USA - TEXAS Trends and Developments Contributed by: Brad Holdbrook, Mary Mendoza, Michael Coleman and James Barnett, Haynes and Boone, LLP
and evolving conditions for the market’s long- term trajectory. The cities of Dallas, Austin, and Houston, promi - nent urban centres in Texas, have been expe - riencing dynamic changes over the past 12 months, particularly in terms of urban growth, economic expansion, and new construction. Each city, with its unique set of strengths, faces a different environment calling for discrete and nimble policies to perpetuate Texas’s good for - tune at both the metropolitan level and state - wide. As discussed above, Texas cities have been magnets for migration, driven by economic opportunities and a relatively lower cost of living compared to other major US metropolitan areas. However, this influx has contributed to a rising cost of living, particularly in housing markets (great news for sellers, bad news for buyers). Austin, known as a high-tech hub for the past couple of decades, has faced circumstances including chronic labour shortages and soaring house prices, which have contributed to Austin’s status as an attractive destination for opportuni - ty-seeking skilled workers and real estate invest - ment, both nationally and globally. As a result, the city’s population has grown substantially, expanding at about five times the national aver - age from 2010 to 2021, while still maintaining its low unemployment rate. Despite generally rising prices in residential real estate in recent years, the past year has cooled Austin’s housing mar - ket, delivering a decrease in the median cost of a house in the city, likely arising from increased construction contributing to a higher supply and higher interest rates nationally. Additionally, Texas’s traditional (relatively) cheap - er housing edge is slipping away as resilient demand outpaces supply, exacerbated by the
COVID-19 pandemic. Texas home prices have increased steadily, with significant implications for housing affordability. This surge in housing demand has been particularly notable in Dal - las-Fort Worth and Austin, drawing many new residents from expensive coastal cities. Despite record highs in building permits for single-fam - ily homes, inventories have generally dwindled, and prices have surged, suggesting that supply increases have fallen short of demand. Regard - less, Texas still compares favourably to many of the states its new residents are coming from, where housing shortages remain acute and new construction can prove difficult. Issues for all growing cities and which have the potential to impact Texas cities in the future include homelessness and urban decay, gal - vanising Texans to rise to the occasion. Hou - ston in particular has made notable strides in addressing housing shortages, focusing initially on military veterans and then expanding efforts, resulting in the housing of approximately several thousand formerly homeless people since 2012. This success has been attributed to strong co- ordination among both public and private actors to raise and distribute resources throughout the community and signals a strong civic engage - ment even as Houston continues to grow and thrive. On the other hand, despite its geo - graphic position and the viability of brand-new construction far into its hinterlands, Dallas has been experiencing a rapid redevelopment of its urban core, replacing aging apartment units with ultra-modern residences and anchoring a sub - stantial number of the city’s new residents in its very heart. These re-development projects often necessitate both substantial building improve - ment and governmental re-zoning, emphasising Dallas’ co-ordination of an entrepreneurial spirit with a receptive city administration.
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