason).

[waiting hawk]

Because a 400k Hemet house has the best ocean views!

[bsrsharma]

seattle-relo: Do you own or rent? That is huge factor in those spreadsheet type analysis. $250 is not even a rounding error if you have to sell & buy. But if you own (and sold last year) and could rent in TX and move back a couple years from now, I think your spreadsheets will look much more interesting.

[seattle-relo]

We bought a modest 550 house in Rancho Bernardo (yes, very stupid…no lectures needed :)). The difference was based on salary – the san diego salary was 45% higher than the Texas offer and we weren’t comparing simular homes. We lowered our housing standards for San Diego when comparing homes to Texas and North Carolina. With that spreedsheet we compared a 275K Texas house with the 550K San Diego house with no mello roos. There were a lot more variables than just mortgage to mortgage, I’d have to look back at his spreadsheet…

[Daniel]

I second surveyor’s opinion. The single biggest factors in housing prices are land availability, regulation and zoning laws. It’s not weather (Seattle and Boston are expensive), and it’s not quality of life (Bakersfield and Barstow, anyone?).

Think of cars: how about if you wanted to buy a Honda, but before buying it, you had to ask every neighbor a mile around if they liked the color of your car, and you had to get the city to approve of your purchase? How about if Honda, before building an Accord, had to wait 5 years to get approvals for it? Do you think they would still sell it to you for $20K?

Edit: for those who like math and finance: google “Zoning’s steep price” to find a pretty interesting old paper about the implicit cost of regulation on home prices.

[bsrsharma]

seattle-relo: I think it will be interesting to see your spreadsheet driven algorithm that landed you in San Diego. You can leave out salary data and just work with house numbers. I am curious to know if there is any algorithm that will land you in SD other than having huge amount of cash (RSF/Del Mar/La Jolla kind).

[bsrsharma]

single biggest factors

I think "what the market can bear" also has an effect.

[lindismith]

Yes, what the market can bear is very important.

Texas has one of the highest poverty rates in the nation: 16% or above, with 4 of the top 10 worst counties in the US.

[img_assist|nid=4562|title=Poverty By County|desc=|link=node|align=left|width=466|height=341]

[Daniel]

Well, of course incomes have something (a lot) to do with prices. But I guess I interpreted the original question to be directed more towards an apples-to-apples type of comparison, like San Diego vs Austin (not SF vs. Hidalgo County, wherever that poor county might be).

In an apples-to-apples comparison, the explaining factor for high prices is usually land use/zoning. Whenever a city adds people (and both San Diego and Austin have grown mightily over the past decade), an inelastic housing supply (restrictions, regulation, NIMBYs, zoning, etc) inevitably results in a price spike. An elastic housing supply (light regulation, fast approvals) will result in sprawl, but also low prices. Texas is the poster child of very light (non-existent?) regulation, enormous sprawl, and consequently, very low prices.

[OwnerOfCalifornia]

I lived in Austin for nine years and have been stuck in San Diego for three. I generally do not understand why housing is so much more expensive here, but I suspect many posters have already hit on the main points, availability of land (though less true for central Texas/Hill Country), less regulation, income disparity (though again not applicable to the Hill Country region).

I’m rather puzzled by people who do not think the outdoor recreation is there–that is one of the main reasons (besides housing expense) I want to move back to Texas. Hiking, camping, mountain biking, scenery, more trees, everything green–all better in the Hill Country. The only thing not available is surfing, though you can still make a weekend trip to South Padre, Corpus Christi, or Port Aransas if you miss the beach.

As for the greater Los Angeles/inland empire area, I will never understand why people live there. You might as well spend 1/3 the money for the same crap in Houston (with slightly worse weather).

[temeculaguy]

Texas ranks 12th in obesity for all states, California 36th. I’ll bet average tooth count numbers are similar.

[Checkm8t]

Amenities found in CA? What amenities? TONS of traffic, smog, crowds everywhere, illegals, pathetic commutes to work, overcrowded/dirty beaches, overpriced everything, earthquakes, and lets not forget $800K stucco boxes. OK, CA has a better climate, but that’s it.

I lived all over CA for 25 years, 3 years ago we moved to the Dallas/Ft Worth area…and the quality of life is MUCH better than CA, especially for a family. Most of our neighbors are from, CA, PA, NY, FL, CT, etc. The negatives to living in TX are: High prop tax (no income tax though), high elec cost, toothless white trash in the outlying areas (no worse than parts of the IE, though), mosquitoes, hornets the size of 747s and occasional humidity.

The positives, WITH OUT A DOUBT, out weigh the negatives by a huge margin: GREAT schools, an overall relaxed feeling, less traffic, elbo room, lots of extra cash, lower prices for everything, etc.

I would recommend checking out various parts of Texas if anyone is thinking of leaving CA.

[mixxalot]

Value for the dollar

I dont surf and do major hiking and while the views of the coast are nice when I drive around San Diego they cannot justify a premium on real estate for me. Same for weather, as I spend most time at work indoors on a computer. I do hit the gym to keep fit but that is anyplace in USA. Now since I dont surf or hike or boat, it makes value for real estate important. I find people in midwest a lot open and friendlier than California or transplants to San Diego. SO.. for me, I can find a place for half cost of a new home with tax break and still have a gym and markets to buy food and toys in Texas. It makes sense to me! Dallas and Austin have good looking women. Houston people tend to be fat based on obesity studies.

[eyePod]

I was born in Santa Monica. It is very entertaining to read the pro-SD posts; many of them include stereotypical negative comments about Texas. The midwest has many areas that are GREAT for raising kids and have LOW cost housing. And that 550K SD house vs the $275K midwest house – don’t forget the SD house is a 30 year old POS and the midwest house is a 3000 sq. ft NEW house.

“There is no HOLLYWOOD in texas or asians!!!!!!” Alex this really shows you’re just a troll. Let me guess – you’re a priced out GenXer. What was that guy you loved – something like mugnyc1 or something, wasn’t really you responding to yourself and congratulating yourself back and forth for being so smart?

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