Low Cost Living in the Lone Star State

 

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.

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5 thoughts on “Low Cost Living in the Lone Star State

  1. Also Texas is a “right to work” state: and public sector unions are illegal.

    As Don Brash said only yesterday: this is a prerequisite for any real reform in NZ.

  2. Pingback: Lessons from Texas | Kiwiblog

  3. Hello Roger,
    I and a partner are land developers. i.e. we subdivide bare land for housing. We do good work, but run a very ‘skinny’ operation. It irritates the hell out of me to hear pundits (eg. Bernard Hickey) with no real understanding, talk about how overvalued our housing prices are.
    There is a really big issue with the local body process in this country. I did a back of the envelope calculation not so long ago that showed council charges and gst accounted for approx $90K in a $250k section.
    Our local council, now merged into the Super City was simply corrupt (in the bureaucratic sense of the word).
    When land is zoned for a particular use and it has been publicly consulted on in the planning process, the council should assist the ratepayer in the application process to speedily comply with all the regulations. They don’t. The reverse is true. They needlessly obstruct and in the process they rack up up huge costs by needlessly delaying construction from season to season.
    In a recent case before purchasing a block of zoned land we did due diligence with council and confirmed they would provide water and sewerage connections. This was a multimillion dollar purchase. Some 15 months into the resource consent process they told us they couldn’t provide a connection for water or waste water. They were quite unconcerned about any cost or inconvenience. Their attitude was ‘we don’t have to give you a consent and if you wish then you can take us to the environment court’. It was only after a very heavy threat of civil litigation that they relented. In the meantime their process took so long that they were able to shift our application from one fiscal period to another. This bumped up the development contributions to $33k per lot.
    I am in favour of responsible, environmentally friendly development, but in this area the patients are running the asylum. I have found council officers to be inefficient, incompetent, and down right dishonest. They regularly construct the flimsiest excuses to delay and then hide behind the ‘more information’ excuse.
    The RMA needs drastic overhaul. It has been totally hijacked. There will never be affordable housing in this country whilst it is so difficult to go through the planning process.
    Whilst I am having this bleat, I would say that in general our elected official just don’t have the intellectual horsepower to deal with the complexities they face, and they too readily accept council officers’ statements without exercising the oversight they were elected to perform.
    Cheers,
    Pete.

  4. No air conditioning in the Texan state legislature? Not so sure about that one… You might have mistakenly drawn this conclusion from a statement from an old lawmaker this week that the state legislature didn’t have airconditioning in the 1950s.

  5. Roger – i trust they are taking good care of you in the great city of Houston. It sure is a great place and I cant wait until they get the direct Auckland / Houston flights underway. I am allergic to California.

    Now I think you will find the 4 bed homes much less expensive than the $200,000 you mention. Check out the Demographia Survey and the Houston Assn of Realtors Monthly Report ( http://www.har.com – click Homes for Sale then gown the right for the latest Monthly Report). The Houston Chronicle Real Estate Section has great maps showing how much they pay per square foot throughout Greater Houston.

    There is a mix of zoning, no zoning and deed restrictions throughout the whole metro as well.

    We are beavering away in the Peoples Republic of Christchurch to free the oppressed and open this city up, so it can start on the process of digging its way out of poverty. There is some great chat going on the Great Saint Bernards (sorry Pete – you will get over it) Interest Co NZ on todays “Quake Migration” article. Very heartening progress indeed

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