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The Biggest Threat to the Texas Economy

Ignore the headlines: Overbuilding and oil prices aren't the biggest threat to Texas; it’s skyrocketing rents and a lack of housing supply, says Texas A&M Real Estate Center former chief economist Dr. Mark Dotzour.


Mark (center, between Tax Advisors Group’s Lynn Krebs and Alliance Tax Advisors’ Curtis Yates at Bisnow’s Dallas 2016 forecast this week) tells us the affordability of living in Texas has been part of the state’s appeal to relocating corporations. But population, job growth and very little new home construction are leading to price fights for houses. Mark says people aren’t coming to Texas to pay a premium for housing; they come for the economy. When we keep our rents low, businesses thrive and the economy goes up, he says. When homes get too expensive, no one wants to come here or employers have to pay more, and then Texas no longer has the competitive edge


Builders need to get more homes out of the ground, and soon, before Texas loses some of its shine. To meet demand, we need about a six-month inventory of houses available, but that pipeline is down to about three months, Mark says. He tells us there are probably two more years ahead before the next recession looms, but it will come sooner if (as a state) we don't start building more single-family homes. A booming pipeline of home construction can keep this economy in expansion mode for two years or longer, he tells us.