I have spent much of this week in Houston, Texas. Texas is the go-ahead large state in the United States today, and Houston is the oil and gas capital, America’s second largest port and home to a huge medical complex.
With it’s business-friendly environment, Texas is attracting firms and people from other states, notably over-taxed and over-regulated California, in large numbers. It has no state income tax. The state legislature only meets for 8 weeks every two years – and without air-conditioning so that politicians do not get too attracted to the place.
Houston is famous for having no zoning (land regulation). Yet it looks pretty much like many other US cities. Without controls you do not find an oil refinery next to prime residential real estate and the expected collection of businesses cluster around the port. But there are many neighborhood associations that set their own rules about things like how close to a boundary you can build or what colour you can paint your house.
The absence of land supply restrictions makes housing (and much else in Houston) incredibly cheap. You can get a very nice two-garage, four-bedroom house for as little as US $200,000. Some 500,000 ‘refugees’ from New Orleans moved to Houston after Hurricane Katrina without putting any significant pressure on house prices or the land market.
If ever the government gets around to a fundamental review of our dysfunctional Resource Management Act, there would be many lessons to be learned from Houston.