In the US, crude oil (WTI) prices dropped more than 60 percent from its peak of more than $100 a barrel in mid-2014. Regardless of this fact, the largest energy producing state still attracts many eager workers.
According to the most recent US Census Bureau statistics, Texas had eight counties in the top twenty with the nation’s largest population growth in 2015. Of the more than 412,000 people flocking to the state, 63 percent were from other states or countries.
Despite Oil Bust, Texas Continues to Boom
The reason is that Texas has significant corporate tax incentives and affordable housing. Since 2010, the Houston metropolitan area has added more than 440,000 people and Dallas-Ft. Worth metro area added 186,000 during the same period according to census data.
Texas A&M University’s Real Estate Center reports that the rise in population led to a 37 percent increase in median home prices, reaching $189,000 in January. However, Texas is still is one of the cheapest real estate markets compared to other states, according to RealtyTrac. For example, in Los Angeles, 67 percent of working wages are used to cover mortgage payments compared to only 22 percent for a home in the Houston area.
Jim Gaines, chief economist at Texas A&M University’s Real Estate Center states, the absence of a state income tax, corporate incentives, and cheap housing makes the state popular with companies and workers. Businesses that aren’t showing effects from the oil crisis because they are in different sectors such as Toyota Motor Co., Dell, and IBM are building new offices in Austin and Dallas, according to Gaines.
According to the US Department of Labor, the Texas jobless rate is 4.5 percent which is lower than the national average of 4.9 percent. So despite the setbacks from major layoffs in the oil and gas sector due to the supply glut, the state continues to boom, for now. I am sure that by this time next year, we will see more of an effect on a national level.