Saturday, July 19, 2008

Houston: A Deregulated, Free Market City That is Middle-Class Friendly

New Yorkers are rightly proud of their city's renaissance over the last two decades, but when it comes to growth, Gotham pales beside Houston. Between 2000 and 2007, the New York region grew by just 2.7%, while greater Houston — the country's sixth-largest metropolitan area — grew by 19.4%, expanding to 5.6 million people from 4.7 million.

The Southern city welcomes the middle class; heavily regulated and expensive Gotham drives it away. Housing prices are the most important part of Houston's recipe for middle-class affordability.

Houston's great advantage, it turns out, is its ability to provide affordable living for middle-income Americans, something that is increasingly hard to achieve in the Big Apple. That Houston is a middle-class city is mirrored in the nature of its economy. Both greater Houston and Manhattan have about 2 million employees.

If the key factor making Houston a middle-class magnet is its plentiful and inexpensive housing, that raises the question: why is it so cheap? The low cost of homes reflects the low cost of supplying homes in Texas. Building an "economy" 2,000-square-foot house in Houston costs about $120,000, and a slightly larger "standard" one about $150,000.

Why is it so much more expensive in New York? For one, supplying housing in New York City costs much, much more — for a 1,500-square-foot apartment, the construction cost alone is more than $500,000. The permitting process in Manhattan is an arduous, unpredictable, multiyear odyssey involving a dizzying array of regulations, environmental, and other hosts of agencies. A further obstacle: rent control.

But Houston's success shows that a relatively deregulated free-market city, with a powerful urban growth machine, can do a much better job of taking care of middle-income Americans than the more "progressive" big governments of the Northeast and the West Coast.

From the NY Sun article "
Houston, New York Has a Problem"


At 7/20/2008 5:39 AM, Blogger juandos said...

Hmmm, this is interesting commentary from the Sun...

I also wonder just how much the following might possibly also contribute to the differences?

County and City Income Taxes Clustered in States with Poor Tax Climates

At 7/20/2008 7:33 AM, Blogger Unknown said...

Houston might be the best place to live in the entire United States.
Having been here since 1969,
I've seen a great deal of change, not all of it good but on balance this has been a dynamic growing part of the country and a great place to live for those years.
Houston is not "zoned" and that can be a problem, the place was first founded by the Allen brothers, real estate developers. Dspite the growing pains this is a major metroplitan ares with all the attendant advantages and problems but it is "middle class" friendly because of it's relatively low cost of living.

At 7/20/2008 8:09 AM, Blogger B D Humbert said...

I had the good fortune to spend a few months in Houston on a consulting assignment. Very livable and very nice people.

I understand there are no [or minimal] zoning regulations. I suspect that this also plays a part in keeping housing costs down.

It also gives the city an odd sort of randomness - mixing of commercial and residential that actually works very nicely.


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